What?

Recent developments in the telecoms sector include the postponement of the 4G auction, an Ofcom pilot scheme in which the regulator charges for the supply of numbers, new guidance on the use of the term “unlimited” in broadband advertising and an update on Ofcom’s review of early termination charges.

So what?

4G auction delay

The auction process for the UK’s 4G telecoms licences has suffered further delay. Ofcom was expected to announce the terms of the auction for the 2.6GHz and 800MHz frequencies in September.  However, now Ofcom plans a further consultation to commence at the end of this year, with the auction scheduled for the last quarter of 2012. The delay was the result of objections from several UK mobile operators to Ofcom’s planned structure for the auction as they felt that certain bidders would receive unfair advantages under the proposed system.

As a result of the delay, operators may have to rely for longer on their 3G networks to provide mobile broadband services to their users, and consumers may have to wait longer for the increased data speeds promised by 4G. There is concern that the additional time for existing operators to increase their capacity on existing 3G networks may act as a disincentive for potential new entrants wishing to bid for the new spectrum’s licences.

Numbering pilot scheme

Ofcom has announced a scheme under which it will charge communications providers 10 pence per number and year for phone numbers to encourage the efficient use of available numbers. The scheme will initially run in the 30 areas with greatest number scarcity. 01 and 02 numbers will continue to be available free of charge in the remaining 580 areas of the UK during the pilot scheme.

Smaller providers have criticised the scheme and see the key reason for the scarcity of numbers not in inefficient use by providers but in Ofcom’s practice of allocating free numbers in large tranches which usually surpass the demand of smaller telecommunications companies.

Number scarcity is becoming a serious issue with Bournemouth being expected to be the first area in which the dialling of area codes will become mandatory for local calls which will increase the amount of numbers available to Ofcom.

“Unlimited” advertising

The Committee of Advertising Practice (“CAP”) has issued a help note on the use of the term “unlimited” in telecoms and broadband advertising. Key points are that users must not incur extra charges or service suspensions where the fair use policy of the service is exceeded and that any provider-imposed limitations on speed or usage are of no more than a moderate level and are clearly explained in the advertisement.

It is also legitimate to describe only parts of the service as unlimited. Thus, while a claim of “unlimited broadband” would require all aspects of the service to be unlimited, a claim of “unlimited web browsing” would be consistent with a limitation on downloads. Yet service providers should note that bandwidth-heavy services such as YouTube and the BBC iPlayer are explicitly included in CAP’s definition of web browsing.

Restrictions such as “free evening and weekend calls” or “free off-peak calls” are also within the scope of the guidance as long as the offers are genuinely unlimited during the advertised times.  Where service providers use terms with analogous meaning such as ‘limitless’ or “all you can use”, the CAP guidance will also apply.

Early termination charges review

Ofcom has extended its Additional Charges Enforcement Programme which deals with the fairness of early termination charges in the communications sector for an additional six months. Over the last six months, Ofcom had been looking at early termination charges in consumer fixed voice, fixed voice and broadband and broadband contracts in particular. Further details, which could include enforcement action, will be announced in Ofcom’s Competition and Consumer Enforcement Bulletin in due course.