Policy & Regulation

Primary author: 

Policy Background: Digital Britain

Technology never stands still.  Having completed a range of measures to promote the roll-out of first-generation broadband in the UK, it soon became apparent to the Government that other countries in Europe were investing in broadband infrastructure capable of delivering even higher speeds.  How should the UK respond?  Was the economic competitiveness of the country in jeopardy?

The development of UK broadband policy on NGA can be chronicled through the publication of several key reports.  In 2007, the the Broadband Stakeholder Group (BSG) opened up the debate with the publication of Pipedreams? Prospects for Next Generation Broadband Deployment in the UK, which laid out the issues confronting the UK in rolling out new access network infrastructure.

The BSG then commissioned Analysys Mason to study fibre costs, and calculate the investment needed to deploy NGA across the whole of the UK.  (Note: An equivalent report on the costs of wireless and satellite broadband was also commissioned, much later, in 2010).

The Government also asked Francesco Caio, former chief executive of Cable and Wireless, to carry out a comprehensive and independent review of the future of broadband in the UK, paying particular attention to barriers to investment, which was published in 2008.

Finally, in 2009 this was followed with a series of strategy papers under the banner Digital Britain, which were to inform new policy in this area.  The final Digital Britain report takes a wide-ranging view of communications strategy, covering topics as diverse as digital inclusion, the digital TV switchover, digital radio, public service broadcasting, the role of the BBC, online copyright, monetization of content, and addressing IT skills shortages.

From the point of view of improving broadband infrastructure, the plan had two stages:

  1. A universal service commitment (USC) to provide 2Mbps to all UK households by 2012;
  2. Coverage to 90% of homes with NGA at speeds of 40Mbps or more by 2017, which would be market-led for two-thirds of the population, with subsidies available for the remainder.

Digital Britain introduced an important concept, the so-called “Final Third” – the areas left behind by the current wave of commercial NGA deployment plans.  In March 2010, the Department of Communities and Local Government (DCLG) published an Assessment and Practical Guidance on Next Generation Access Risk in the UK, which identifies areas likely to become part of the Final Third.  These are predominantly rural areas due to the higher cost of installing fibre, but some urban populations may also be at risk as a consequence of social deprivation.

To meet the objectives outlined in Digital Britain, the Government created a delivery body, christened Broadband Delivery UK (BDUK).  This body was initially to concentrate on delivering the USC, using £200 million of funding from the Digital Switchover Help Scheme under-spend (part of the BBC licence fee set aside for helping people convert to digital TV), and the Strategic Investment Fund (a new £750 million fund announced in the March 2009 Budget).  BDUK formally came into existence in March 2010.

This article originally appeared in Beyond Broadband: Giving our Communities the Digital Networks They Need.

Key publications mentioned in this article:

April 2007Pipe Dreams? Prospects for next generation broadband deployment in the UK, report by the BSG executive

September 2008 - The costs of deploying fibre-based next-generation broadband infrastructure: Final report for the BSG by Analysys Mason.

September 2008Review of Barriers to Investment in Next Generation Access: Final Report by Francesco Caio (also called The Caio Review).

June 2009 Digital Britain: The Final Report by Department for Culture, Media and Sport.

March 2010 - An assessment and practical guidance on next generation access (NGA) risk in the UK by Communities and Local Government

October 2010 The Costs and Capabilities of Wireless and Satellite Technologies – 2016 snapshot Report for the BSG by Analysys Mason

Primary author: 

Government Policy on Next Generation Broadband

By Louise Lancaster at Ayres End Consulting

In May 2010, following a general election, a new Government, a coalition of the Conservative and Liberal Democrat Parties, took office.  The Coalition Programme for Government promised:

“We will introduce measures to ensure the rapid roll-out of superfast broadband across the country. We will ensure that BT and other infrastructure providers allow the use of their assets to deliver such broadband, and we will seek to introduce superfast broadband in remote areas at the same time as in more populated areas. If necessary, we will consider using the part of the TV licence fee that is supporting the digital switchover to fund broadband in areas that the market alone will not reach.”

Jeremy Hunt, the new Minister for Culture, Media and Sport, gave his first speech on the media and broadband sector in June 2010.  He referred to the Labour Government’s legacy as a “paltry 2 Mbps universal connection”.  He expressed the view that, “Superfast broadband is not simply about doing the same things faster. It’s about doing totally new things – creating a platform on which a whole generation of new businesses can thrive.” He signalled that plans would shortly be announced to bring superfast broadband to rural and hard to reach areas and concluded with a simple goal:  “Within this parliament we want Britain to have the best superfast broadband network in Europe.”  Much debate ensued about what “best” might mean.  It was subsequently explained that this did not necessarily refer to speed alone, but would refer to a basket of measures.

Mr Hunt’s policy was fleshed out at an Industry Day on 15 July 2010, hosted by Broadband Delivery UK (BDUK).  The 2 Mbps USC deadline was pushed back from 2012 to 2015, but this was not necessarily bad news.   The 2009 Digital Britain report had identified an under-investment in backhaul networks (i.e. the section between the local telephone exchange and the central backbone network) which needed to be addressed.  Now the Government was expressing an intention to remove barriers to investment by encouraging shared use of infrastructure such as public sector networks and BT’s ducts and poles, and by easing obstacles thrown up by street works, wayleaves and State Aid processes.  They made it clear that the minimum 2 Mbps would only apply to an “irreducible core” of 160,000 or so premises.  The rest of the country would be served by superfast broadband and BDUK would oversee a procurement process with local and regional involvement.

In order to understand potential commercial models in detail, BDUK announced a Theoretical Exercise.  Suppliers were invited to propose complete solutions for three real rural locations (in the Highlands of Scotland, Lancaster and South Wales).  From this work, BDUK would develop commercial models, from which they would begin a procurement process to fulfill the universal Service Commitment, using 2 Mbit/s as a minimum but not necessarily a maximum.

BDUK also heralded the superfast broadband “pilot” schemes, which would be procured in the first half of 2011 and delivered from Q3 2011.  Superfast broadband was described as at least 20 Mbps, though both Jeremy Hunt and BDUK expressed the view that we should be aiming for 50 Mbps by 2015 and that speeds of 200 Mbps were expected by 2025. 

In the Comprehensive Spending Review on 20 October 20 2010, the Government announced that the first four pilot projects to be run by BDUK would be in the Highlands and Islands, North Yorkshire, Cumbria and Herefordshire.  The funding for this was being redirected away from the BBC.  £230m was the underspend from the Digital Switchover scheme, and the BBC would be required to contribute a further £150m in 2013-14 and 2014-15, bringing the total to £530m.  This could be increased to £830m if the BBC is required to contribute the same amount in 2015-16 and 2016-17 (which is when this current settlement with the BBC expires).

On 6 December 2010, BDUK published the conclusions and lessons learned from the theoretical exercise, alongside a policy document Britain's Superfast Broadband Future, which sets out the government's vision for superfast broadband networks in the UK and describing the measures it will take to achieve this.

In May 2011 Jeremy Hunt reiterated that vision by announcing that 90% of homes and businesses should have superfast broadband (which he clarified to mean at least 25 Mbps downstream) by 2015.  Mr Hunt has also emphasised the need to consider wireless, as well as fixed, networks.  He believes that superfast broadband to be "super-flexible" to keep up with the increasing use of broadband-on-the-move.

Meanwhile BDUK have now published their Programme Delivery Model which provides detail on how BDUK will help deliver the government's broadband policy goals. 

 

Louise Lancaster is an independent consultant providing practical advice on telecoms regulation, interconnect, public policy and commercial contracts.

After qualifying as a solicitor at a City firm in 1994, Louise worked as an in-house lawyer, regulatory and government affairs adviser for a number of telecoms companies, before becoming a consultant in 2003.  She has experience in Continental Europe and the USA and her clients include traditional network operators, specialist service providers and trade associations. 

She has been a member of the Council of ITSPA, the Internet Telephony Service Providers’ Association, since 2006.  She provides advice to INCA on regulatory and public policy matters.

www.ayres-end.com

 

 

Primary author: 

An Introduction to Telecoms Regulation

By Louise Lancaster at Ayres End Consulting.

The provision of electronic communications networks and services in the UK is overseen by the industry regulator, Ofcom.    Ofcom, combines regulatory oversight of broadcasting (TV and radio), spectrum (the airwaves over which wireless devices operate) and electronic communications networks and services (fixed and mobile telecoms services).  Ofcom also has concurrent power with the Office of Fair Trading under the Enterprise Act 2002 and the Competition Act 1998.  Competition law prohibits anti-competitive practices and abuses of dominant market positions.

Much of the UK regulation is transposed from European Law.  The EU Framework consists of five Directives: the Framework Directive (2002/21/EC), Authorisation Directive (2002/20/EC), Access Directive (2002/19/EC), Universal Service Directive (2002/22/EC), Privacy and Electronic Communications (2002/58/EC).  These have now been amended by the Better Regulation Directive (2009/140/EC) and Citizens’ Rights Directive (2009/136/EC).The latest revision of the EU regulatory framework comes into force in May 2011. 

The Communications Act 2003

The functions and powers of Ofcom are laid out in The Communications Act, 2003.  Ofcom’s duty is to further the interests of consumers by ensuring, amongst other things the availability of a wide range of electronic communications services and the optimal use of spectrum.

Ofcom is funded by administrative charges paid by those in the industry.  The administrative charge is a percentage of the operator or provider’s annual revenue.

A new Communications Bill is due to be introduced in 2013.  The Government aims to publish a Green Paper in the second half of 2011, for which they announced they were seeking input by 30th June 2011.

General Authorisation Regime

Since 2003, rather than issue individual operating licences, electronic communications networks and services are provided under the General Authorisation regime.   Before providing a network or service, all providers must notify Ofcom of their intention to do so.  Under the General Authorisation regime, all providers must abide by Ofcom’s General Conditions of Entitlement .  The General Conditions distinguish between different types of network or service provider.  The type of network or service you provide will determine which conditions apply to you.   It is the responsibility of all providers of electronic communications networks and services to decide which of the General Conditions apply to them and to ensure that they comply.  Guidance on the application of the General Conditions can be found here.

The General Conditions concern the protection and effective functioning of the UK communications network, the interconnection of networks, use of telephone numbers and measures aimed at consumer protection.  Ofcom has recently consulted on the changes to the General Conditions that need to be made in order to implement the revised EU electronic communications framework.

There are also some specific conditions which apply on to certain individuals, such as those that have been deemed to have Significant Market Power in a particular market, and those who have been designated Universal Service Providers, namely BT and KCom. SMP Conditions vary according to each market in which they are imposed and can include obligations to meet reasonable request to supply services to other providers and not unduly to discriminate.  Price controls may also be imposed.

The Universal Service Conditions ensure basic fixed line telecoms services are available at an affordable price to all consumers in the UK. Amongst other things the conditions cover meeting reasonable requests for connection at a fixed location, a social (low cost) tariff, reasonable access to payphones and access for end-users with a disability.

The Secretary of must make a Universal Service Order setting out the general requirements which must be provided as Universal Services in the UK. The last Order was laid in 2003.

BT's Undertakings

Between 2003 and 2005 Ofcom conducted a Strategic Review of the telecoms market in the UK.  It concluded that competition between alternative infrastructure providers was the only way to ensure a healthy and competitive market.  Ofcom had grounds to suspect that competition was being restricted in markets for the supply of wholesale access and backhaul services in the UK and in directly related downstream retail markets. 

Ofcom felt that it had grounds to make a reference to the Competition Commission under the Enterprise Act, 2002 but, instead, it accepted "Undertakings" from BT in 2005 that it would "functionally" separate the different parts of its business.  It was the biggest change to the regulation of BT since privatisation in the 1980s.  The part of BT that sold local access services became Openreach.  (Although functionally separate, it is not a separate legal entity - BT plc is still one organisation which includes the Openreach division.  Some feel that full "structural" separation of BT is required in order truly to create a level playing field.)

The Undertakings introduced the concept of "Equality of Access", which comprised both functional separation and Equivalence of Inputs ("EOI").  Certain EOI products were defined which had to be offered to other operators in the same timescales, on the same terms and conditions, and using the same systems and processes as they were offered to BT's own downstream businesses.  Sadly, Equivalence of Inputs applies to a fairly limited set of products, and most products relating to NGA (such as sub-loop unbunding and Passive Infrastructure Access) are not covered by the EOI obligation.

 

www.ayres-end.com

 

 

 

Primary author: 

Next Generation Access – regulation of key input products

By Paul Brisby, Partner at Towerhouse Consulting

This section deals with Ofcom’s regulation of BT in the NGA space.  It looks specifically at wholesale markets:  what products must BT sell to other players?  On what terms?  What are the pricing rules?  It is largely concerned with Openreach (although we also touch on BT Wholesale) and covers the following wholesale product areas:

(i)              Local Loop Unbundling (LLU)

(ii)            Sub-Loop Unbundling (SLU)

(iii)           Physical Infrastructure Access (access to BT’s ducts and poles)

(iv)          VULA / GEA – this is the NGA-based BT product delivered at (or very near) the local exchange.  VULA stands for Virtual Unbundled Local Access and is Ofcom’s term.  GEA stands for Generic Ethernet Access and is BT’s term.  (The question of whether GEA is the same as VULA is complicated – see below).

(v)            Backhaul

(vi)          Wholesale Broadband (the only product in this note which is not provided by Openreach) – we deal with this only briefly.

Our aim here is to present a simple account of some of the key rules.  But you need to be aware that regulation[1] in this area is ultimately extremely complicated.  The Ofcom document dealing with items (i) – (iv) above is the Wholesale Local Access statement of 7 October 2010:  it’s 250 pages long; even then, to make proper sense of it you also need to read the consultations which preceded it – the one in March 2010 ran in total to 600 pages.  Then, to understand what the rules mean in practice, you need to plough through various previous Ofcom investigations, appeal cases at the Competition Appeal Tribunal and Competition Commission; separate detailed pricing rules running to hundreds of pages; and quite probably something from the European Commission as well[2].

So, if you want to make sense of the Ofcom rules without reading all that, this section is for you. 

Bear in mind, though, that it is only a summary.  If you need to use these rules in anger – if they really affect your business – you may end up getting to know some of the documents themselves in an unfortunate level of detail!  

1.    Introduction

Ofcom’s rules on most of these areas were set out in its statement on Wholesale Local Access of 7 October 2010 (WLA Statement) and the accompanying SMP Conditions.  Those conditions are the legal rules which generate binding obligations on BT[3].   

As well as making more-or-less final decisions in these areas, Ofcom also set out the steps which it believes are necessary to establish a clear regulatory framework which will allow competition in high speed broadband services to flourish. Ofcom notes that there had been significant investments in so-called super-fast broadband over the previous two years and that around 50% of UK households could now access these services.

Competition in these markets however remains in its infancy.  Ofcom's intention was therefore to establish a regulatory framework which would promote competition but would also support continued investment and innovation.  It will remain to be seen how this works in practice. 

2.    The WLA rules

Alongside the expected rules on LLU and SLU, the WLA statement provided that, for the first time, BT will be obliged to offer duct and pole access to its competitors and to provide access to its own NGA services.  The rules have three central elements:-

(i)              Virtual Unbundled Local Access (VULA).

Ofcom set out new rules governing BT’s NGA services.    In summary:

a.              Where BT deploys NGA, rival CPs will be able to use VULA to deliver high speed services using the BT network. This is intended to give them similar levels of control to that available using LLU. 

b.              As with LLU, in order to use VULA, CPs will need a network presence at or near the BT local exchange. 

c.              BT is now obliged to provide VULA on fair and reasonable terms and on the basis of Equivalence of Inputs or “EOI”[4]

d.              There is a raft of other obligations such as a rule requiring BT to comply with directions given by Ofcom and a procedure for the delivery of new products. 

e.              Note that there are no direct pricing obligations (though there are rules designed to prevent margin squeeze).

f.               Ofcom has said that VULA has to comply with 5 key characteristics:

i.       Localness:  interconnection for VULA should occur locally;

ii.      Service agnostic: VULA should be able to support a multitude of services (including voice)

iii.     Un-contended: dedicated capacity should be available to the end user;

iv.     Control of access: sufficient control of the access connection should be made available; and

v.      Control of Customer Premises Equipment (“CPE”): sufficient control of CPE should be available.

BT has chosen to comply with its VULA obligations through its GEA product-set.  It is beyond the scope of this paper to dissect the BT product set.  However, a key debate is about whether the GEA product set complies with the VULA criteria.  This is inevitable and is likely to continue through the life of the product for a simple reason:  whenever a new product development is requested, the first question asked will be whether it fits within the criteria specified by Ofcom.

Controversy may surround Ofcom’s decision not to make VULA subject to cost orientation but this was widely expected in the industry.  Ofcom believes that NGA development is at such an early stage that they believe it would have been difficult to determine the correct level of any cost orientation obligation.  More interesting is the new guidance on an ex ante approach to margin squeeze. Ofcom has identified the potential for BT to engage in anti competitive behaviour including the potential to engage in margin squeeze by setting “inappropriate price differentials” between VULA and BT’s retail offerings such as BT Infinity. It is also interesting to note that Ofcom has formally recognised that ex post competition law may not provide an adequate remedy to ensure that competition takes hold. Their solution is to set out guidance on the approach Ofcom would take when investigating any suggestion that BT’s pricing was creating a margin squeeze.  It remains to be seen how this will work in practice and the extent to which alternative providers have the will to pursue it.

VULA is envisaged to last for at least the next five years or until fully unbundled fibre services are available. VULA is intended to give altnets greater control over BT's FTTC-based broadband services, enabling them to differentiate their products both from one another and from the standard BT services. As we have seen in the past with products such as LLU, whether this is what happens depends on mundane but fundamentally important matters such as the terms and conditions offered by BT and the design of the systems introduced to deliver the service.  

(ii)       Physical Infrastructure Access (PIA)

The new PIA product will allow others to deploy their own NGA infrastructure between the customer and the local exchange, using BT's ducts and poles. This is expected to be particularly significant in areas outside BT’s own NGA roll-out.

PIA must be provided on fair and reasonable terms; on a non-discriminatory basis; and on cost oriented prices.  There is a raft of other obligations such as a rule requiring BT to comply with directions given by Ofcom and a procedure for the delivery of new products.  BT must publish a reference offer.

Ofcom set out a timeline for the development of the PIA product set (which is a new thing).

i.                BT’s initial reference offer (i.e. the contractual and commercial terms) was to be published within three months of the statement – i.e. by mid-January 2011;

ii.              A window of another three months was to be allowed for the negotiation of the offer with industry (which would notionally have run until mid-April but in fact is ongoing at the time of writing);

iii.             BT should then produce a revised reference offer within two months;

iv.            Ofcom have said that they would consider intervening if agreement could not be reached.

In theory, PIA should enable alternative operators to deploy superfast broadband services in areas where BT elects not to deploy NGA but much will depend on both the price and the terms and conditions. These in turn will depend on whether industry is able to collectively negotiate a fair and reasonable contract, and effective operational procedures, with Openreach.

This has already proven controversial – a public spat has arisen over pricing[5] - and the process of developing workable products is ongoing. 

Note also that PIA is not subject to EOI – but the undertakings contain some interesting rules that go some way towards that (also on SLU).

(iii)           Local Loop Unbundling (LLU) and sub-loop unbundling. 

Unlike VULA/GEA these product sets (in full and share form) exist already; the main difference is that LLU exists in a full, productised and more-or-less scalable form, backed up by a full OSS.  (The same is not necessarily true of SLU).  The key rules on LLU and SLU are these:

a.              It must be provided on fair and reasonable and non-discriminatory terms.

b.              BT is subject to a price control in relation to LLU services.  This means that Ofcom specifies detailed price rules for LLU.  Understanding this fully means reading not one, but several lengthy documents – Ofcom’s original price control statement, the Competition Commission ruling in the appeal made by TalkTalk against the decision, and Ofcom’s subsequent amendments.  Ofcom has also launched a review of that price control (which is currently ongoing). 

c.              Both LLU and SLU are subject to cost-orientation obligations.

d.              There is a raft of other obligations including a requirement that BT comply with Ofcom directions and a procedure for the delivery of new products.

3.    Other relevant rules

We have dealt with the key direct inputs for NGA and broadband services.  Other relevant areas include backhaul and wholesale broadband.  The key points to note are these:

·         BT must provide ethernet backhaul services up to and including 1Gb/s on fair, reasonable, non-discriminatory terms and on the basis of cost-oriented pricing.  It is also subject to a price control.  Ofcom is currently kicking off work to look again at the regulation of backhaul through its confusingly-named Business Connectivity Market Review – it issued a “call for inputs” on 21 April 2011[6].  Anyone at all interested in these areas is strongly advised to offer input. 

·         BT’s wholesale broadband services are also regulated in some areas (these go under names such as IPStream, IPStream Connect, and Wholesale Broadband Connect).  These are the only products considered in this note which are provided by BTWholesale rather than Openreach; they are relevant, though, because they affect the competitive environment.   The key thing to note here is that while BT is unregulated in the vast majority of the country (Ofcom considers that services based on LLU provide a significant competition constraint to BT), much of the “final third” is subject to regulation.  This means that for areas representing population coverage of some 20% of the population BT’s prices will be subject to regulation – though probably only for BT’s 8Mb/s IPStream Connect service.

·         Finally in this section, ancillary services are also regulated.  This might be anything from cable pull-through to renting space in a BT exchange.

4.    Commentary and practical issues

This section offers a little more insight into how the rules might work in practice; into what they actually mean; and into how they can be enforced.

The first point to note is that the whole regulatory structure puts an enormous level of responsibility on BT.   Most of these areas are complex and Ofcom almost always leaves the detail – and sometimes much more than just detail - to BT in the first instance.  The Ofcom rules on the whole don’t tell you much about the actual products – for those you have to look to BT.

The second point is that if you rely on these products to run your business, you can’t necessarily rely on BT or Ofcom to produce products that will work for you.  Ofcom is generally regarded as a very good regulator but they do not typically intervene at a really detailed level.  There are actually some pretty sound reasons for this:  first, a simple resourcing question – Ofcom doesn’t have the resources to control BT at the level of minutiae.  Secondly, a question of efficiency:  the (comparatively generic) rules set by Ofcom could have a near-infinite number of consequences at a level of detail.  Ofcom, then, needs to be guided in what and how to enforce and the people best-placed to do that are those already operating in (or seeking to enter) the market.

The third point flows obviously from the first two:  if you have requirements of these regulated products, you need to be very clear with BT and (possibly) also with Ofcom about what they are. 

It’s worth looking a bit more at how this plays out in practice.  We’re going to focus here on pricing. 

There are two quite distinct kinds of direct pricing rule: 

i.                A (generic) cost-orientation rule:  this rule simply says that BT has an obligation to ensure that its prices (say, SLU rental) are reasonably derived from its costs

ii.              A price control:  this sets more detailed rules for BT’s prices. 

Obviously, the first of those gives BT potentially quite a lot of freedom.  Its exact meaning has in fact been very controversial (at the time of writing, BT is seeking leave to appeal to the Court of Appeal on the matter) but Ofcom’s view is that there is an initial test requiring the price to be between a ceiling (distributed stand alone cost or "DSAC") and a floor (distributed long run incremental cost or "DLRIC").   In terms of what those mean in practice, for some services the difference between the two can be hundreds of percent. 

The price control, you might think, would be much more precise – and you’d be correct.  A price control proceeding is long and complicated and in the case appealed by TalkTalk (on LLU pricing) the final decision ran to something around 270 pages. Even then, though, a lot of freedom is left to BT.  An Ofcom price control will typically take a service – say, MPF rental and, rather than specifying a particular price, will simply say “the price of this service must decrease [or may increase] by a minimum [maximum] of X% per year – with an allowance for inflation”.  Often several services are lumped together in a basket and, provided the price of the basket complies with the rule, the individual prices within it may change.

Some of this is currently being tested.  Visible signs include the public spat about PIA prices (see above).  Sharp-eyed observers will also have noted a dispute submitted to Ofcom on SLU prices by Digital Region (the publicly-funding NGA provider in parts of South Yorkshire); Ofcom is also looking at another dispute on ethernet pricing.

This brings us to enforcement.  It is pretty unusual for Ofcom to take direct enforcement action against BT for breach of SMP conditions.  This means that most serious players will want, at some stage, to test BT’s compliance for themselves.  There are a number of ways of doing this – the best-known (thought definitely not the only ones) being disputes and complaints.  The good news is that, used properly, these routes can be pretty effective[7]

Another interesting point is that regulation is very different for different products.  LLU (MPF and SMPF) is heavily regulated, with a full set of standard regulatory obligations, a cost orientation obligation and a pretty detailed (and closely-targeted) price control; ethernet similarly.   VULA, though, is much less regulated with no direct price regulation at all; SLU and PIA sit somewhere in the middle. 

All of this is complicated by the possibility of appeals and, these days, most of the really big decisions are appealed.  If you want to know more about this, you can read our paper on it here:  http://www.towerhouseconsulting.com/telecoms_news.htm

5.    Conclusions and tips

In all of this complexity, how can we make sense of this in practical terms?

First, it’s a good idea to know the basics about the products you plan to use.  Double check and remember the key obligations.  Likely candidates are fair and reasonable terms, non-discrimination, cost orientation – possibly also EOI and price control.   Take time to think about what they mean for you.

Secondly, unfortunately, no-one else is going to look after your interests.  This means that you need to be very clear about what you want / expect from BT.  Ask clearly and ask in writing.  (A written request is required to trigger some regulatory obligations.)  Get involved in the Ofcom proceedings that set the rules (market reviews or price controls) – either directly or through one of the industry associations.

Thirdly, don’t forget the contractual angle.  Hopefully it’s clear from the rest of this note that most of the regulatory rules are pretty generic.  The contract with BT is your opportunity to put flesh on those bones and almost all contracts have a periodic review.  (On the flip side, a bad contract can do you real damage.)

Finally, you may ultimately have no choice but to ask Ofcom for help in a formal way.  This is not something to take lightly but, equally, is genuinely not something to be frightened of if you really have to do it.   At the time of writing Ofcom is consulting on new dispute resolution guidelines which are designed to make that process more streamlined.

www.Towerhouseconsulting.com




[1] We deal with SMP conditions in this section; BT’s undertakings are dealt with elsewhere.  Note however that there is often overlap and in particular that Equivalence of Input (EOI) obligations often exist under the Undertakings, rather than under the rules discussed in this section.

[2]There’s another 600 pages in the Ofcom statement which covers backhaul

[3]It’s common practice (and rightly) to read the SMP conditions in the light of the Ofcom statement which accompanies them.  In strict terms, though, it is only the Conditions themselves that are binding – a point emphasized by the Competition Appeal Tribunal recently in a ruling on PPC trunk charges.

[4]EOI means that BT has to supply the same product to everyone downstream, including its own downstream businesses.  We have deliberately not quoted precise rule-numbers in this note – it would substantially increase the length of the note and actually looking at individual rules in isolation is quite a bad idea – but the relevant rule here is FAA11.3.  In case you’re interested.

[7]We don’t deal with the role of the OTA in this note but they deserve an honourable mention for their tireless work helping to make regulation work in practice

Primary author: 

Radio Spectrum – the UK’s “4G” auction

By Domhnall Dods, Senior Associate at Towerhouse Consulting

The UK recently announced plans to auction spectrum for so-called “4G” services (suitable for LTE and WiMAX, but actually allocating the spectrum on a technology neutral basis). It’s a reasonably complex area, with abstruse economic questions about untested auction theory over-lapping with a controversial legal framework. This note outlines the plans without seeking to be judgmental.

The Plans in Outline

Spectrum allocations are complicated at the best of times and never more so than recently in the UK. The blandishments of massive auction revenues will challenge the instincts of even the most ardent of free-marketeers. It’s a complex area of regulatory principle which goes to the heart of the market structure – spectrum being an absolute barrier to entry – and which in the UK has been complicated by the merger of two of the formerly five mobile network operators in 2010.

Faced with litigation in a crucial area of industrial policy, the last government went so far as to appoint a neutral mediator to try to get agreement between the various stakeholders. 

The current Minister, Ed Vaizey MP, issued a direction to Ofcom in December 2010 which covered a variety of spectrum issues (“the Vaizey Direction”) – including on 4G allocation. Vaizey set the course directionally; Ofcom’s consultation of 22 March deals with the detail [1]. In summary, this is what the consultation covers:

  • An assessment of future competition in mobile markets (including the potential for new entry).  It was a requirement of the Vaizey Direction that Ofcom undertake such an assessment.  Sound in principle but may be risky in practice (see below).
  • Detailed proposals for the design of the 4G auction – covering a total of 250MHz of spectrum 800MHz and 2.6GHz
  • A number of ancillary questions:  should there be coverage / roll-out obligations, low power local licences and so on
  • Variation of existing 2G and 3G licences to permit the use of LTE  and WiMAX; and
  • How licence fees will be set for existing allocations at 900 MHz and 1800 MHz after the auction.

The rest of this part of the note contains a little more detail on Ofcom’s plans.

The objective

Ofcom believes this new spectrum allocation is desperately needed to meet the UK's rapidly growing appetite for mobile data services, and much of the consultation seeks to determine how best to promote competition. It is hoped that the new spectrum will allow the launch and rollout of 4G mobile technology which will provide mobile broadband speeds close to those that are offered by ADSL fixed line services today [2]. Such technologies should not only offer greater speeds, but much better coverage than has been achieved by 3G services. It is thought that the coverage offered will be comparable to today's 2G, or voice, coverage by 2017.

Ofcom is particularly keen to ensure that the benefits of these new mobile broadband services are also enjoyed in more rural parts of the country and in this respect the 800 MHz band is seen as being particularly important given that lower frequency signals travel farther, and are therefore ideal for serving rural areas.

The higher frequency 2.6 GHz band is seen as being useful for delivering higher speed broadband services simultaneously to many users. Ofcom says it’s therefore likely to be used in urban centres, since systems using higher frequencies require a greater number of cell sites due to their propagation characteristics.

Promoting Competition

Ofcom has decided that a completely open auction would threaten future competition. Spectrum holdings might become inefficiently fragmented across multiple players – some of whom may end up with insufficient spectrum to support a national service. Ofcom has therefore proposed a system of auction floors (to ensure that at least four bidders get enough spectrum to operate a credible UK wide wholesale service). At the same time, they want to ensure that spectrum holdings are not concentrated in the hands of a few players (to ensure no one bidder can secure enough spectrum to allow them to distort competition in the future). In doing this Ofcom creates a new regulatory concept – the “credible national wholesaler”. 

Ofcom clearly hopes that the auction may allow new entrants to come to the market; and appears to have gone to some trouble to ensure that companies are permitted to bid for sufficient spectrum to enable them to become credible national wholesalers in the future. 

While the consultation makes it clear that Ofcom is keen to encourage investment, they are also mindful of the need to ensure that the benefits do not just flow to urban centres and therefore they propose to insert coverage obligations in one of the 800 Mhz licences which will oblige the licensee to deploy a mobile network capable of providing a sustained downlink speed or not less than 2Mb/s, with a 90% probability of indoor reception to an area within which at least 95% of the UK’s population lives.

Sub-national competition

Interestingly Ofcom also considers that sub-national operators may wish to enter the market. For example, some companies may wish to deliver mobile services indoors or in particular localised environments such as university campuses. It may be possible for such operators to share one block of 2.6 GHz spectrum and use lower power equipment in order to facilitate such sharing. Directionally this looks a bit like Ofcom’s GSM guardband auction (in which we acted for one of the winning bidders.)

Licence Conditions

At this stage only non technical licence conditions are being consulted on. And these are very much in line with previous Ofcom practice in that licences will be:

  • UK wide
  • technology and service neutral
  • spectrum trading will be permitted
  • of indefinite duration (subject to very limited revocation powers for Ofcom during an initial period of 20 years)

Auction Design

The proposed auction is a combinatorial clock auction, similar to those which were used for the two spectrum auctions in 2008. This will utilise generic spectrum blocks which bidders will then be able to aggregate. The design itself – while in principle simple for auction theorists – will look quite complicated to many participants.  For example, the price paid by winning bidders will not be their own bid, but the next highest. This all sounds odd and is very different from – say – the UK 3G auction, in which we were intimately involved. And it can lead to some odd-looking results (in a previous UK auction on the same methodology, a winning bidder ended up paying only around 40% of their actual bid price). 

Revised fees for 900 Mhz and 1800 Mhz

Ofcom has also been directed by the government to revise the annual license fees for existing 900 and 1800 MHz spectrum to reflect full market value in light of bids received in this auction.

Next Steps

The consultation runs until the 31st May 2011, after which Ofcom will reach a decision sometime in the autumn. The auction is currently anticipated to take place in the first half of 2012.

It’s worth noting that there is the possibility of litigation about this auction.  There are some genuinely controversial aspects – none more so than the availability of the critical sub-1GHz spectrum, with its superior propagation characteristics.  So it may not all be plain sailing.

www.towerhouseconsulting.com




[1] With responses due at the end of May

[2] In field trials of 4G services in the USA (using LTE rather than WiMAX) Verizon achieved up to 60 Mb/s download speeds:  http://www.zdnet.com/blog/btl/verizon-wireless-4g-lte-trials-showing-50-to-60-mbps-download-rates/13058

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Commercial Operational and Technical Standards Group

By Alex Jennings    

In July 2009 the Broadband Stakeholder group initiated the ‘Commercial, Operational, and Technical Standards group’ - COTS. This initiative was to develop an efficient standardised approach to enable service providers to offer retail services over local or community-led open networks to end users, with a focus on Next Generation Access. As a result of this initiative consumers and small businesses should be able to access a wide choice of service providers, regardless of how the underlying infrastructure is either provisioned or owned. It should be in the interests of all local or community-led projects to be compliant with this approach.

In order to mitigate the risk of the emergence of disjointed networks which did not support interoperability a degree of standardisation and harmonisation is required at both the technical and process levels. However, any standardisation and harmonisation should not inhibit the scope for grass roots innovation at the local level.

The initial meeting of COTS was well represented a second kick-off was held in Hull, with the work of the group being taken forward by a steering group, with representatives from the following organisations participating:

  • BIS 
  • BSG
  • BT
  • Cable and Wireless Worldwide
  • CBN/INCA later JON and now ONE Exchange
  • Fibrestream
  • Geo Networks
  • H2O Networks
  • IFNL
  • Industria/Quintain
  • KCOM
  • Scottish and Southern Energy/FCS
  • Sky
  • TalkTalk Group 
  • Thales
  • Latterly JON and now ONExchange

From this a sub-group was set up which discussed both the issues of the local networks and a list of generic ISP requirements from a COTS solution, tabled by Sky and TalkTalk. As the group was already working from the common view point that an aggregation provider or clearing house was required the group then heard presentation from CSMG discussing B2B interfaces and the work Ofcom had carried out in this area. The steering group looked at how to take forward the issues concerning multiple B2B interfaces and touched on customer migrations.

COTS is now engaging with BD-UK as a result of this work to co-ordinate an approach towards a statement of requirements, which the group has developed, outlining the key areas which need to be considered to support standardisation, harmonisation and ease of access to the disparate networks as communities and local initiatives develop. Many of the requirements are based on the existing information required to provision customers across networks. However, the issue of migration is from existing networks to fibre and between VLANS with the emergence of more dynamic services has yet to be thought about, with many service providers still expecting to be able to provide ‘more of the same’ in the case of Wholesale Line Rental and Carrier Pre-selection.

The key area that all involved in the process agreed on to support the plethora of products and services both old and new was the need of a single aggregation point.

For notes from most of the meeting http://www.broadbanduk.org/content/view/379/43/1/0/

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Network Interfaces and Standardisation

By Huw Saunders, Catalyst Communications Consulting

Ofcom’s General Condition 2 requires providers of communications networks and services to comply with certain technical standards, specifically with regard to interconnection between networks. GC 2 encourages all network providers to follow relevant European standards (as required by the underlying EU Telecom Framework) or those of the global ITU or equivalent bodies. It also allows Ofcom to specify standards that must be followed by one or more providers.

In practice, European or global standards, whether from ETSI, ITU or the IETF, tend not to be particularly specific – often there are a wide range of configuration or methodology options even within a single standard. Consequently, in the 1990s, it became clear to industry and the regulator that a more UK-specific standards body was necessary to agree national approaches to service delivery so that interoperability across networks was more easily enabled. This body was known as the Networks Interoperability Consultative Committee (NICC).

Originally NICC was formally constituted as a committee reporting to Ofcom (and previously Oftel). In June 2008, NICC reformed as an independent industry body that is now owned and managed by organisations involved in interoperability standards development (mainly larger communications providers and equipment manufacturers), and is parented on the Institution of Engineering and Technology. In its initial phases of operation, NICC concentrated on developing a full suite of interconnection and interoperability standards for traditional telco networks and services but, over the last few years, has been turning more and more to “Next Generation” network issues.

Of particular interest to NGA superfast broadband providers is the work they are doing on Active Line Access (ALA). This concept was first developed by Ofcom as a result of work they undertook in 2007 and 2008, looking at how the deployment of NGA would affect services delivered to customers and how competition would develop. Essentially, they concluded that NGA networks were close to being “natural monopolies”, in that only one or, at most, two competing infrastructures were likely to be economically viable. Consequently, the current broadband landscape of both large scale and niche competitive providers being able to differentiate their services through easy access to basic infrastructure such as BT’s copper network through Local Loop Unbundling (LLU) was likely to be subject to radical change.

Ofcom believe that the current health of the UK broadband market, with its wide range of providers competing vigorously for market share at comparatively low prices, is based on a high level of competitive intensity – in other words a large number of potential providers of services being forced to innovate in price, product or service in order to win customers. If NGAs are natural monopolies, LLU enabled competition will fall away and, in the face of diminished competitive pressure, consumers may lose out through the lack of innovation incentives.

Ofcom have sought to address this on BT’s network by introducing the concept of “virtual unbundling” that will, in principle, allow this competitive intensity to be maintained by requiring BT to provide an “enhanced bitstream” service that, unlike current generation IPStream and WBC, allows retail service providers a real opportunity to innovate and offer differentiated services.

But what about the smaller networks being established elsewhere through community initiatives or those that will result from the BDUK “Final Third” funding? This is where the ALA work comes in. NICC will develop standards to underpin the deployment of Next Generation Access technologies that are used to provide high speed broadband services. The Active Line Access (ALA) standards will allow retail Communication Providers (such as TalkTalk or Sky) to offer services to end users in a consistent way regardless of the access network provider that the end user is connected to. These standards can be used to support virtual unbundling of the access network where necessary; they can also provide a single transport solution for smaller community broadband networks that will enable them to connect their individual end users to any CP. The ALA standards will also support advanced capabilities such as Quality of Service and IP multicast that are key enablers for mass market broadband services.

In addition, the Broadband Stakeholder Group (BSG) has been running a programme called Commercial, Operational and Technical Standards (COTS) that is looking at how ALA might work in practice and what other initiatives may be needed in order to deliver the multi-provider competitive landscape that Ofcom see as being necessary. This has concentrated, in particular, on the possible need for intermediaries to sit between smaller NGA players and the big retail service providers, acting as a gateway to minimise underlying technical and operational differences for the service providers without forcing the access providers to make disproportionate investment to meet their requirements.

Whether Ofcom will actually make the use of ALA and a COTS intermediary mandatory for every NGA access network is another matter. At the moment, they are actively encouraging schemes to adopt this approach on a voluntary basis and it may be that BDUK funding is tied to some degree of commitment to them. The next iteration of the WLA Review in 2013 will, however,allow them to designate any NGA networks then operational as having Significant Market Power (SMP) which would allow them to impose a so-called “regulatory remedy” such as ALA compliance.

Useful links:

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Wayleaves: The Right to Install, Maintain and Repair a Network on Another Person's Land

By Rob Bratby, Partner at Olswang LLP

Note: This information is provided by way of background information and is not legal advice.

A wayleave is a contractual licence granting the operator of an electronic communications network the right to install, maintain and/or repair their equipment (or "Apparatus") on a landowner's and/or occupier's land.

How do I obtain a wayleave?

Most wayleaves are agreed commercially with the landowner.

If a wayleave cannot be agreed commercially, then provided the installing operator has been designated by Ofcom as an operator with Code Powers, then the Electronic Communications Code ("Code") as updated by the Communications Act 2003 provides a statutory backdrop for negotiations. That backdrop has led to market norms that apply even where the installing operator does not have Code Powers.  

The following checklist coupled with the sample agreement attached provides general background for negotiations, but does not comprise legal advice:

·         Who should the wayleave be with, and what consents are required? Ideally the wayleave should be granted by the owner of the land. Whilst occupiers may be able to enter into wayleaves, they will often need the consent of their landlord, and land owners may need the consent of their mortgagee or tenant.

·         What is the scope of the wayleave? Is the wayleave linked to the provision of certain services to certain customers, or unlimited in scope?

·         How much consideration is paid for the wayleave?This will depend on the circumstances. Whilst it is not unusual for some wayleaves to be granted for no fee, the fee can include the landowner's legal and other costs, a one-off payment and/or an annual payment.

·         Does the wayleave bind future purchasers?This is the ideal position. However, landowners are often unwilling to agree to this. The right should include access on reasonable notice with or without vehicles for apparatus installation and maintenance (including repairs, removals, alterations, upgrades and renewals).

·         Network operators should obtain sufficient insurance (at least to the level of the offered indemnity) in place to cover any liability under the agreement including for fraud, damage to property and personal injury.

·         The wayleave should require land owners and/or occupiers to not knowingly or recklessly permit any interference with the apparatus or the ability to exercise the right granted by the wayleave. The agreement should set out notice requirements for any planned renovations to the land or development that may interfere with the apparatus. Under the Code, landowners must usually bear the cost of relocating the apparatus during the renovation or development; however, this is subject to negotiation.

·         If the landowner terminates the agreement and requires the removal of the apparatus, adequate notice must be given. The network operator may also request a right to terminate. If the operator has Code Powers the landlord is not able to contract out of the provisions of the Code that restrict the landowner's right to require the removal of the apparatus. However, the wayleave can address the contractual consequences of the service of a Code Power Notice in a way that incentivises the Code Power operator to not serve a counter-notice.

·         Any sub-contracts for the installation and maintenance of the apparatus should mirror the terms and obligations of the main wayleave agreement and include adequate insurance provisions.

·         The length of the agreement will depend on the negotiations. The licence may expire at the end of the tenancy or it may be renewable subject to an additional one-off fee. The example below is a licence terminable on notice in certain prescribed circumstances.

The Country Landowners and Business Association, the National Farmers Union and the Government are working towards more standardised Wayleave terms and conditions to facilitate the roll-out of next generation broadband networks.

Last updated May 2011.

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State Aid and Next Generation Broadband

By Rob Bratby, Partner at Olswang LLP

Note:  This information is provided by way of background information and is not legal advice.

What constitutes State Aid?

Any support granted to networks rolling out broadband by the state (including subsidies and tax rebates) can constitute state aid. If that state aid distorts competition or trade between member states it will be prohibited on the basis that it is not compatible with the EU internal market.[1]

Other non-economic measures won't constitute state aid provided they are available to all utility operators or do not involve any expenditure of state funds.[2] This includes measures to improve network infrastructure such as public-built ducts, new building regulations requiring fibre connections and OFCOM requirements for infrastructure sharing between network providers.

How do the State Aid rules apply to Next Generation Broadband Networks?

State aid is permitted in certain circumstances: the most relevant for these purposes being when the state aid is provided in relation to a service of general economic interest ("SGEI").[3] To fall within this category next generation broadband projects must meet certain criteria. Those criteria are:

·         The project must have a clearly defined public service mission, i.e. to rollout next generation broadband in non-profitable areas.

·         The aid itself must be objectively and transparently allocated through a non-discriminatory public tender and should only cover costs incurred plus a reasonable profit. If allocation is made outside of a public tender, compensation for costs will only cover those a typical, well-run organisation would have incurred.[4]

·         The network must provide universal connectivity to all local users and be technologically neutral to allow for all possible forms of network access and for effective competition at the retail level.

As a general rule, even if a scheme does not satisfy these strict criteria in their entirety, it may be approved on the basis that the positive effects of the aid outweigh the negative effects of competition distortion. Moreover, aid must be the most proportionate and least distortive policy instrument to achieve rapid rollout of superfast broadband. This will not be the case in areas where broadband investment is likely to occur within the same timeframe without aid.

The local existing level of infrastructure will be a good indication of compatibility. 'White' areas where there is no pre-existing or planned basic broadband infrastructure will qualify for aid. 'Grey' areas which have one NGA network already in place (or being deployed in the next three years) will only qualify for aid where the current service is insufficient for local businesses and consumers. 'Black' areas with more than one NGA network already in place will not qualify for state aid. Where there are many basic broadband networks in place operators should have the incentive to upgrade to NGA without aid.

If aid is granted, network providers must also follow OFCOM's access conditions. The networks should satisfy all different types of network access sought by third party operators and support effective and full unbundling.[5] Third parties must also have wholesale access (including rights to use ducts, cabinets and other passive and active infrastructure) for at least seven years following state support.

What is the procedure for notification of State Aid?

Unless a scheme falls outside the state aid regime entirely because it satisfies the strict Altmark criteria set out above, the EU Commission must authorise all plans to grant new aid before they are put into effect.[6] A standard notification of state aid might take 6-9 months to be approved. Notifications that present new issues, are contentious, or which do not fall under existing rules may take longer. Below are some examples of decisions where State Aid for broadband networks has been deemed compatible.

The Government has made proposals for a national framework notification procedure. If adopted, future uses of state funds to stimulate next generation broadband will be pre-approved under an umbrella scheme. In decentralising the funding process local bodies and network providers will have much more flexibility. Pending approval of this umbrella scheme, a state aid template notification is being developed to simplify and ease the procedural requirements of notification.[7]

 

North Yorkshire

http://ec.europa.eu/eu_law/state_aids/comp-2009/n559-09.pdf

Cornwall and the Isles of Scilly

http://ec.europa.eu/eu_law/state_aids/comp-2009/n461-09.pdf

Northern Ireland

http://ec.europa.eu/eu_law/state_aids/comp-2009/n418-09.pdf

Cumbria

http://ec.europa.eu/eu_law/state_aids/comp-2003/n282-03.pdf

 

This information was last updated in May 2011.




[7]BIS 'Britain's Superfast Broadband Future December 2010'

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Business Rates on Fibre-Optic Networks

Fibre-optical cables are a business asset and as such will attract non-domestic property rates.  In August 2010, the Valuations Office Agency (VOA) published the current list of rateable values for fibre-optic telecommunications networks.  For the first time it also published guidelines for assessing NGA networks, which include FTTC and FTTP connections.

Fibre-optic cables are assessed according to values laid out in a table called the “tone of lists”, which relates to the distance, amount of fibre in the scheme and the number of fibres lit.  The rateable values start at £1,500 for a single lit fibre of 1 km length outside London and go up from there.  The bill must be paid by the company that lights the fibre.

At the opposite end of the scale, BT’s extensive fibre network is deemed too complicated to assess on this basis, so the rates liability is calculated according to the Receipts and Expenditures method.   The overall assessment is adjusted by an unpublicised formula relating to BT’s market share.  As a result, BT’s rates bill has fallen in recent years even though its fibre network has grown substantially.

Alternative operators, who do not have the scale of BT, must pay rates according to the “tone of lists” and the rates bill can quickly add up to a hefty sum, particularly in rural areas where longer runs of fibre will be needed to reach the population centres.  This creates a disincentive for alternative operators to invest in fibre; the smaller the network, the larger the rates bill will be relative to the operator’s budget.

For the NGA piece the VOA has two means of calculating rateable values:

  • For domestic users there is flat rate of £20 per home connected.
  • For businesses, the fibre is valued according to the “tone of lists”.

This raises potential anomalies, which the Broadband Stakeholder Group has been working to clarify.  The decision to rate networks according to subscribers connected rather than homes passed (at a lower rate) penalizes Greenfield operators, who would expect a high take-up of services where fibre is the only infrastructure.  Clarity is also needed on how to assess connections to small business customers; how are they  to be rated when shared fibre is employed?

The Government understands that the business rates charged on fibre represent a disincentive for small operators to invest in fibre networks.  In November 2009, a Commons Select Committee report on broadband concluded that:

The current arrangements hinder the delivery of investment in NGA, which is being championed by Government. We recommend that the Government review the application of business rates to fibre optic networks as a matter of urgency, and develop a uniform system for all providers.

Nevertheless, there are no plans to change the ratings regime. 

There is a glimmer of hope for communities: create social enterprises in the form of cooperatives or community interest companies to invest in local fibre projects and seek partial or full exemption from business rates.  Whether local authorities have the resources to grant exemptions in the current financial climate is another matter.

Useful links

VOA Rating Manual: Section 871: Telecommunications Fibre Optic Networks

VOA Rating Manual: Section 873 : Next Generation Access Telecommunications Network (NGA)

VOA: Agenda and speaking notes for Roundtable 11 January 2011

Vtesse Networks: Briefing paper on Business Rates on optical fibre for Francesco Caio

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Streetworks and Code Powers

By Huw Saunders of Catalyst Communications Consulting

Constructing an NGA network on private land seems relatively straightforward – reach agreement with the landowner and JFDI! Caution should be exercised to ensure that the rights to put equipment into the property are maintained in the event of a change of ownership (by entering into an appropriate “wayleave agreement” or “easement” [insert link to wayleaves page]) but a number of legal precedents are available and bodies such as the Country Landowners Association encourage their members to adopt a similar approach to these types of contracts. In addition, there needs to be a clear consideration of how the installation can affect the landowners’ normal activities, and vice versa, and the normal considerations of “health and safety” and liability insurance etc, but these should be standard issues for any experienced contractor.

How do you go about doing the same thing in public land, such as a highway (which includes pavements and verges by the way)? In simple terms, you could proceed in exactly the same manner – reach “commercial” agreement with the relevant “property owner” and then undertake the work, bearing in mind the need to meet the requirements of all of the relevant legislation, such as the New Roads and Street Works Act (NRSWA), ensuring that you don’t interfere with utility assets and other infrastructure already in place, and that you comply with the specified standards of work and restitution. This “Section 6 permit” approach to minor schemes is perfectly feasible, but does require the co-operation of the relevant body (either a local authority, or the Highways Agency) and, again, an experienced civil engineering contractor.

However, if you don’t want to be reliant on “goodwill”, you can apply to be granted use of the Electronic Communications Code. This piece of legislation dates back from before telecoms liberalisation, although it has been modified from time to time, most obviously in the Communications Act 2003. Essentially, the Code enables communications providers to construct infrastructure on public land (streets), and to take rights over private land, either with the agreement of the landowner or by applying to the County Court or the Sheriff in Scotland. It also conveys certain immunities from the Town and Country Planning legislation in the form of “Permitted Development”. In addition to providers of electronic communications networks the Code is also available to those who wish to construct conduits to be made available to network providers.

The Code is granted to network providers by Ofcom, by a direction made following a public consultation and consideration of the responses to that consultation. All that is basically required is that you show Ofcom that you have a legitimate need for the Code and that you have the wherewithal to use it. The Code is not the most user friendly pieces of legislation, but the Ofcom site explains some of its uses and also provides templates for the “notices” that are required to be served on the relevant highways authority etc. Again, the advice and experience of an established contractor can save a lot of problems.

One sometimes overlooked aspect of the Code is the requirement that Code operators ensure that sufficient funds are available to meet any specified liabilities, and that they provide Ofcom with a certificate on 1st April each year that needs to state, amongst other things, that sufficient funds have been put in place,  and needs to be accompanied by copies of any insurance policy, bond, guarantee or other instrument which will provide for the funds if the Code operator ceases to exist. This requirement came about because of the legacy of failed companies in the “dot com” bubble of the early “Noughties”, who left decaying and potentially dangerous apparatus in place, that the local authorities did not have the wherewithal to remove.

 

Huw Saunders has been in the Telecommunications industry for over 30 years working for equipment vendors, telco/service providers and a leading specialist consultancy. He has in depth and widespread experience of all aspects of telecoms services with an emphasis on policy, strategy, business development and service deployment. He has particular expertise in regulatory issues, with extensive involvement with the development of the UK and European regulatory framework and its application from the “Duopoly Review” of the early 90s, through the various EU Reviews of their Regulatory Framework and Ofcom’s Telecoms Strategic Review. Due to the unique nature of the businesses he has worked for, this experience extends from consumers to the largest business customers, from both an incumbent and new entrant perspective, including services provided to and via other carriers and service providers. His consultancy clients have been in the UK, other European states and Asia, and have included incumbent telcos, new entrants and regulatory authorities. In the UK he has been on the Board of NICC, NGNUK and ATVOD, and has recently been the industry co-chair of BT’s Consult 21 Steering Board, and much of his recent work has focussed on “Next Generation Network” and consumer issues.

 

He has had long term involvement in the public sector led South Yorkshire Digital Region “next generation broadband” project. This involved liaison with the lead public sector agencies over a 5 year period, coordinating the public procurement tender response work as part of a bidding consortium and negotiating with key project partners. This project represents the largest ever commercial contract won by his them employer with total revenues of over £100 million over the project’s life.

 

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