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.




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