Regulatory Outlook | Telecoms | July 2021

Current issues

Implementation of the EECC

As featured in our January 2021 edition of the Regulatory Outlook, updates to Ofcom's General Conditions of Entitlement (GCs) following implementation of the European Electronic Communications Code (EECC) in the UK remains one of the key upcoming changes in telecoms regulation. The EECC replaces the existing European telecoms regulatory framework and aims to harmonise the EU regulatory framework for electronic communications.

Member States were required to implement the EECC by 21 December 2020. The UK did so through the Electronic Communications and Wireless Telegraphy (Amendment) (European Electronic Communications Code and EU Exit) Regulations 2020 that made updates to the Communications Act 2003 and the GCs as well as the Wireless Telegraphy Act 2006.

Due to the impact of the Covid-19 pandemic and its recognition that providers would need time to make changes to their systems and processes, Ofcom confirmed on 27 October 2020 that it would allow providers 12 months from publication of the final notification containing the revised General Conditions (published on 19 December 2020) to implement the relevant changes. The three implementation phases can be broadly summarised as follows, with changes applying depending on the customer type:

• December 2021: The majority of the changes will come into force on this date, including the ban on selling locked devices to residential customers; requirements on accessibility of information; new rules for bundles; and requirements on contract duration.
• June 2022: Entry into force of the requirements on pre-contract information and contract summary, and on customers' right to exit following contractual changes and after a fixed commitment period.
• December 2022: Entry into force of the new rules on switching and porting.

Where applicable, the changes will require providers to undertake system changes to ensure compliance, which could have a significant impact. Businesses will need to understand the impact of these changes on their activity, and set aside budget and time over the coming months to ensure compliance on time.

Government announces new Telecommunications (Security) Bill

On 24 November 2020, the Department for Digital, Culture, Media & Sport (DCMS) published the Telecommunications (Security) Bill, to strengthen the legislative framework for telecoms security and resilience, focusing in particular on 5G and full fibre networks, and to enable the government to take action on the use of "high risk" vendors on national security grounds. The Bill, which amends the Communications Act 2003, is currently making its way through the legislative process.

The Bill contains three main themes:

1. Placing new, increased duties on public telecoms providers to identify and reduce security risks in UK telecoms networks;
2. Granting the Secretary of State powers to designate vendors as "high risk" and control the use of their goods, services or facilities; and
3. Placing Ofcom under a new duty to monitor compliance and granting new investigative and enforcement powers, including the ability to levy fines of up to 10% of annual turnover or £100,000 per day in the case of continuing contravention.

The Bill also gives the Secretary of State power to make regulations imposing duties on providers to identify, reduce and take specified measures in response to security compromises (a draft of which was published by DCMS in January 2021 in the form of the Draft Electronic Communications (Security Measures) Regulations). The Bill results from the government's 2019 UK Telecoms Supply Chain Review Report, and its announcement in January 2020 that new restrictions should be placed on high risk vendors in such networks. In July 2020, following a ban on the use of Huawei equipment in the core parts of 5G networks, DCMS announced that UK telecoms providers should not procure any new 5G equipment from Huawei after 31 December 2020 and that all Huawei equipment must be removed from 5G networks by the end of 2027.

Queen's Speech unveils proposals for a Product Security and Telecommunications Infrastructure Bill

In the Queen's Speech delivered on 11 May 2021, which set out legislative plans for the next session of Parliament, the government proposed a new Product Security and Telecommunications Infrastructure Bill. The Bill has two main focuses:

• ensuring that smart consumer products such as smartphones and televisions are secure against cyber attacks, to protect the privacy and security of individuals; and
• accelerating and improving the deployment of 5G and gigabit-capable broadband by supporting the installation, maintenance, upgrading and sharing of apparatus to promote coverage and connectivity.

The government seeks to achieve these aims by:

• setting minimum security standards for manufacturers, importers and distributors in relation to smart products made available to UK consumers; and
• amending the UK Electronic Communications Code to foster quicker, more collaborative negotiations for the use of land for telecommunications deployment, and to put in place a suitable framework for the use of installed apparatus.

Government's Wholesale Fixed Telecoms Market Review 2021-2026: investment and competition

In March 2021, Ofcom announced its decisions from its Wholesale Fixed Telecoms Market Review 2021-26, setting out how the fixed telecoms markets that support broadband, mobile and business connections will be regulated in the UK from April 2021 to March 2026.

Against the backdrop of a 40% increase in data use year-on-year by UK households, Ofcom underscores the importance of delivering future-proof gigabit-capable broadband, by promoting competition and investment (mainly by private companies, but the government has also committed at least £1.2 billion between March 2021 and 2024/25 to subsidise rollout in more remote areas of the UK).

The review continues the trend of recent telecoms regulation towards extending access to BT's infrastructure to other operators, having identified BT as having market power in providing physical telecoms infrastructure and in the wholesale markets underpinning broadband and leased line services.

Key decisions in the review:

• Ofcom clarifies its regulatory approach to fibre, stating that it does not expect to introduce cost-based price controls until at least 2031.
• Openreach must continue to allow all network operators to use its ducts and poles to roll out their own networks.
• Openreach's residential broadband products will be regulated according to the level of competition in an area. In areas where Openreach is the only operator providing a large-scale network, Ofcom is setting a cost-based charge control to allow Openreach to recover investment costs across both its existing copper network and new full-fibre networks.
• Openreach's leased lines (which underpin the UK's mobile and broadband networks) will be regulated in a similar way to residential broadband, with the approach varying according to levels of competition.
• Openreach will be able to charge more (£1.70 per month extra) for full-fibre broadband, and will be supported to retire its copper network.
• Openreach is prohibited from offering geographic discounts on its superfast broadband wholesale services, including full fibre.
• Openreach's quality of service rules for repairs and installations are broadly being retained with some temporary leeway allowed in light of Covid-19.

These decisions should make it easier for new market entrants providing broadband and leased line services to gain traction.

Dates for the diary

17 December 2021: Entry into force of the majority of the changes to Ofcom's GCs as required by the implementation of the European Electronic Communications Code, including the ban on selling locked devices to residential customers; requirements on accessibility of information; new rules for bundles; and requirements on contract duration and termination.

17 June 2022: Entry into force of further revisions to the GCs: the requirements on pre-contract information and contract summary, and on customers' rights to exit following contractual changes.

19 December 2022: Entry into force of further revisions to the GCs: the new rules on switching and porting.