Regulatory Outlook: Telecoms - November 2016

Current Issues

European telecommunications framework reform: The European Commission published a proposal to reform the 2009 European telecoms package. The proposal takes the form of a European Electronic Communications Code. This telecoms reform will impact communications providers that fall within the current regime; they also create a new class of service provider for OTT platforms that do not use the national phone numbering system. In the current proposals OTT platforms only have limited obligations (security and access to emergency services); however, this may change as the proposal progresses through the legislative process.

Digital communications review: In February 2016 Ofcom announced its proposal following its strategic review in 2015. The review focuses on five key areas for which we expect to see regulatory change over the next few years: the guarantee of sufficiently fast universal broadband availability; support for investment in new broadband networks; improving quality of service; increased independence of Openreach from BT; and consumer empowerment so that people can understand the array of choices available to them. Some of these reforms form part of the Digital Economy Bill.

Automatic compensation: Following the digital communications review and a call for inputs in summer 2016, Ofcom will launch a full consultation by the end of 2016 on its proposals for automatic compensation for performance failures. The proposed automatic compensation will apply to consumers and small businesses (up to 10 people) from the retail communications provider. A number of practical and commercial considerations still need to be fully explored by Ofcom and the consultation will be the opportunity for communications service providers (both retail and wholesale) as well as customers to input on these issues.

Review of the General Conditions of Entitlement: Ofcom issued a consultation in August 2016 to review the UK telecoms framework by amending the general conditions to simplify and clarify regulation thus reducing the cost of compliance and removing redundant rules. The consultation looked at the rules around network functioning, public pay phones, directory information and numbering conditions. Ofcom will issue revised conditions in spring 2017.

Wholesale roaming charges: Following the abolition of retail roaming charges which will be effective from June 2017, the European Commission has adopted a proposal to set maximum regulated wholesale roaming charges for mobile operators at EUR0.04/min, EUR0.01/SMS and EUR0.085/MB in the EU. This proposal still needs to be adopted by the European Parliament and Council.

Net neutrality: Following the implementation of the European regulation on net neutrality on 30 April 2016, BEREC issued non-binding guidance on the interpretation of the regulation on 30 August 2016. The guidance clarifies a number of areas such as the permissibility of zero-rating practice and it will be the responsibility of national regulatory authorities to monitor and enforce the rules. It will be interesting to see if there is variation in the approach taken by each Member State and Ofcom’s approach over the coming months.

In Focus: Enforcement

Ofcom is the independent regulator of the communications sector in the UK, as well as the competition authority. In carrying out its role, Ofcom has two over-arching duties:

• to further the interests of citizens in relation to communications matters; and
• further the interests of consumers in relevant markets, where appropriate, by promoting competition.

Whilst Ofcom operates independently, it can co-ordinate with other regulators on issues where there is a crossover. For example, in relation to its own-initiative investigation into nuisance calls on which it has co-ordinated with the Information Commissioners Office (the data protection regulator).

Ofcom has the power to impose fines of up to £2m or 10% relevant turnover, and Ofcom policy is to set fines at a level which are a deterrent and set an example to other providers of the implications of breaching the regulations. It also has the power to request information from companies and impose specific conditions, for example where a provider has significant market power. Any request for information by Ofcom should be considered carefully and we recommend taking legal advice as to the scope of the request and information disclosed. Whilst significant fines are not regularly handed down, Ofcom will use its powers where it is in the interests of furthering its over­arching duties.

Whilst Ofcom initiates its own investigations and actively monitors compliance of companies, for example by conducting mystery shopping exercises, it also resolves complaints between operators and services providers based on claims/breaches in relation to the Competition Act 1998 and the Communications Act 2003.

Where appropriate Ofcom may handle a dispute/complaint on an informal basis. Where this is not appropriate it will conduct an enquiry, followed by an investigation.

Current focus areas for Ofcom enforcement are:

• silent and abandoned calls;
• emergency calls;
• complaints handling (which includes rules related to dispute resolution);
• wholesale mobile call termination rates;
• annual geographic number charges;
• cancellation and termination arrangements; and
• services offered to end-users with disabilities.

Dates for the diary

31 December 2016

Investigatory Powers Bill expected to receive Royal Assent.

Late 2016

Ofcom consultation on the automatic compensation proposals for communications providers.

Spring 2017

General conditions review – Ofcom to publish final statement and revised conditions.

End of spring 2017

Digital Economy Bill expected to receive Royal Assent.

15 June 2017

Roaming charges for consumers within Europe will come to an end, subject to fair usage rules. A cap on wholesale roaming charges may also be adopted.

For more information and details of all of the other areas covered by the Regulatory Outlook click here.