Regulatory Timeline | Telecoms - April 2016

“As the Internet of Things continues to gather speed, the need for additional spectrum which can accommodate multiple connected devices in a resilient manner will remain an important topic in 2016 for industry players and Ofcom. Measures are already underway to try to release valuable spectrum in the 700 MHz band (currently used for digital terrestrial TV), but it will still be a few years before the spectrum is actually available for use.

The UK government’s recent Budget has also announced a number of measures aimed at freeing up spectrum for new and innovative technologies. The challenge for both Ofcom and industry will be how to make the most of these initiatives to ensure that the UK does not lag behind in IoT development.”

Jon Fell, Partner, Osborne Clarke

30 April 2016 – Net neutrality

The EU Net Neutrality Regulation comes into force on 30 April 2016. It will affect UK telecoms operators, internet service providers (ISPs) and those wanting to have their content distributed via the internet.

The Net Neutrality Regulation is designed to ensure that users have access to online content and services without discrimination or interference by ISPs. All internet traffic must be treated equally, subject to limited exceptions. This means that the ability of telecoms operators and ISPs to apply traffic management measures will be much more limited. Likewise, the ability to negotiate preferred speeds or quality of service deals will be limited to so-called “specialised services” whose delivery requires a guaranteed service level – think IPTV, connected cars, telemedicine and certain cloud services. Ofcom will be the body which enforces the Regulation within the UK.

The Body of European Regulators for Electronic Communications (BEREC) is currently working on putting together guidance to assist national regulators such as Ofcom with interpretation of key aspects of the Regulation. However, BEREC’s guidance is unlikely to come into effect until the end of August 2016.

The Net Neutrality Regulation forms part of the EU’s wider reform of the European telecoms regime, which includes the end of international roaming charges in June 2017.

2016 – Ofcom review of digital communications

Ofcom is currently engaged in a wide review of digital communications. The review is looking at all communications services, including fixed, mobile, and pay-TV services and therefore has the potential to affect all players in the UK communications market.

The consultation document was published in July 2015. Ofcom published its initial conclusions on 25 February 2016. Ofcom’s final position is expected later in 2016.

The review is looking at a wide range of issues, including:

• specific wholesale market issues. Ofcom is likely to fall short of requiring BT Openreach to be splitout from the rest of the BT Group as a separate company;
• improvements across the industry in terms of mobile broadband coverage; and
• consumer-related issues, including ways to further consumer empowerment, such as increased transparency and automatic compensation for consumers when their communications service providers fail to deliver.

1 July 2016 – Electronic signatures 

Regulation 910/2014 on Electronic Identification and Trust Services for Electronic Transactions in the internal market replaces the existing E-Signatures Directive (Directive 1999/93/EC). 

The European Council believes that the failure to make greater use of electronic signatures within the framework of an independent certification system has hindered the creation of a fully integrated digital single market. It remains to be seen whether the new Regulation and related initiatives will result in greater use of electronic certification facilities. With some exceptions, the new Regulation will apply from 1 July 2016. For more information, see here.

2016 – General Conditions of Entitlement under the UK general authorisation framework

All communications providers that are subject to the UK general authorisation regime (such as fixed, mobile providers, and providers of managed (cloud) communications services) should be aware of Ofcom’s forthcoming review of The General Conditions of Entitlement.

The issues being considered include whether some of the conditions can be removed, for example on the basis that regulation is no longer necessary or the types of products have moved on, and therefore the current Condition is no longer appropriate, as well as the impact that new services (such as over-the-top (OTT) services or VoIP calling) have on the current wording.

No specific proposals have been released yet as to which conditions may be changed. We expect that further details on each of these items will be released later in 2016.

2016 – Ofcom market reviews at wholesale level

Ofcom’s draft Annual Plan for 2016/17 sets out the following areas where Ofcom will conduct market reviews:

• mobile call termination rates: the wholesale charges that mobile network operators (MNOs) demand from one another to connect a call on that MNO’s network;
• wholesale broadband access: the wholesale broadband products that communications providers provide for themselves and sell to each other; and
• wholesale local access: the local connection between an end-user’s premises and the local exchange which is used to provide fixed-line services such as voice calls and broadband internet.

Ofcom is also looking at whether an obligation should be placed on UK communications providers by way of a universal service obligation to provide a minimum level and speed of broadband. This would be intended to address areas (particularly rural) where there is a lack of good quality, reliable broadband. 

2016 – Investigatory Powers Bill 

The Bill has been the subject of fierce debate over recent months. 

Amongst other things, it seeks to give enhanced powers to UK government agencies to request access to electronic communications in the UK. For example, communications providers will need to store records of websites visited by every person for 12 months (showing their browing history but not specific items viewed on that page). It also seeks to enable security services to acquire bulk communications data (such as NHS health records), and to bypass encrypted services. 

If enacted in its current format, this has the potential to place significant regulatory and financial burden on communications networks / providers to comply with the Bill. A final vote on the Bill is expected in Parliament by the end of April. This could see the Bill come into effect before the end of 2016. For more information on the Investigatory Powers Bill see here.

Q3/Q4 2016 – More radio spectrum for mobile data (700 MHz)

On 11 March 2016 Ofcom issued a consultation setting out proposals to:

• bring forward the date from which spectrum in the 700 MHz band would be avaiable for national mobile use, by 18 months (now Q2 2020 rather than 2022); and 
• free up 25 MHz of spectrum in the 700 MHz band for mobile data use.

The 700 MHz band is currently used for digital terrestrial TV (DTT) and wireless microphone applications. In order to bring forward the date from which the spectrum is available for mobile use, Ofcom is looking at changing frequencies used by some temporary DTT services that operate in the 600 MHz band. The 25MHz of the spectrum that would be released sits in the middle of the band and is a “centre gap” (a bit like a buffer zone) between the uplink and downlink parts of the band.

The closing date for responses to the consultation is 20 May 2016. Allowing Ofcom in time to review the responses to the consultation, we could see a decision on this Q3 2016, and possibly see the centre gap spectrum being released before the end of 2016 or early 2017.

2016/17 – Spectrum awards

Ofcom is intending to award spectrum in the following frequencies, which are particularly useful for offering 4G services:

• 2.3 & 3.4 GHz; and
• 700 MHz.

The award is likely to be made by way of spectrum auction. A date has not yet been set for either of the above awards. Ofcom has stated it will hold off from running any award process for the 2.3 and 3.4 GHz bands until after the European Commission has issued its decision in the Three UK/O2 UK merger (the deadline for which is 22 May 2016).

2016/17 – Government Budget initiatives to support the digital economy

The government’s 2016 Budget announced a number of steps that it intends to take to support growth of the UK’s digital economy. Providers of telecoms services will be particularly interested in the following:

• the government is to establish a new Broadband Investment Fund in partnership with the private sector. The aim of the Fund is to ensure that financial assistance is more readily available to the private sector. This could be used to support growth of alternative broadband networks;
• specific measures will also be explored jointly by Ofcom and the Advertising Standards Authority to look at making broadband more affordable and ensuring that prices including price comparison tools are clearer to users;
• the government plans to consult on ending the practice of handset locking outside any initial contract period. The government has hinted at its preference for industry to come up with a voluntary solution so that legislative action is not needed. A consultation is expected to be published later in 2016;
• the government has announced that it intends to deliver a 5G strategy in 2017 to look at how the UK can become a world leader in 5G; and
• the government has also given a commitment to free up more of the spectrum currently used by the public sector (750 MHz of public sector spectrum in bands under 10 GHz to be made available by 2022, with 500 MHz of this being made available as soon as 2020).