Brexit: Impact on telecommunications

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The UK is currently seen very much as a leader in the field of sensible and practical telecoms regulation, and has historically been a strong influencer on EU telecoms rules. Following Brexit this position will be lost but, depending on the terms of exit, the UK may still have to follow EU rules.

Key issues 

The EU’s telecoms regulatory regime aims to apply a common set of principles and regulations across the EU. As a result the UK’s own system is very strongly affected by the EU, although it is also fair to say that the UK’s regulator, OFCOM, is seen very much as the model for others to follow. 

Potential impact 

With the UK leaving the EU, we can foresee the following: 

  • Loss of UK influence over EU telecoms rules - The departure of the UK will mean the departure of a very strong advocate for removing regulation where not strictly needed and as a result we are likely to find a much more interventionist and regulation-heavy approach applied to telecoms regulations in the EU in the future. This will affect the UK if the terms of exit mean that, in order to access the EU single market, UK telecoms regulation must continue to follow EU rules. As a consequence the UK could find itself bound to follow and to implement more interventionist and more bureaucratic rules than previously, not less. A recent example might be the pan-European regulatory body BERERC's rules on "net neutrality" which would have been considerably more onerous until, in good part as a result of the UK's influence, earlier drafts were changed to take a more case-by-case approach.  
  • Greater independence – As a corollary to the above (and depending on the exit terms) the UK may no longer be bound by telecoms regulations with which it disagrees. An example might be the new rules against "zero-rating" (part of the BEREC 'net neutrality' guidelines mentioned above) which could apply significant constraints on EU telecoms businesses and their retail propositions, and which might no longer apply to the UK.  
  • Roaming – UK consumers may no longer be entitled to benefit from the 'Roaming Regulation', meaning roaming calls within the EU could be much more expensive, and that it may be much more expensive for EU-based travellers to roam in the UK.  
  • Mobile call termination – A number of EU countries currently allow their national operators to charge operators from outside the EU more for making calls to their mobile customers than they charge EU operators. UK leaving might become much more expensive for some UK users to make calls to mobile numbers in certain countries (eg Italy). 

Further considerations

Again depending on the terms of exit the UK may be free to put in place new models for subsidising broadband in rural areas (something which is restricted by EU State Aid rules at present) and the UK's own competition regulators are likely to be the ones to determine the outcome of future proposed mergers in the sector, such as the proposed O2/Three merger in 2015/16 which was determined by the European Commission not by the UK authorities. 

Actions

  • Until the terms of Brexit become clearer it is difficult to advise any action other than close monitoring of the situation. 
For a more detailed analysis of the issues, please contact the authors or your usual DLA Piper contact.