Communication Workers Union



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EU and UK Telecoms Competition Regulation

Introduction

The following document provides an overview of European Union rules on competition in the telecoms sector. It goes on to look at how existing UK legislation and the Government’s Future Telecoms Infrastructure Review proposals fit with EU requirements.

Summary

EU telecoms legislation is set out in the European Electronic Communications Code which was formally adopted in December 2018.[1] The Code is designed to encourage investment and competition in the provision of high capacity networks, such as 5G and new fibre networks. It also requires affordable and adequate universal access to broadband services. Member states have two years (until December 2020) to incorporate the Code into national law.

In the UK, Ofcom’s regulatory powers in respect of telecoms are largely determined by the Communications Act 2003, the Digital Economy Act 2017, the Competition Act 1998 and the Enterprise Act 2002. The Digital Economy Act incorporates the new EU Code in part, by introducing a broadband USO requirement and a new UK Electronic Communications Code.[2] This new Code lays down rights and obligations regarding the deployment and maintenance of mobile phone masts and other telecoms infrastructure. Beyond this, the UK Government’s telecoms plans are consistent with the EU Code’s objectives in that they focus on encouraging competition wherever possible to promote investment in 5G and fibre networks.[3] The Government says it will bring forward further legislation if necessary to further its strategic priorities.

The UK’s Prime Minister Boris Johnson has recently pledged to deliver full fibre to every home by 2025. Naturally though, he has not said how this would be delivered or how it would be funded. Experts see the pledge as unrealistic, suggesting that such a complex civil engineering project will take two decades.[4] It will also cost around £30bn, and at least £3bn-£5bn of this will have to be publicly funded. However, there is no indication from Government as to where this money will come from.

European Telecoms Legislation

In December 2018, the European Union adopted the European Electronic Communications Code, which marks a significant revision of the old telecoms regulatory framework. The Code is designed to reflect the reality of today's electronic communications market, which has transformed over the last 20 years from a landscape of national monopolies to a competitive market with many providers offering a wide variety of services.[5]

The EU Code emphasises the importance of both competition and investment, stating: “both efficient investment and competition should be encouraged in tandem, in order to increase economic growth, innovation and consumer choice.”

Encouraging Investment

The Code specifically encourages more investment in new very high capacity networks, such as 5G and new fibre optical networks, by adding detailed articles on topics like access regulation and facilitating 5G roll-out. The European Commission regards encouraging investment in very high capacity networks as increasingly important to strengthen the internal market for many sectors of the economy, including education, healthcare, manufacturing and transport. It extends regulation to providers and services that were not regulated under the previous regulatory framework. These include over the top (OTT) services, which use the internet to offer a variety of services, such as communication, content and cloud-based services.

Fostering Competition

Competition is identified as one of the primary objectives in the Code, alongside promoting the internal market and end-user interests. It states that “Competition can best be fostered through an economically efficient level of investment in new and existing infrastructure, complemented by regulation, where necessary, to achieve effective competition in retail services. An efficient level of infrastructure-based competition is the extent of infrastructure duplication at which investors can reasonably be expected to make a fair return based on reasonable expectations about the evolution of market shares.”

Addressing competition concerns for companies with Significant Market Power

As with the previous legislation (The EU Framework Directive), the new EU legislation sets out how telecoms regulators might intervene to address competition concerns associated with cases where companies in telecoms markets have Significant Market Power (SMP).

It includes setting out a procedure for the national regulators to follow for identifying and defining markets and for analysing those markets. For example, it states that “a market may be considered to justify the imposition of regulatory obligations set out in this Directive if there are barriers to market entry, if the market structure does not tend towards effective competition, and if competition law alone is insufficient to address the market failure(s).”

The legislation also sets out the range of remedies available to telecoms regulators to address competition concerns.[6] These include:

• An obligation of transparency (including for example the provision of information on network characteristics and prices);

• Obligations of non-discrimination (to ensure that a provider applies equivalent conditions in equivalence circumstances to other providers of equivalent services);

• An obligation of accounting separation (focused on providing specific accounting records on request);

• Access to civil engineering (including buildings, cables, poles, masts, ducts, conduits, inspection chambers and cabinets);

• Obligations of access to, and use of, specific network elements and associated facilities. (This includes physical network elements such as unbundled access to the local loop and sub-loop. It also includes providing co-location or other forms of associated facilities sharing);

• Price control and cost accounting obligations;

• Functional separation (the imposition of an obligation on vertically integrated undertakings for wholesale provision of services to operate independently). Ofcom proposed this for BT in 2016, after the business failed to offer voluntary proposals that addressed its competition concerns. However, BT announced a voluntary agreement in 2017 to legally separate from Openreach, and Ofcom confirmed it would no longer need to impose these changes through regulation;[7]

• Voluntary separation by a vertically integrated undertaking.

In addition, businesses designated as having SMP must engage with national regulators before migrating from legacy infrastructure, including "infrastructure necessary to operate a copper network".

Lighter SMP regulation to encourage investment in new very high capacity networks

The Code amends the framework for regulation of providers with SMP, specifically aimed at encouraging investments in new very high capacity networks. Under certain conditions, an SMP-provider that enters into co-investment agreements with its competitors, may be subject to lighter regulation or even be exempted from SMP regulation altogether. Also, wholesale-only providers can only be subjected to a limited set of obligations (non-discrimination, access and "fair and reasonable pricing"). Finally, instead of having to review their SMP-decisions every 3 years, regulators now need to do so within 5 years (or 7 years in case of co-investment commitments).

Access obligations for parties without Significant Market Power

Under the prior EU regulatory framework, obligations to provide access to networks were generally only imposed on providers with SMP.

Under the new code however, telecoms regulators can now impose obligations on relevant providers of non-traditional communication services (if they reach a significant level of coverage and user uptake) to make their services interoperable, where end-to-end connectivity between end-users is endangered due to a lack of interoperability.

The Code also makes it possible that if replication of network elements would be economically inefficient or physically impracticable, regulators may require providers to grant access to bottlenecks. These obligations can also be imposed on providers who do not have SMP.

Ensuring investment in 5G and harmonising spectrum

One of the main goals of the Code is to ensure investment in and quick roll-out of 5G mobile networks. The Code for example sets out rules ensuring efficient and coordinated use of harmonised radio spectrum, including rules on ensuring coordinated timing of assignment of 5G spectrum (the 3.4-3.8 GHz band and 1 GHz of the 24.25-27.5 GHz band by 31 December 2020). In order to ensure regulatory certainty and to promote long-term investments, a minimum license term of 20 years should apply in principle (15 years + 5 years extension term).

A more harmonised level of protection for end users

The Code aims to ensure that all end-users in the EU receive the same level of end-user protection. This level of protection is to be guaranteed by providers of interpersonal communications services connecting through publicly assigned numbering resources. These include traditional voice calls, all types of email, messaging services or group chats. These end-user protection provisions for instance relate to specific information requirements for contracts, including a contract summary which consists of predefined elements. The Code requires the information to be published in a set way and for end-users to have access to at least one independent comparison tool.

Provisions are extended to facilitate switching between providers of internet access services. The end-user protection provisions now specifically apply also to bundled offers, if the bundle includes an internet access service or a number-based interpersonal communications service.

Member States also have to ensure that consumers have access to “affordable” and “adequate” broadband services. In defining this, it states: “The affordable adequate broadband internet access service should have sufficient bandwidth to support access to and use of at least a minimum set of basic services that reflect the services used by the majority of end-users. To that end, the Commission should monitor the development in the use of the internet to identify those online services used by a majority of end-users across the Union and necessary for social and economic participation in society and update the list accordingly.”

Where Member States establish that retail prices for voice communication and broadband internet access services are not affordable for consumers with a low income or special social needs, they must take measures to ensure affordability of these services.

In respect of radio spectrum policy, the Code states that “Consistent and coordinated measures for high-quality terrestrial wireless coverage across the Union…should aim to meet the radio spectrum policy programme objective that all citizens of the Union should have access both indoors and outdoors, to the fastest broadband speeds of not less than 30 Mbps by 2020.”

Among the Directive's other provisions are rules governing what information retail telecoms service providers need to provide in consumer contracts, and which restrict the contractual period the companies can require consumers to sign up to. Further provisions are aimed at helping consumers to switch easily between internet providers.

The Directive will also require national authorities to "conduct a geographical survey of the reach of electronic communications networks capable of delivering broadband".[8]

UK Telecoms Legislation

UK telecoms legislation is already largely consistent with EU legislation. The UK Government’s Future Telecoms Infrastructure Review proposals seek objectives that are in line with EU objectives on investment and competition. The Government says that if Ofcom is unable to consider regulatory options that would contribute to achieving its strategic priorities, the Government will consider bringing forward legislation to allow it to do so.[9]

Existing Legislation

Ofcom already has powers, under the Communications Act 2003, to impose a number of obligations on operators with SMP, and it has applied these to BT in respect of non-discrimination, price controls, access to civil engineering and voluntary separation for example.

The Competition Act 1998 is the current major source of competition law in the UK, along with the Enterprise Act 2002. These acts confer powers in relation to investigations and actions regarding competition and the abuse of a dominant market position.[10]

The Digital Economy Act 2017 introduced a Universal Service Obligation which allows users to request mobile speeds of at least 10 Mbps. The obligation is to be introduced by 2020, and Ofcom is empowered to subsequently increase the minimum broadband speed requirement.

The Digital Economy Act also updates the Electronic Communications Code under the Communications Act 2003 to make it easier for telecoms companies to install and maintain apparatus such as phone masts, exchanges and cabinets on public and private land.[11]

DCMS Future Telecoms Infrastructure Review

In July 2018, the Government published the findings of its ‘Future Telecoms Infrastructure Review’. This sets out the Government’s targets for the availability of full fibre and 5G networks. In the sense that it seeks to promote both investment and competition in high capacity networks, it is consistent with the objectives of the EU telecoms legislation.

The proposals of the Review have since been set out in the Government’s Statement of Strategic Priorities for telecommunications and postal services.[12]

In particular, the Government wants to see 15 million premises connected to full fibre by 2025, with coverage across all parts of the country by 2033. It wants the majority of the population to have 5G coverage by 2027.[13]

Furthermore, the Government considers that promoting investment should be prioritised over interventions to further reduce retail prices in the near term, recognising these longer-term benefits.

The Government has identified the need for greater regulatory stability and clarity, through the availability of longer five year market review periods and a framework for a fair return on investment.

The Government estimates that in the final c.10% of premises, the market alone is unlikely to support network deployment and the Government ‘will support investment in the most difficult to reach areas’. The Government estimates that the required additional funding ‘from whatever source’ is likely to be in the region of c.£3 billion to c.£5 billion. Regrettably however, there is no indication of where this money will come from.

The Government plans to make fibre networks ‘pro-competitive’ with processes in place to support easy switching between networks. It also wants a fair deal for consumers, including adequate safeguards for vulnerable consumers.

Boris Johnson’s Pledge

Prime minister Boris Johnson has pledged full-fibre broadband coverage by 2025. However, he has not said how this would be delivered or how it would be funded. Expert commentators have suggested the pledge is unrealistic and doomed to failure.[14] They point out that such a complex civil engineering project would normally take two decades.[15] It will also cost around £30bn, and at least £3bn-£5bn of this will have to be publicly funded. However, there is no indication from Government as to where this money will come from.

CWU Research 29th July 2019

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[1] Directive (EU) 2018/1972 of the European Parliament and Council, 11 December 2018, establishing the European Electronic Communications Code, accessed at:

[2] UK electronic communications code to become law on 28th December, Out-Law news, Pinsent Masons, 15 December 2017, accessed at:

[3] Future Telecoms Infrastructure Review, DCMS, 23rd July 2018, accessed at:

[4] Boris Johnson Pledges Full Fibre for All UK by 2025 – doesn’t say how UPDATE, ISP Review, 17th June 2019,

accessed at:

[5] European Electronic Communications Code aims to boost connectivity and competitiveness with the roll-out of very high capacity networks in a 5G era, Bird&Bird, December 2018, accessed at:

[6] Access remedies imposed on undertakings with SMP, Chapter IV, Article 69 to 78, Directive (EU) 2018/1972 of the European Parliament and Council, 11 December 2018, establishing the European Electronic Communications Code

[7] BT announces voluntary agreement to legally separate from Openreach, Broadband Stakeholder Group, 10th March 2017, accessed at:

[8] European Electronic Communications Code Finalised, Out-Law, Pinsent Masons, 6th December 2018, accessed at:

[9] Statement of Strategic Priorities for telecommunications and postal services, DCMS, July 2019, p.4 accessed at:

[10] Competition Act 1998, accessed on 29th July 2019 at:

[11] Electronic Communications Code, Ofcom, accessed on 29th July 2019 at:

[12] Statement of Strategic Priorities for telecommunications and postal services, DCMS, ibid

[13] Future Telecoms Infrastructure Review, Gov.uk, 23 July 2018, accessed on 29th July 2019 at:

[14] Boris Johnson’s bold full-fibre broadband pledge is doomed to fail, Wired, 29th July 2019, accessed at:

[15] Boris Johnson Pledges Full Fibre for All UK by 2025 – doesn’t say how UPDATE, ISP Review, 17th June 2019,

accessed at:

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26th July 2019

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