Brexit may have little impact on regulation

27 June 2016 |

As a result of the vote in the UK referendum on June 23, 2016, the UK is heading for Brexit. Although the regulatory impact may be small at first there are areas such as spectrum allocation which may prove thorny.

As a result of the vote in the UK referendum on June 23, 2016, it is now likely that the UK will start the process that will lead the country to leave the European Union (EU), a move commonly known as “Brexit.” This will require lengthy negotiations, and is expected to take two years.

Research outfit Ovum said this week that Brexit may have little impact on the UK’s regulatory environment for at least two reasons.

They reason that it is highly likely that the UK will continue to be part of the European Economic Area (EEA). As other EEA countries do (e.g. Norway), Ofcom will likely follow a regulatory approach very close to the approach stemming from the European Commission’s (EC’s) regulatory framework.

Secondly, the European approach to regulation borrows a great deal, Ovum says, from the UK’s experience of privatization and market liberalization. It is unlikely that the UK will adopt a radically different regulatory approach, which will still be characterized by regular market reviews.

However, one aspect that could change is the frequency of such reviews, which is currently set at three years for all markets warranting regulation. Ofcom could look to be more flexible about the time frames for reviewing markets once it is no longer bound to the EC’s framework.

Another impact is that UK consumers could lose the benefits of the ‘roam-like-at-home’ regime recently implemented by the EC for international mobile roaming because UK operators will no longer be subject to the EC’s roaming regulation. However, this is an area that could ultimately depend on the UK remaining part of the EEA. Market forces could also contribute to keeping roaming prices low because operators’ recent offers have shown a tendency to package roaming to some destinations inside and outside the EU in an increasingly attractive way for customers.

Legal firm Bird and Bird point out that the flip side is that UK operators will also no longer be subject to regulated roaming tariffs at the wholesale level. However, as a commercial matter, one might expect that any wholesale rate rise on the part of UK operators will be likely to be reciprocated by their counterparts elsewhere in the EU. This could prove a costly move for UK industry in the event of unfavourable tourist and traveler flows between the UK and the rest of the EU. There has been speculation that the UK might, introduce UK legislation with the purpose of ensuring as far as possible a parallel roaming regime in the UK to that applying in the EU Member States under the Roaming Regulation.

Following a Brexit, the UK will no longer be subject to commission decisions and initiatives on the harmonisation of spectrum allocations and use across the EU. It will, however, continue to cooperate with the other member states on some of these issues through membership of other organisations, including the European Conference of Telecommunications and Postal Administrations or CEPT.