ANALYSIS: 20,000 leagues under the Brexit, without a rudder

14 July 2016 |

The UK's imminent departure from the European Union has injected a vast sea of uncertainty and instability into the telco ocean. Bill Boyle looks at the Brexit aftermath. Agnes Stubbs looks at the impact on roaming and wholesale

The UK’s decision to pull out of the European Union (EU), in what is being called “Brexit”, will have major repercussions for the telecoms industry.

It is unlikely there will be wholesale changes to the UK telecoms landscape, despite its being founded on EU law. There will be key alterations that will impact the regulator, industry players and consumers. 

Brexit is prelonging market turbulence as the new captains of ‘UK Nautilus Plc’ peer into the murky waters ahead attempting to plot a new course for a ship adrift with almost half of its passengers having voted to take the opposite route. brexit roaming wholesale

According to law firm Shepherd and Wedderburn, it is likely Ofcom will retain its position as telecoms regulator and may receive additional powers including, for example, the ability to order the structural separation of operators where this is deemed necessary to improve the functioning of the market, or to regulate content, which currently does not fall within the EU Framework, thereby giving it the opportunity to regulate bundled services.

Ofcom is also likely to use Brexit to continue the pressure to reduce the scope for appeals against its decisions.

It is not yet clear whether the present roaming rules, which will remove roaming charges by June 2017 across the EU, will still apply in the UK post-Brexit. With UK citizens having experienced free roaming in the EU from this date, the government will be under pressure to strike a deal that will include this element, but this is dependent on the model adopted during negotiations. 

It is now uncertain whether the UK will be able to benefit from the incoming number portability regulations. As above, it will depend on the outcome of negotiations and the model adopted.

If new competition rules or regulation apply to the sector, this may change the operator landscape, with a likelihood of more calls for consolidation between operators in the market, and the approach of the UK authorities to merger proposals may differ from those adopted to date in Europe.

However, it is expected that a strict approach to horizontal mergers will be maintained, as in the response to the proposed merger of O2 UK with Three UK.

Many transatlantic cables go through the UK to arrive in Europe. At the moment London is the gateway that everything passes through on the way to Europe. However, there has been activity on the coast of Ireland, and discussion about inserting direct links to Europe, bypassing the UK.

There is also Telefónica’s new transatlantic cable planned to run between Spain and Virginia Beach. These projects may become rather attractive as London’s position as a gateway to Europe crumbles.

Will Britain be considered a safe place for European data to be transferred and processed once Brexit has been finalised?

The UK Information Commissioner’s Office issued a statement after the referendum: “If the UK is not part of the EU, then upcoming EU reforms to data protection law [the General Data Protection Regulation or GDPR] would not directly apply to the UK. But if the UK wants to trade with the [EU’s] single market on equal terms we would have to prove ‘adequacy’ – therefore UK data protection standards would have to be equivalent to the EU’s GDPR framework by 2018. 

Having clear laws with safeguards in place is more important than ever given the growing digital economy, and we will be speaking to the government to present our view that reform of the UK law remains necessary.” It looks like business as usual with some interesting exceptions.