By Alexander Mather, Consultant, London
In the recent history of the UK telecoms industry, the past two weeks must rank as being among the most significant. In their own ways, the publication of both Ofcom’s initial findings on their review of digital communications and the Investigatory Powers Bill are likely to shape the industry for the next decade. Now that the wave of reaction from the media, industry and pressure groups is subsiding, a clearer picture of the impact of the Review and the Bill is beginning to be revealed.
Ofcom’s Strategic Review of Digital Communications
Ofcom’s Review, billed as the ten-year sequel to 2005’s Strategic Review of Telecommunications which resulted in the creation of Openreach, was preceded by a vast number of statements from key industry and political stakeholders on whether Openreach should be structurally separated from BT. Indeed, a cross-party group of 121 MPs led by former Tory Chairman Grant Shapps MP backed the ‘Broadbad’ Report calling for structural separation, stating that this would be the only way to keep ahead of international competitors when it comes to access to superfast broadband.
In the end, Ofcom stopped short of recommending full structural separation of Openreach from BT, instead outlining measures to ‘reform Openreach’s governance’ and strengthen its independence from BT so that it is ‘governed at arm’s length from BT Group’. However, it should be acknowledged that structural separation is not yet completely off the table, although Ofcom did state that it would ‘entail significant disruption and costs to both BT and the wider industry’ if pursued. Ofcom added that they are now in the process of developing proposals on Openreach’s future for discussion with the European Commission.
Away from this headline news, Ofcom also announced measures which aim to increase investment in fibre – including giving competing providers access to Openreach’s network of underground ducts and telegraph poles (to be implemented this summer) – and measures to encourage a step change in quality of service across the sector (including rigorous quality of service standards for Openreach, and the introduction of an annual Service Quality Report to publically name and shame the best and worst performing fixed and mobile operators .
Ofcom also aim to ‘secure wide availability of services’ through supporting the Government’s 10Mbit/S broadband Universal Service Obligation commitment, placing new coverage obligations on companies who win new spectrum licences and finally (!) reforming the Electronic Communications Code. A further development of great significance for communications service providers (CSPs) is the announcement that all of Ofcom’s General Conditions, which outline CSPs’ legal obligations, are to be reviewed.
Furthermore, regarding the hot topic of the regulation of over-the-top (OTT) services, Ofcom have stated that they have highlighted to the European Commission that it would be ‘disproportionate’ to automatically extend the scope of the Telecoms Framework (currently under review) to all OTT services by default, and are calling for flexibility to be retained.
The Investigatory Powers Bill
Less than a week after the publication of Ofcom’s Review, the Home Office published the Investigatory Powers Bill. The Bill, referred to by many as the Snooper’s Charter – a previous version of which was blocked by the Liberal Democrats in the last Parliament – is described by Ministers as essential for ensuring that law enforcement agencies have the necessary powers to combat terrorism and other serious crimes. However, the draft version of the Bill received severe criticism from across industry and three Parliamentary Committees.
On the day of the Bill’s publication, Home Secretary Theresa May sought to quell fears by assuring Parliament that ‘the majority of the committees’ recommendations’ had been reflected in the revised Bill text, claiming that strengthened safeguards, enhanced privacy protections and bolstered oversight arrangements had been introduced.
However, despite these assurances much of industry remains concerned by various aspects of the Bill, particularly the lack of clarity over Internet Connection Records (a record of the services that a device connects to) which will have to be retained by CSPs for a year and the steps that the Government wants CSPs to follow regarding encryption. Many tech companies are concerned that the Bill will require them to decrypt communications which have been encrypted by the end-user, despite this being technically impossible (the Government has now stated that this will not be required), or include so-called ‘back doors’ which they fear would compromise the security of users’ communications – a debate which is continuing on both sides of the Atlantic.
The key steps from the Ofcom Review will be implemented over a broad period of time, but further details on the proposals for bringing greater independence and autonomy to Openreach will be introduced later this year following discussions with the European Commission.
Other key dates set out in the Review are:
- A consultation on the update to Ofcom’s General Conditions will take place in summer 2016 with proposals finalised by spring 2017.
- The first annual ‘Report on Quality of Service’ will be published in early 2017.
- The opening up of duct and pole infrastructure will be implemented in summer 2016 through changes to the Civil Infrastructure Directive and its subsequent transposition into UK law.
Investigatory Powers Bill:
The Bill will receive its Second Reading on March 16th and the Government hopes for the Bill to become law by the end of the year due to the sunset clauses which apply to RIPA and DRIPA.