BSG Comment – What does Brexit mean for the UK telecoms industry?

BSG Comment – What does Brexit mean for the UK telecoms industry?

There is no straight answer to this question. The scale of the risks and opportunities for the telecoms industry depends on the future relationship between the UK, the EU and the rest of the world. The ramifications of decades of EU legislation, policies and initiatives in the UK system are difficult to untangle. However, it is possible to identify immediate concerns for the industry and how these could be tackled.

The Broadband Stakeholder Group is composed of organisations established in the UK covering the broadband value chain. Many operate in the EU and globally. Our sponsors have concerns over the short and long-term implications of Brexit on their operations.

Brexit has come at a critical time for the telecoms industry which is starting a new cycle of investment in the deployment technologies such as ultrafast connections and 5G. As we uncover the complexity of the ramifications of the EU framework and UK/EU relationship, it is clear that the uncertainty linked to upcoming changes to the regulatory system may impede on long-term investments decisions for some organisations. Implications might be felt with regards to key aspects of the UK regulatory framework which derives from EU legislation such as competition and merger rules, the state aid regime for broadband, universal service obligations, the regulation of cross-border services (e.g. audio-visual and media services, content portability), roaming regulations, cross-border data flow, but also in the trade of telecoms services and telecoms equipment.

Moving from a regulatory system designed by the EU to one designed by the UK carries opportunities and risks; rules could in theory be tailored to the UK market and better coordinated across various regulated sectors, but this should be approached with caution. Maintaining a level of regulatory predictability is important for operators investing over long periods of time, and therefore maintaining an alignment of UK and EU regulations in the medium-term is essential.

The UK will also lose influence in the design of EU regulations where industry operate, but some representation at EU level, for example at BEREC (the body of European Regulators) would help minimise risks for the industry. The accountability and peer review mechanism through the European Commission and BEREC are key elements of the UK/EU relationship in the telecoms regulatory sector, at risk of being lost post-Brexit. Replicating this mechanism at national level might prove a challenge and industry consultation will be essential.

There are of course other challenges common to other sectors of the economy, and in particular the capacity for the sector to continue to attract talent from the EU to maintain its position as a leader in research and development of innovative technologies as well as its capacity to continue attracting the human resources needed to deploy networks across the country.

Let’s not forget that the telecoms industry contributes to £30.2 billion pa to the UK economy. The digital industry, which relies in great part on telecoms services, contributes to £118.4 billion to the economy. Not only are these industries growing, they export and compete at international level. In determining the objectives for the sector during the Brexit negotiations, we believe it crucial for Government to carefully consider with industry how to minimise regulatory uncertainty in the short and long-term, and create the right conditions for the sector to continue to compete and deliver its services (telecoms and audio-visual media) in the EU and globally.

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