The note has been amended to reflect that the Competition Markets Authority has taken over responsibilities from the OFT and the Competition Commission.
Telecoms: a quick guide
A quick guide to the regulation of the telecoms infrastructure that underpins the delivery of services such as telephone calls, broadband internet and television.
This is one of a series of quick guides: see Quick guides.
What legislation applies to communications providers?
The Communications Act 2003 is the main source of regulation for communications providers. By communications providers, we mean those who carry content services (also referred to as communications carriage providers), for example:
Fixed-line owners and operators (such as British Telecommunications (BT) and Virgin Media).
Mobile network operators (MNOs) (such as Vodafone and O2).
Companies who use BT's network for their own "indirect access" voice or internet services (using access codes or carrier pre-selection) and wholesale line rental voice and internet services.
Telecoms resellers providing bespoke services, even though they do not own a network themselves.
Mobile virtual network operators (such as Virgin Mobile) who do not own their own network but use networks belonging to MNOs.
Internet service providers (ISPs), regardless of the technology they use. They may provide broadband access via:
their own fixed-line network (BT);
BT's network using ADSL technology (AOL);
cable (Virgin Media); or
VoIP (voice over internet protocol) operators (such as Skype).
Satellite network providers (such as Sky).
Broadcast network providers (such as Arqiva).
By communications providers, we do not mean telecoms equipment providers or content providers (of either audiovisual media services or information society services), although some communications carriage providers also provide content services.
What is an ECN or an ECS?
The types of communications providers listed above can be defined as "electronic communications network" (ECN) providers or "electronic communications service" (ECS) providers. ECN and ECS providers do not need any specific permission to operate, because they are "generally authorised" to operate so long as they comply with the General Conditions of entitlement (see General Conditions of entitlement).
Communications providers should consider the definitions of an ECN and an ECS carefully, to check whether they fall into either category. The categories are wide ranging:
An ECN is a system for conveying signals of any kind using electrical, magnetic or electromagnetic energy (section 32(1), Communications Act). It includes the apparatus that makes up the system, switching or routing apparatus, software stored data, and (following amendments in 2011) "other resources" including non-active network elements.
An ECS is a service conveying signals over an electronic communications network (section 32(2), Communications Act) that is not a content service (that is, a service that involves supplying material or involves exercising editorial control over content) (section 32(7), Communications Act).
The Communications Act and the EU directives on which it is based were designed to remove the distinction between different types of communications networks and services and to apply the same regulatory regime to all communications networks and services, whatever content they delivered, to reflect the fact that the same content could be delivered in many different ways, and there is consequently no significant difference in the way in which ECNs and ECSs are regulated. For example, BT operates over its own network, while TalkTalk operates a service over BT's network, but from the end-user's point of view, the services they receive are essentially the same. Likewise, the same audiovisual content can be watched on television or over the internet, with delivery of either format being over wireless frequencies or via cable or satellite.
General Conditions of entitlement
ECN and ECS providers are generally authorised to operate, that is, they do not need to apply for any specific permission to do so (although they may need a licence in relation to the particular type of network or service they are operating: see Licences for networks or services). All ECN and ECS providers must comply with the General Conditions, which were drawn up and are enforced by Ofcom under the Communications Act. The General Conditions contain a range of requirements, including rules on:
- Technical standards.
- Use of telephone numbers.
- Negotiating interconnection.
- Dealing with consumers (for example, billing requirements and minimum terms for consumer contracts).
The General Conditions apply slightly differently to different types of service, depending on whether the service is available to the general public or only to a private group (such as payphone services provided by landlords, or bespoke services only available to particular users within one company). For example, the requirement to provide directory services only applies to publicly available telephone services.
Some larger providers are also subject to specific terms, of which they will be notified, for example, in relation to the provision of access to their networks to third-party providers, or in relation to their having "significant market power" in a particular market.
Licences for networks or services
Providers of certain types of networks or services will need specific authorisation. For example:
Anyone using radio spectrum (such as MNOs and satellite service providers) will need a licence under section 8 of the Wireless Telegraphy Act 2006, unless the government has exempted the particular use from the need for a licence.
Satellite operators will need to apply to the International Telecommunication Union for orbital slots as well as operating licences in all jurisdictions into which services are provided.
Operators may also need to comply with regulation in relation to aspects of their service that comprise content over which they have some kind of editorial control, as opposed to content they simply carry, but that is beyond the scope of this guide.
Access and interconnection
Before the 1980s, the telecoms industry was dominated by monopolies such as BT. Since the 1980s, however, competitive markets have been created in all aspects of communications provision.
Because only a couple of large players (BT and Virgin Media) own most of the physical networks, regulation ensures that third parties have access to those networks to set up their own services.
Communications providers also need to "interconnect" with one another so that the customers of one network can communicate with the customers of another. Interconnection is regulated in various ways, but in particular by General Condition 1, which requires all providers of public ECNs to negotiate interconnection with other providers of public ECNs with a view to reaching agreement within a reasonable time.
Access to land
Ofcom grants rights for communications network providers to access private or public land to install and maintain essential equipment (for example, cables or masts) in, over or under that land under the Electronic Communications Code. The Code is set out in Schedule 2 to the Telecommunications Act 1984, as amended by Schedule 3 to the Communications Act. ECN providers and providers of conduit systems which may be used by ECN providers (such as gas or water providers) can apply for "Code powers" (section 106, Communications Act). The Law Commission has proposed that the Code should be rewritten (Legal update, Law Commission reports on Electronic Communications Code reform (www.practicallaw.com/3-524-5369)).
Numbers and number portability
ECN and ECS providers can apply to Ofcom for number ranges, so that they can subsequently allocate individual numbers to customers. Internet domain names are available from various registrars.
End-users have a right to keep their telephone number when they switch provider (Article 30 of the Universal Service Directive 2002/22/EC), and communications providers must comply with General Condition 18 when "porting" numbers from one provider to another.
Net neutrality is the principle that network operators should be prevented from or restricted in discriminating between the types and sources of data travelling across their networks as the demand for bandwidth increases. There is currently no regulation in the EU or UK that requires internet applications, content, content providers and users to be treated equally by service providers.
For more information, see Practice note, Net neutrality (www.practicallaw.com/6-507-2003).
Security and resilience
Network and service providers are required by sections 105A to 105D of the Communications Act to manage risks to the security of public electronic-communications networks and services, and to inform Ofcom of certain breaches to network and service security. Ofcom can audit a company's security measures. The maximum penalty for breach is £2 million.
Communications providers who provide the network for premium-rate phone services must comply with the 12th Code of Practice operated by PhonepayPlus, the regulator for such services. Network operators must register with PhonepayPlus and carry out due diligence checks on parties with whom they contract to provide premium-rate services. For more on the regulation of premium-rate services, see Practice note, Premium-rate phone services (www.practicallaw.com/9-504-8262).
Data retention, interception and use
Most communications providers will have to consider legislation in relation to the data they handle.
Providers of public ECNs and ECSs must retain certain data in relation to telephone calls and internet access under the Data Retention (EC Directive) Regulations 2009 (SI 2009/859). This includes the data necessary to:
- Trace and identify the source of a communication.
- Identify the destination of a communication.
- Identify the date, time and duration of a communication.
- Identify the type of communication.
- Identify the users' communication equipment.
- Identify the location of the users' mobile-communication equipment (for mobile-telephony users only).
The Data Retention Regulations contain specific requirements for internet communications data.
Providers of ECNs and ECSs must retain the name and address of the subscriber or registered user to whom an internet protocol address, user identification or telephone number was allocated at the time of the communication.
Data in respect of calls that are connected but not answered must also be retained, and communications service providers must retain all communications data for 12 months (regulation 5, Data Retention Regulations).
For more information on retaining data, see Practice note, Data protection aspects of the retention of communications data (www.practicallaw.com/9-227-0953).
Communications providers must be careful about the way they intercept data, which is regulated by the Regulation of Investigatory Powers Act 2000. These rules were tightened up in June 2011 by the Regulation of Investigatory Powers (Monetary Penalty Notices and Consents for Interceptions) Regulations 2011, after the European Commission identified problems in the way the UK deals with behavioural advertising. For more information, see Legal update, Regulations providing for new penalties for unintentional interceptions under RIPA laid before Parliament (www.practicallaw.com/9-506-4964).
The Data Protection Act 1998 applies to the way communications service providers hold and use customer data. For more information, see Practice note, Overview of UK data protection regime (www.practicallaw.com/7-107-4765).
Role of communications regulator
Ofcom's role includes:
Drafting and enforcing the General Conditions, specific conditions and wireless telegraphy licences.
Shared responsibility with the Competition and Markets Authority (CMA) for competition matters in the communications sector.
Concurrent powers with the CMA to exercise Competition Act powers (section 371, Communications Act).
Applying and enforcing Articles 101 and 102 of the Treaty on the Functioning of the European Union.
Concurrent powers with the CMA in relation to market investigations and super-complaints under the Enterprise Act 2002, insofar as they relate to communications matters (section 370, Communications Act).
Appealing Ofcom decisions
Certain acts or decisions of Ofcom (primarily in relation to the General Conditions and the use of radio spectrum) can be appealed to the Competition Appeal Tribunal (CAT). If an appeal is successful, the CAT decision will include an indication of the appropriate course of action for Ofcom to take and the matter will be referred back to Ofcom. If the matter appealed to the CAT relates to price controls, the CAT must refer the matter to the Competition Markets Authority for determination.
An appeal from a decision of the CAT is available only on a point of law or, in cases where a penalty has been imposed, as to the amount of the penalty, and is made to the Court of Appeal in England and Wales (or the Court of Session in Scotland).
For more on appealing against Ofcom decisions, see Practice note, Challenging decisions by electronic communications regulators (www.practicallaw.com/4-512-6672).
Offences under the Communications Act
Ofcom can enforce compliance with general and specific conditions under section 94 of the Communications Act through a process of notification and enforcement notices which can lead to civil proceedings for failure to comply with an enforcement notice. Section 96 of the Communications Act gives Ofcom the power to impose financial penalties for failure to comply with a notification according to the terms of section 97 of the Communications Act. In serious or urgent cases Ofcom may give a direction suspending or restricting a provider's entitlement to provide ECNs or ECSs, and it may require a provider to pay compensation to its customers (sections 98 and 100, Communications Act). Providing an ECN or ECS in breach of a direction is a criminal offence.
A communications provider who wants to bring action against another communications provider for breach of the general conditions must get consent from Ofcom to do so (section 104(4), Communications Act).
A number of other offences under the Communications Act apply to networks and services. These apply mainly to dishonest or offensive use of ECNs and ECSs (sections 125-127, Communications Act), and can lead to fines or imprisonment.
There is also a lesser offence of persistent misuse of a network or service (section 128, Communications Act), which carries a maximum penalty of a £2 million fine. "Persistent misuse" occurs where the effect or likely effect of the use of the network or service is to cause another person unnecessarily to suffer annoyance, inconvenience or anxiety, for example, through the high use of "silent" or "abandoned" calls, something that has come under scrutiny from Ofcom.