The new UK electronic communications regulatory body, the Office of Communications (“Ofcom”), will commence its operations as the UK national Regulatory Authority on 29th December 2003, pursuant to the EC Electronic Communications Directives of 2002.

The four key EC Electronic Communications Directives were implemented in the UK as from 25th July 2003 by means of the Communications Act 2003 (the “Act”) and the Communications Act 2003 (Commencement No.1) Order 2003 (SI 2003 No. 1900). The Act provides for the Ofcom to be the electronic communications regulator, in place of Oftel, and to exercise all the functions of the national Regulatory Authority under the EC Electronic Communications Directives of 2002. The Act also provides for the transfer to Ofcom of the previous functions of the Independent Television Commission, the Broadcasting Standards Commission, the Radio Authority and the Radiocommunications Agency.

The Commencement No. 1 Order did not itself enable Ofcom to commence operations pursuant to the Directives and Act. The transfer of personnel and resources from the five pre-commencement regulators to Ofcom could only take place at the end of 2003, and these transfers of resources have duly taken place during the final weeks of 2003. The Commencement No. 1 Order brought the electronic communications provisions of the Communications Act into force on a transitional basis only, conferring on Oftel the powers and duties to apply the new rules.

The Commencement No. 2 Order, SI 2003 No. 3142 (made on 8th December 2003), will bring fully into force the electronic communications provisions of the Communications Act on 29th December 2003, for purposes of conferring the electronic communications and spectrum functions of the Act on Ofcom in place of Oftel. The Commencement No. 2 Order will also bring into force the broadcasting and media regulatory provisions of the Communications Act, in most cases on 29th December 2003, but in some cases on 1st April 2004. Only a limited number of provisions are still required to be brought into force following the adoption of the Commencement No. 2 Order.

The focus of regulation in the electronic communications sector under the Communications Act are now electronic communications networks and electronic communications services instead of telecommunication systems as under the previous regime. Electronic communications networks are wider in scope than “systems” in that they include the internet and broadcasting networks as well as traditional telecommunications networks. An electronic communications service includes any service of conveying signals by means of such a network, but excluding the provision of content.

The system of telecommunications licences under the Telecommunications Act 1984 has been abolished and a new general authorisation scheme has been introduced in its place. As a general rule, providers of electronic communications networks or services are authorised to operate subject only to the “General Conditions of Entitlement” laid down by Ofcom in accordance with the Act and the EC Directives on Authorisations and on Universal Service, which general conditions have already been transitionally adopted by Oftel. Further universal services obligations are imposed on the designated universal service providers, BT (for the UK excluding the Hull area) and Kingston Communications (Hull) plc (for the Hull area only).

A system of ex post regulation has been introduced by the Communications Act, whereby competition regulatory controls can be imposed on operators having significant market power (“SMP”), i.e. operators in a dominant position in a relevant market. The Act aims to ensure competition regulatory controls are applied on a focused basis to deal with specific competition problems in markets which have been identified by Ofcom as being not effectively competitive, after consultation with the European Commission, in accordance with the EC Framework Directive and the EC Access and Interconnection Directive. Oftel, acting under the transitionally-commenced provisions of the Act, has already carried out most of the market assessments required under the EC Framework Directive to identify which electronic communications markets feature SMP. The results of these market assessments are summarised elsewhere in this Bulletin: “Regulatory Controls under the Communications Act 2003”. In addition, the Act authorises Ofcom to impose conditions concerning the provision of application program interfaces (“APIs”) and electronic programme guide facilities (“EPGs”) on fair and reasonable terms, and to impose conditions on providers of conditional access systems to ensure the availability of access to digital programme services.

Since 25th July 2003, a provider of electronic communications networks or services (other than BT or Kingston Communications) which does not have SMP and which does not provide conditional access systems, APIs or EPGs, will be required to comply only with the General Conditions of Entitlement. Such an operator will not need to obtain any licence from Ofcom (or Oftel) unless it uses radio spectrum as part of a mobile or combined fixed and mobile network, in which case it will continue to require a licence under the Wireless Telegraphy Act 1949 (as amended) for any existing or future use of spectrum. Ofcom will be the licensing authority in place of the Radiocommunications Agency. The Act also contains important provisions providing for regulations to be made by Ofcom which will authorise transfers of rights to use spectrum, thus enabling, for the first time, trading in spectrum or wireless telegraphy rights. This will enable such rights to be used exclusively by the transferee or concurrently with the transferor. Such regulations may also require Ofcom’s approval or consent for the making of a transfer or that any such transfers be made subject to compliance with specified conditions.

A system of administrative charges, to be imposed annually, is to be introduced in respect of providers of electronic communication networks and services. Oftel, acting on behalf of Ofcom, has set and published the Charging Principles as required by the Act, which define the basis for administrative charging by reference to turnover from the provision of electronic communications networks and services in respect of annual periods ending on 31st March each year. Ofcom is empowered to obtain information under the Act, including relevant turnover data for charging purposes. Charges will be imposed by reference to turnover bands, commencing at £5 million and going up to a maximum of £1 billion, in each case using the lower figure of the band, subject to a maximum of 0.08% of turnover.

The General Conditions of Entitlement contain various provisions which apply separately as regards electronic communications network providers and electronic communications services providers. In the latter case, many provisions apply only to providers of publicly available telephone services, as opposed to other electronic communications services. The general conditions on electronic communications networks providers include obligations to negotiate interconnection, obligations concerning standardisation and provision of specified interface data, obligations to ensure the proper and effective functioning of the network, and number portability. The general conditions on providers of publicly available telephone services include various obligations regarding the provision of minimum contract terms, the provision of directory enquiry facilities, itemised billing, dispute resolution, telephone numbering and number portability.

A detailed summary and explanation of the provisions of the Communications Act 2003, including both the electronic communications and broadcasting and media regulatory provisions, will be launched imminently on the Bird & Bird website.

Important - The information in this article is provided subject to the disclaimer. The law may have changed since first publication and the reader is cautioned accordingly.