The latest telco rules and the impact on tech transactions

2020 has been an important year for telecommunications in the UK and this looks set to continue into 2021. Any tech transactions involving companies that provide electronic communication services or networks will need to take into account the changing regulatory regime in the UK.

Last month, the UK Government published the UK’s legislation transposing the requirements of the EU Electronic Communications Code (EECC), which it is obligated to implement under the Brexit transitional arrangement. The Government’s approach was foreshadowed by its statement on the UK implementation published in July, and the draft Statutory Implement (SI) can be found here.

The EECC is designed to put in place one of the essential building blocks of the EU’s Digital Single Market (DSM) and is a significant revision of the current EU telecommunications regulatory framework, from 2009. Central to the EECC is the desire to promote connectivity in fibre deployment as well as 5G.

Impact on Tech Transactions
  • The UK legislation does not fully transpose the EECC requirements as applicable to over-the-top communication services, creating a difference in approach in the UK to the EU.

  • The UK’s EECC implementing legislation, which makes changes to the Communications Act 2003 and Wireless Telegraphy Act 2006 (governing spectrum), is due to enter into force on 21 December 2020 (some provisions will also be refined at the end of the Brexit transition period).

  • Ofcom’s new rules (in the General Conditions of Entitlement) will enter into force at the same time, with differing transition periods to give communication providers time to implement the requirements, particularly in the COVID-19 environment.

  • The EECC has measures to promote greater investment in very high capacity networks in line with the EU’s ambitions to build a European Gigabit society (which chime with the UK’s ambitions) and one of its core objectives reflects this ambition. This development of high capacity networks also offers opportunities for tech transactions as long-term investments.

The UK’s FDI screening Bill will also clearly have an impact on any relevant transactions and will also need to be considered alongside the EU FDI Regulation and national screening laws.

Any tech transactions involving electronic communications services or networks will need to consider these changes in the UK market and in particular the difference between the UK and EU position, which will likely diverge even further in the future.

Click here to read more about the latest telco rules.