Brexit and the communications sector

On 29 March 2017 the UK Prime Minister Theresa May gave formal notification to the European Council of the United Kingdom’s intention to withdraw from the European Union. Commonly referred to as “triggering Article 50”, the United Kingdom will have a two year countdown to the country’s departure from the EU, a relationship that it has been a part of for 44 years.

Article 50 is set out in the Treaty of Lisbon – the legal document signed up to by all EU states which became law in 2009. Before that treaty existed, there was no formal mechanism for a country to leave the EU. Although Article 50 is just five paragraphs long, it is monumental in its effect particularly given that it has never been exercised before. Any EU member state can leave the EU by notifying the European Council. That member state has two years to negotiate the terms of its exit. These terms must then be approved by a “qualified majority” (72% of the remaining 27 EU states) and by MEPs. Unless all member states agree to extend the two year deadline, it will serve as an absolute deadline and by the end of March 2019 the UK will no longer be an European Union country.

There seems to be optimism on both sides of the table that a deal will be agreed but what that deal will look like is very uncertain. High profile issues such as trade, debt, immigration, labour mobility, Scottish independence etc. will be high on the media agenda but the reality is that there are thousands of laws and regulations that need to be considered, the detail of which will need to be picked over in minute detail.

The Law Society, the independent professional body for solicitors, has been focussed on the impact of Brexit on the legal sector overall, looking at the impact that this will have on the legal profession. Mutual access for lawyers to practise law and base themselves in the UK and EU member states, legal professional privilege and the maintenance of mutual recognition and enforcement of judgments are high priority issues. However of most importance to business is the focus on ensuring that legal certainty is maintained throughout the process of withdrawal so that businesses – and indeed individuals – are given sufficient time to adapt to transitional arrangements and to any new legal framework.

Brexit will have a practical and real impact on all sectors and the legal and regulatory environment under which they operate. Although we do not yet know how and we do not yet know when, we know with certainty that European laws form the foundation of much UK domestic law. The extent to which these foundations will be knocked down and rebuilt will determine the decisions that businesses take about almost everything, whether this is the physical location of their head office and the chosen country of tax presence to their future operational strategy. For communications operators regulatory stability is as important a criteria as economic and consumer dynamics in determining where, how and at what price, products and services are provided. Specific concerns around the impact of the Digital Single Market Initiative, aimed at making the EU’s single market fit for the digital age and around EU regulations on roaming and net neutrality add to the uncertainty. In a regulatory uncertain market it is inevitable that businesses will work harder to explore opportunities in more stable regions.

This said, with communications law overall there is reason to be a little less gloomy. The laws surrounding telecommunications probably only warrant a mid level ranking in the priority ladder of which laws and regulations need most pressing Brexit attention. This seems to be a view reinforced by other bodies; for example “The Brexit Papers” published by the English Bar Council’s Brexit working group did not identify communications itself as a pressing Brexit legal issue – although notably competition law and intellectual property, both of which are very influential on the communications sector were included.

The reason for this is that unlike many other areas, communications is still a sector governed at a national level. Despite recent attempts to introduce harmonisation the reality is that the provision of electronic communication networks and services is governed by national UK general conditions. Spectrum is managed and assigned domestically, albeit subject to ITU standards that are themselves not (just) EU specific. Another important factor is that the UK has made a number of commitments on telecommunications as part of its World Trade Organisation membership. The definitions and principles on a basic regulatory framework for telecommunications are not that dissimilar to those set out in the European regulatory framework for the sector.

Finally, and perhaps most influentially, the UK regulator, OFCOM, is a strong regulator which has always fought hard for independence and made its own decisions. In a public address in December 2016 the Chief Executive of OFCOM made it clear that the future of communications regulation in a post Brexit world does not mean starting with a fresh piece of paper; rather it will look to retain what works in the EU framework, improving things where they may be deficient.

Brexit means a brave new world for so many and so much; but perhaps the communications sector can survive the process – and its aftermath – without too much corrosion.