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The What Next in Telecoms of Brexit

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If one ever wanted to read two documents that purported to speak truth about the same event yet were entirely at opposite ends of anything resembling fact then look no further than any UK Government paper on Brexit and the Prospect Union’s piece covering the same issue. Whilst this may well be the time to debate Brexit, the TP Tele blog is certainly not the place, so without contentious intent let’s just look at what’s being said about the future of Telecoms in a post Brexit world by those who should know.

Not to be in any way blaming but I don’t think it’s going too far to say that the Government’s publication, “What Telecoms businesses should do if there’s no Brexit deal” reads as if written by a small child whose hand has been trapped in a biscuit jar and is trying to justify its being there to a parent.

 “Delivering on the deal negotiated with the EU remains our top priority” it tells us, “However, the government must prepare for every eventuality, including a no deal scenario. For 2 years, the government has been implementing a significant programme of work to ensure that the UK is prepared to leave the EU on 29 March 2019.” And so it goes on, splendid in its justification to the last bitter full stop. But is it true?

At the same time Prospect, the union that would most concern itself with workers in the Telecoms industry, is taking a rather less sanguine view. It points out that Telecoms is regarded by Government as being a “low priority”, in spite of the fact that this industry has over 180,000 workers depending on it, plus all its customers, which is you and me. As Prospect points out, quite apart from the unknown impact on a highly mobile international workforce, there’s the potential immediate “no-deal” impact on the flow of data that communications depend on. Apparently, outside the EU, the UK would need “data adequacy” status for personal data on EU citizens to be transmitted across its borders, something that could take years to agree. And then there’s BT, which has18,000 suppliers with whom contracts would have to be amended, and Vodaphone, a company that makes over half its money from the EU. Vodaphone has issued a statement pointing out that “freedom of movement of people, capital and goods are integral to the operation of any pan-European business…it remains unclear how many of these positive attributes will remain in place once the process of the UK’s exit from the European Union has been completed.” It’s no surprise that Vodaphone may join all the others who have decided to move its HQ away from the UK.

Having said all of that, and accepting the possibility of the UK being excluded from European R&D developments that we have invest heavily in and been leaders of… is there any sort of silver lining to Brexit so far as Telecoms is concerned? Well, yes, maybe there is. Apparently the UK Department for Digital, Culture, Media and Sport has been quietly asking itself what and how to modernise UK Telecoms if Brexit allows for this, something BT has every reason to be nervous about. It’s recognised that the EU has in the past had a tendency to concentrate on competition and customer cost reduction, often at the expense of jobs and investment and their concern is that if Ofcom is given its freedom it might push for even more of this medicine. How about a sell-off of Openreach? And of course with no EU there’ll be no-where for BT to appeal Ofcoms decisions.

Another area to watch will be the cost of telecoms to subscribers with the thought that Ofcom could act to cap or at least control the fees charged to mobile, fixed line and broadband users. BT on the other hand, at least publicly, is being up beat, looking to Brexit as an opportunity to “establish regulatory policies that enable the communications sector and industrial strategy of the 21st century, in particular to underpin investment, to be forward looking and embrace innovation”, in other words, quite the opposite. There is of course truth in the fact that if BT knows its income stream isn’t going to be squeezed it can afford to consider longer investment cycles and spend more on making sure it gets the increasing integration of services such as broadband and Pay TV right.

Perhaps a greater post Brexit impact will be seen in the mobiles market. Last month’s blog noted that 5G will require a far greater number of transmitter and receiver antenna, and therefore far greater investment. With an eye on competition the EU is essentially against any mergers between the big Telecoms companies. An unconstrained UK Government is likely to be far more ‘understanding’ of such things if this leads to the necessary investment being made. Similarly the Government will be able to be more broadminded in its approach to tax breaks and public investment programmes, potentially allowing for faster decision making and rollout.

Where does that leave us? Should we be excited or deflated? We’ll let you know in a month or two!

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