A Short Note on Telecommunications Issues Related to Brexit

Abstract

Brexit, the United Kingdom (UK) leaving the European Union (EU), is the subject of a referendum in June 2016. A vote to leave would result in the government invoking Article 50 TEU, which would begin a two-year period of negotiation for a withdrawal agreement, after which the EU treaties would no longer apply. The unpopular ‘Norway Option’ would result in signing the European Economic Area (EEA) Treaty, which would re-impose most of the obligations and costs of EU membership. Otherwise, there would be considerable freedom for the government to develop new policies and legislation, subject to whatever trade agreements it could reach with other countries.The effects for telecommunications markets, legislation and policies are potentially considerable, but depend on how the United Kingdom government acts with the freedom that follows from no longer being bound by the EU acquis. While it might be innovative, it is unclear how or in what direction that might take its policies. Indeed it is not immediately obvious in which direction the benefits might lie.Withdrawal creates a number of legislative holes, with innumerable references to EU institutions and to its objectives (e.g., completion of the single market), which would need to be filled. Some legislation (e.g., state aid rules and the markets subject to ex ante regulation) exist only the EU acquis, which disappears with Brexit, potentially requiring ‘transposition’ into domestic law. While ministers have promised that rates for international mobile roaming would not rise in the event of Brexit, operators would almost certainly lose access to the regulated wholesale rates in the remaining member states. Indeed, there would be strong commercial incentives on both sides to raise wholesale rates for those roaming in the EU and in the European Union. While the operators might try to negotiate alternative deals, there are no precedents for success and precious few for governments in the European periphery.The repatriation of policy-making and legislative scrutiny from the EU institutions would require ‘beefing up’ of governmental and parliamentary capabilities. It would also require a much deeper engagement with business and consumer groups, not least to counter the special pleading of the operators, which have considerable expertise and experience in lobbying. Additionally, it would be important to boost the provision of independent views, both from academic researchers and think tanks. Without a rich debate on policies for telecommunications, the potential benefits of Brexit would be lost, with the greatest risk being in a mishandled transition.