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What will a No-Deal Brexit mean?

what will a no-deal brexit mean?No-deal Brexit: Good or Bad?

As the possibility of a no-deal Brexit deal increases what would be the impact on our telecoms if it were to happen.   Is it another instance of doom and gloom or are there any upsides.

These are our thoughts on the matter…

Roaming

In 2017 the EU abolished all the charges previously levied by the mobile operators for roaming calls and data within the EU area.  Should the UK leave the EU on a no deal basis, this could no longer be the case.   Other countries outside the EU such have Norway have signed up to the deal but they have agreed economic arrangements as well.   If the UK is operating on World Trade Organisation arrangements then there is nothing in there that covers roaming.  I am sure the mobile operators will be pleased as it was a major revenue source for them.

Like all these bilateral arrangements it is a case as to whether the EU wants to cut its nose off to spite it face as all EU citizens could roam for free in the UK.

The impact may be longer term as UK can negotiate its own trade agreements it could similar seeks to do deals with countries it wants to encourage more trade with.  So it could be free to roam between the UK and commonwealth countries for instance.   It is to be hoped that this will be an element of any new trade agreements that are set up.   Certainly, it has been discussed in the initial conversations between the UK and USA.

So there are potential implications for tourism, business people working in Europe and those with overseas home.   Should it come to fruition people should check their contracts – and add roaming plans if required.

Competition

At the moment some of the biggest decisions affecting the UK market are taken by the EU.  For example, the final say on the O2 and 3 merger deal fell to European competition commissioner Margrethe Vestager.    In future any such mergers will down to the UK and as such will reflect more the views of the UK Government.  The EU has generally been anti merger and the UK Government has been less so.   It enhances the role of Ofcom, who has constantly bottled the decision to split Openreach away from BT.   The EU has made decisions and threatened fines against anti competitive behaviours by companies such as Microsoft and Google.  Historically the UK Government has been less interventionist.

It potentially leaves companies more open to overseas acquisition.  Would BT be a tempting target for someone given their share price being 40% of what it was 3 years?   Deutsche Telecom already own a stake in them.   As general rule greater consolidation leads to less choice for customers and the potential for lower service levels and higher prices.

Trade

Like many other manufacturing industries, as a country we import far more telecoms equipment than we export.  Not many mobile phones or phone systems are made here, even most of the infrastructure is imported.   A lot is made in China, Asia and the USA.  These countries are the forefront of targets for our own trade deals.   As the fifth largest economy, the UK is attractive to the handset makers and deals could lead to lower import charges and therefore prices.

The first few weeks after the Brexit referendum saw a large drop in value of the pound, which resulted in the cost of telecoms and technology equipment going up quite quickly.  Dell announced a price rise within weeks.  Should we go on WTO rules after a no-deal Brexit, then the uncertainty could drive the pound lower, at least in the short term.   If that seems the likely option and your business is considering replacing your phone system and data infrastructure it may pay to order early.

Regulation and Infrastructure

As an industry telecoms has not integrated very much across Europe.  Each country issues it own licences and phone numbers.   There are no minimum standards for 4G coverage or broadband speeds.  Although the EU has stated it believes the minimum target speed should be 30 mbps which is higher than the UK.

The EU has set targets for 5G rollouts. Each country should have one city operational by 2020.  The UK has continuously lagged behind most of Europe on 4G coverage and FTTP availability.  The recent announcements have targets that will not improve that, but currently being in or out of the EU won’t affect that situation.  It is more a question of local priorities.

The EU customs union allow member states to charge higher international termination rates to non-EU members so the UK would be free to break from that and make the cost of calling here from abroad lower and therefore more attractive to businesses to have overseas offices here.

Like so many other things there is a lot to resolve and we have less than 6 months to go if we are to leave on a no deal basis.   But it will make the telecoms market very interesting and it means businesses should be asking key questions when signing long term contracts that extend beyond that period.

What are your thoughts on a no-deal Brexit? We’d love to read them.

How Brexit makes calling Scotland very expensive

calling scotland could become expensiveThe EU referendum is rapidly approaching. June 23rd will be a very important day in the history of the UK, no matter which way the vote goes. In telecoms terms the most significant impact would most likely be if the UK population votes to leave the European Union. Let me explain my thoughts…

Roaming

On April 30th 2016, the EU applies further charging caps on what the mobile operators can charge for roaming calls and data. If you are in Europe and either make mobile calls or use data on your smartphone, they will be much cheaper from that date. In 2017, they will be abolished altogether and you will simply use your contract bundle wherever you are in the EU. The most obvious change, if the UK left the EU, could be that this was no longer the case. A new agreement would be required. However, the precedent is there as other countries outside the EU such have Norway have signed up to the deal. The impact may be longer term if the EU starts to promote common tariffs to people visiting from outside the EU. Again as with other trade elements does that mean the UK could set lower costs or be left out?

Now back to the title of this blog. How could calling Scotland become more expensive? Everyone knows that Nicola Sturgeon is planning to hold another Scottish Referendum and if the UK were to leave the EU, this would leave the way for Scotland to have another referendum. If they did and voted to leave that would impact businesses with operations or customers across the two countries.

Calls from London to Edinburgh would then be international calls. If you were in Scotland with an English SIM card, you would be making roaming calls. If you check your LinkedIn status, you would be using roaming data and just how much would that cost you? If Scotland leaves the UK, it doesn’t mean it will be part of Europe and so you could incur Rest of World roaming data charges. For some mobile operators that is up to £8 per MB! Billshock could return!

There would also need an Ofcom for each country and potentially different pricing for lines and internet.

Still, this is all conjecture, so let’s see what we wake up to on the 24th June and go from there.