What could Brexit mean for the telecommunications industry?
March 8, 2019
As the countdown to Brexit moves closer and the debate as to what and how things will change continues to range on (considering both a ‘deal’ or ‘no deal’ scenario), you could be forgiven for asking: why has the telecommunication industry not been getting much attention when it comes to Brexit?
It can be argued that everyone should be concerned about the effect Brexit could have on the telecommunications industry, as at every level, the state of the industry has some effect on manufacturers, network providers and consumers.
In this blog, we attempt to navigate the uncertain Brexit landscape to understand where the telecommunications industry sits within (and from outside) the UK, in a post-Brexit scenario.
A ‘no deal’ scenario
As an industry, telecommunications is one of the most reliant on good quality international cooperation and relationships.
As a result of a ‘no deal’ Brexit, the UK will leave the EU without a ‘transitionary period’, meaning that there will be no pre-agreed withdrawal terms to work to and the industry will need to adapt in ‘real-time’ without any certainty of what is going to happen. There is little doubt this level of uncertainty will cause (at best) disruption and (at worst) long-term damage to the sector.
Thousands of UK nationals working overseas (and vice versa) also face uncertainty on employment and residency status, which itself could have a direct effect on the Telcos (telecommunications companies) they are employed by.
Currently there are no roaming charges across all 28 EU countries and this is the result of EU legislation. When the UK leaves the EU, this legislation will no longer apply, meaning that a new agreement will be required.
Without an agreement, UK operators could potentially be charged for access to continental networks that in turn could result in roaming chares being reinstated or additional fees being added to consumer bills in order to balance costs.
Other non-member countries outside the EU (such as Norway) have signed up to the existing deal, so it sets a good precedent for the UK to potentially sign up in the same way, post-Brexit.
It also opens up the opportunity for the UK to negotiate its own terms with other countries outside of the EU, which could result in free roaming between the UK and America, for example.
Some telecommunications operators have warned that they may need to relocate technical facilities and even rethink existing and future network design, post-Brexit.
This may be seen as extreme, but it is certainly part of contingency plans for many operators.
As with many other industries that involve the manufacture of products, the UK imports more telecommunications equipment than it exports (taking mobile phones as a basic example, not many are manufactured in the UK and are instead purchased from other countries and imported for sale in the UK).
Once the UK is no longer affected by the existing EU trade agreements, it will be possible for the UK to negotiate new trade deals with the countries that do manufacture the telecommunications equipment that needs to be imported.
The UK is the fifth largest economy in the world, meaning it is an attractive prospect for many manufacturers looking to create agreements with lower import tariffs for them.
Public investment programmes and government tax break which are used to support the telecommunication industry have governed by EU competition rules. This has led to schemes such as Broadband Delivery UK being designed to meet European Commission approval, which meant certain aspects originally proposed by the scheme where challenged – such as the UK government’s policy of exempting fibre-optic upgrades from business rates.
Without these restrictions, many would argue that this will allow the UK to focus public investment within the telecom sector on the things that are focused on being the best option for the UK.
The future of the telecommunications industry
The telecommunications sector is a vital part of the UK’s economy and will play a crucial role in the prosperity of the country post-Brexit.
From the infrastructure and services to innovation and the jobs that it provides, the industry is a sector which strengthens the UK’s position in terms of the global economy. The decisions made before, on and after March 29th will determine its ability to continue making contributions in this area.
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