Ofcom Investigates Multiple UK Broadband Networks Over Liability Funds

The UK telecoms regulator, Ofcom, has opened investigations into several alternative full fibre broadband networks (altnets) – including Internetty, Cambridge Fibre Networks, Optical Fibre Infrastructure, Pine Media and Trooli – after they found “reasonable grounds to believe” that they may not be meeting their duties to show they have secured funds for meeting their liabilities.

Under Regulation 16 of the Electronic Communications Code (ECC), network operators with Code Powers have a legal obligation to provide the regulator with documents each year – on 1st April – confirming that they have sufficient funds to meet certain liabilities (details). These liabilities include for fixing damage caused by the installation or removal of electronic communications apparatus on streets and roads.

The funds act as an insurance so that, in the event of the code operator falling into administration or ceasing to trade, there are sufficient funds available to remedy any works the operator was carrying out when using its Code Powers (e.g. digging up roads to lay its telecoms network). “This helps ensure that the public is not left having to pay for such works,” said Ofcom.

Regular readers will appreciate that this rule has become much more important in recent years as network builders have come under increasing pressure from rising build costs, high interest rates and competition. “Given how quickly the market is changing, ensuring that Code Operators are securing the right funds is more important than ever before,” added Ofcom.

Suffice to say that, in keeping with this, the regulator has launched several investigations against network operators including Internetty Limited (here), Cambridge Fibre Networks, Optical Fibre Infrastructure Limited (here), Pine Media Limited (here) and Trooli Limited  + Trooli Thistle Limited (here) after finding “reasonable grounds to believe” that they may not be meeting their duties to show they have secured the necessary liability funds.

In addition, Ofcom has also opened a wider enforcement programme to monitor if providers are meeting their duties to show they have secured funds for meeting their liabilities. The regulator added that they would be “engaging with other operators who we are concerned may not be complying fully with their obligations” (i.e. more investigations may soon follow).

Ofcom Statement

We expect this programme to run for several months, during which time we may decide to open additional formal investigations if we consider it would be appropriate to do so. We expect to publish updates on progress at relevant points over this period.

Whilst no formal obligation exists on operators, we would encourage operators who have not yet exercised their code powers to update Ofcom accordingly, so such operators are not subject to potential enforcement action.

In terms of enforcement, we suspect that the most likely outcome at this stage, if any operators are indeed found to have failed in their duties, is for Ofcom to levy a financial penalty and / or require that the operators correct their mistake as soon as possible (i.e. making sure they have adequate funds and submission of the necessary certificates).

In theory, the regulator could also revoke a network operator’s Code Powers, although that would be extremely disruptive (including to third-party contractors) and is likely to be viewed as a last result. We’ve not previously seen investigations like this one take place and so have no base of comparison for how long they will run, but we imagine it should be fairly easy for Ofcom to identify who is or is not compliant.