Culture Secretary pushes for statutory UK broadband supplier of last resort

The UK Government’s Secretary of State for Digital and Culture (DCMS), Lisa Nandy MP, has pushed for the Enterprise Act 2002 to be updated to add a statutory Supplier of Last Resort (SoLR) process for telecoms providers (broadband and mobile). The move follows Nandy’s 11th hour intervention to wave through TalkTalk’s controversial sale to BT via a public interest exemption.

Ordinarily BT’s deal to acquire both TalkTalk’s consumer broadband ISP business and their PXC (PlatformX Communications) wholesale business, which occurred after TalkTalk repeatedly failed to reach a sale agreement with any of the other bidders (arguably a process that has been going on for years), might have raised significant competition concerns – likely prompting the Competition and Markets Authority (CMA) to block the deal.

However, Nandy effectively appeared to give the agreement a provisional green light by issuing a Public Interest Intervention Notice (PIIN) under section 42 of the Enterprise Act 2002, which allows her to consider the wider public interest of the deal, once the CMA has reported on its competition concerns (i.e. TalkTalk’s collapse would have disrupted services to hundreds of thousands of vulnerable people, NHS sites and other critical CNI users).

The situation once again highlighted the fact that broadband and mobile providers in the UK do not currently benefit from a statutory Supplier of Last Resort (SoLR) process, which could help to move customers to a different provider if the company fails to find a solution itself.

The Office of the Telecommunications Adjudicator (OTA2) has previously sketched out a limited wholesale-focused SoLR process to help protect customers in the event of a big failure, but it’s largely untested at this scale and not enforced. In addition, it seems to be heavily dependent upon Openreach (BT), which in today’s market of many competing networks isn’t necessarily the only viable alternative option available.

In recognition of this Lisa Nandy MP yesterday proposed to introduce a statutory SoLR process to the Enterprise Act 2002.

Lisa Nandy MP, Culture and Digital Secretary, said:

“Colleagues will know that on Monday 5 October 2026, BT Group plc announced that it had acquired TalkTalk Telecom Group out of administration. As has been widely reported, TalkTalk had been seeking a buyer for its consumer and wholesale businesses for some time, but no deal was reached. TalkTalk has been responsible for, among other things, running telecare services to vulnerable customers. This created potential risk to life, in addition to potentially serious disruption to the continuity and stability of our telecommunications supply, with impacts on livelihoods, the wider economy and national security.

That is why, following the announcement that BT and TalkTalk were to merge, I intervened to ensure that the Government act proactively to prevent any sudden disruption to these vital broadband and phone services, affecting millions of people. On 5 October, I issued a public interest intervention notice under the Enterprise Act 2002. This begins a process in which the Competition and Markets Authority investigates the sale and reports back to me on the effects of that sale on competition. I can then weigh up those considerations against other considerations, specified in the public interest intervention notice, before deciding whether the merger must be considered further or can proceed.

The considerations that I specified in the public interest intervention notice of 5 October were, first, the need to maintain in the United Kingdom the capability to combat and to mitigate the effects of public health emergencies and, secondly, the need to maintain in the United Kingdom continuity of the supply of telecommunications services, for the purposes of preventing disruption to the economy and society of the United Kingdom, including, in particular, disruption to public services, critical national infrastructure and supply to customers who are or may be vulnerable. The first of those, relating to public health emergencies, is already specified in section 58 of the 2002 Act, whereas the second, relating to the need to maintain continuity of the supply of telecommunications services, is a new consideration, which I believe ought to be specified in the Act.

If Parliament agrees, this will allow me to consider, alongside the effect on competition, the impact on society and the economy of widespread or significant prolonged disruption to connectivity. I believe it is right to consider the potential for disruption that would affect businesses, work and Government services and result in significant difficulties across the country. I also believe that Government must be able to fully consider the impact on vulnerable people, such as those who rely on telecare services, people with disabilities and health conditions, older people and people dependent on communication services to access emergency assistance.”

As it stands this is only the beginning of what could be a long process of debates and reports before we actually get to some solid legislative change. After that we’re likely to see Ofcom and the OTA look again at what processes or new codes they may need to set out for the industry.

Most of the MPs taking part in yesterday’s debate appeared to agree with the need for such a process, but they also expressed clear concerns over its application and the potentially negative impacts upon competition and investor sentiment with deals like the one between BT and TalkTalk.

The other difficulty is that modern fixed broadband provision is a much more complex and fragmented market than energy or water, which creates a difficult competitive and technical problem for any future SoLR process to navigate. Ofcom’s new One Touch Switch (OTS) process does at least provide more of a foundation for moving customers between physically separate networks than existed before, but that’s designed for individual migrations and not a mass bulk process.

For example, consider situations where a customer on a failing ISP may be connected to CommunityFibre’s (replace that with the name of any physical network) underlying full fibre network with its own dedicated ONT (optical modem). You cannot simply move all of those customers in bulk to a different network if the new owner doesn’t already have a similar arrangement with CommunityFibre, as this could otherwise create a huge resource problem requiring more engineers than may exist for home visits.

The above is before we also consider the huge and complex impacts upon pre-existing wholesale contracts, issues with compatibility between different consumer hardware (routers etc.), differing levels of phone provision/access (some providers are data-only) and the potential for taxpayers to pay extra in order to cover the costs of needing to facilitate such a SoLR process and market failures, like they do in other sectors (aka – the socialisation of debt).

Little wonder that nobody has set out a proper statutory telecoms SoLR process before. It’s very hard to do. In many ways Nandy has the easy job of making provisions for such a process in law, while Ofcom and the industry will then suffer the headache of needing to figure out how to actually make that work.

Finally, Nandy responded to another MP’s question on whether her intervention in the BT deal for TalkTalk meant the outcome had been predetermined.

Lisa Nandy MP said:

I want to say to the Committee that it absolutely has not. Not only does the law preclude me from doing that, but, as was set out very well by the Chair of the Select Committee—I know the view will be shared by those on the Opposition Front Bench—there are of course risks of this deal unravelling, but there are also risks of harming the competitiveness of the sector where that competition has helped to drive down bills, protect consumers and drive investment into the industry, and helped protect the resilience of the industry.

This is a genuine attempt to make sure that the Government can consider all these considerations in the round and come to a conclusion that is in the interests of the public as a whole.

The reality here is that BT would not have been willing to step in without some certainly from the government that it wouldn’t end up being a huge waste of their money and becoming a legal nightmare. The absence of a clear and viable alternative to BT’s deal also reignites the same risks as existed before (i.e. collapse), if she refers the deal for a deeper competition probe.

Nevertheless, Nandy made clear that she is currently considering the CMA’s brief report on the deal alongside wider evidence on the public interest considerations, and “on the basis of that evidence I will then decide whether to refer the case for a more detailed investigation on competition or public interest grounds, or both, or to clear the transaction without further investigation“. We shall soon see.