Welcome to our Communications & Competition newsletter – a place where we collate the most interesting developments for the communications sector and the latest key competition law developments. If you’ve been forwarded this newsletter by a colleague and would like to subscribe, please click here.

If you would like to discuss any of the developments covered in this newsletter or on Communications and Competition law matters more generally in relation to your business, please don’t hesitate to get in touch with our team.

We recently welcomed Lucas Ford to our team – with over 18 years’ experience specialising in ex ante and ex post competition law and policy in regulated sectors we are excited to have him on board! Lucas has worked within a number of National Regulatory and Competition Authorities such as Ofcom and the Australian Competition and Consumer Commission in a range of roles including investigations and enforcement, regulated dispute resolution, policy development and compliance strategies. In private practice Lucas has specialised in all aspects of economic regulation, with a key focus on communications networks, including the recent development of digital platform regulation. To find out more, including how you can contact Lucas, please click here.

As the first quarter of 2024 came to end, both Ofcom and the CMA published plans of work for the 2024/25 financial year, and (unsurprisingly) these include a focus on their new statutory powers and areas of responsibility: for Ofcom a number of significant milestones are expected following the coming into force of the Online Safety Act and the extension of their powers to cover online harms, while the CMA is looking ahead at the new statutory powers and responsibility they will gain under the Digital Markets, Competition and Consumer Bill currently passing through the legislative process – especially with regards to the extension of their consumer protection powers.

• Ofcom’s Plan of Work for 2024/25

Ofcom published its Plan of Work for 2024/25, setting out work programmes to deliver on existing and newly acquired duties.

For our analysis of the programmes particularly impacting the Communications sector, see here.

• Ofcom’s strategic approach to AI

Alongside their Plan of Work, Ofcom also published an update on their Strategic approach to Artificial Intelligence (AI), setting out their approach to AI over the coming year to ensure that the benefits of AI are harnessed and the risks are managed in the sectors it regulates, including telecommunications. While Ofcom states that it recognises the potential benefits of AI, such as enhancing network planning, optimising network building, and detecting fraudulent behaviour, it also acknowledges the challenges and risks posed by AI, such as the creation and spread of illegal or harmful content, increased risk of misinformation and disinformation, as well as its enabling capabilities for more sophisticated fraud and scams.

For more detail on its proposed approach, see our article here.

• UK Regulators pen letter for debt collection practices for customers

The UK Regulators’ Network, together with the Financial Conduct Authority, Ofcom, Ofwat, and Ofgem, has published a joint letter setting out their shared expectations for firms in their respective sectors concerning debt collection. The letter emphasises the importance of supportive and non-threatening communications with customers facing financial hardship, clear signposting of free debt advice, and making it easy for debt advisers to get in touch with creditors. The regulators underscore that they will use their powers to ensure compliance with these expectations and may take robust action against firms that fail to meet them.

For further information, see our article here.

• On 21 February 2024, the European Commission published a paper titled “How to master Europe’s digital infrastructure needs”, analysing the challenges faced in rolling out future digital networks and proposing scenarios to attract investment, foster innovation, increase security and achieve a digital single market. Key challenges included exponential data growth, the need for high-capacity network investment, lack of an integrated telecoms market, and developing security standards. Proposals included were creating a ‘Connected Collaborative Computing’ ecosystem spanning semiconductors to applications, potentially via large-scale pilots, accelerating gigabit deployment, coordinating spectrum and the 2023 copper switch-off, a single telecoms market, and levelling the playing field between telecoms and cloud providers. Benefits envisaged included safer workspaces, better transport/healthcare, and reduced environmental impact. A consultation on the 12 outlined scenarios is open until 30 June 2024.

For further details regarding this update, see our article here.

• Ofcom’s views on “super-apps”

Online communications services like WhatsApp, Snapchat, Facebook and Instagram fall under the remit of the UK’s Ofcom regulator. In a recent report from Ofcom, the regulator highlighted the trend of these services expanding into “super-apps” offering a wide range of functionalities beyond just messaging and calling, such as shopping, gaming, food delivery and travel bookings. It noted that this raises potential regulatory issues around online harms, competition, service resilience and data privacy. With added features, super-apps could increase exposure to illegal scams and fraud. They may create barriers for new businesses if consumers find it difficult to switch providers. Centralising data raises privacy concerns over breaches, though unified consent management could enhance privacy controls. Ofcom has stated it will therefore continue to monitor super-app developments.

For further analysis of Ofcom’s report, see our article here.

Fixed line

• Telecoms Access Review 2026

On 26 March 2024, Ofcom published a “Review document” that announced the commencement of the Telecoms Access Review 2026 (“TAR 2026”). The TAR is the next instalment in Ofcom’s fixed telecoms market review cycle, following the decisions and principles it set out in the Wholesale Fixed Telecoms Market Review 2021-2026 (“WFTMR”) Statement.

For a recap on the market review process along with details of the next steps, see our article here.

• Failed implementation of One Touch Switch

As we’ve previously reported, in April 2023 Ofcom opened an industry-wide enforcement programme regarding the failed implementation of the new broadband switching process, known as “One Touch Switch”. With the launch of One Touch Switch delayed again, with the planned go-live date now scheduled for 12 September 2024, Ofcom have provided an update to their enforcement programme, where they have stated that “given the already very lengthy delay to the launch of OTS, Ofcom is increasing the level of implementation oversight with [BT, Sky, TalkTalk and VMO2] as well as TOTSCo separately, as the industry body appointed by communications providers to manage the launch of OTS, and subsequent operation”. Separately Ofcom will, based on the evidence already gathered, review the conduct of all industry participants since their 2021 statement, to determine whether it will be appropriate or necessary to open individual investigations after launch. The continued delays, which Ofcom attribute to industry, raise concerns that consumer harm has ultimately been caused, with consumers losing out on the benefits of a quicker and more effective switching process as a result of the delays, with individual investigations now looking inevitable. You can read our previous review of Ofcom’s published analysis here.

For further detail of the update from Ofcom, see our article here.

• Ofcom submits statutory information request to TOTSCo

TOTSCo, the organisation responsible for implementing the One Touch Switch system in the UK, has now received a statutory information request from Ofcom, the country’s communications regulator. The request, issued under section 135 of the Communications Act 2003, requires TOTSCo to provide Ofcom with information regarding the progress of the One Touch Switch implementation. Whilst the specifics of the notice remain confidential, it is understood that TOTSCo must share data on the individual and aggregate activities of Communication Providers (CPs) in both the test and live hub environments. This move aligns with Ofcom’s commitment to transparency and its role in overseeing the successful implementation of the One Touch Switch system, which aims to simplify the process of switching between communication service providers for consumers in the UK.

See here for TOTSCo’s statement of 3 May 2024.

Mobile, Wireless and Spectrum

• Enabling mmWave spectrum for new uses

Last year Ofcom published its statement and further consultation on “enabling mmWave spectrum for new uses”, where it decided to make over 6 GHz of mmWave spectrum available across the 26 GHz (24.25 GHz – 27.5 GHz) and 40GHz (40.5 GHz – 43.5GHz) bands for mobile technology including 5G. On 16 April 2024 an update was published in regards to the auction design to award citywide licences in the 26 GHz and 40 GHz bands. This includes Ofcom’s decision not to include a negotiation period at the assignment stage of the auction. They also set out their proposals to make a Limitation Order and amend the Mobile Trading Regulations, which are intended to implement some of their policy decisions in relation to award licences in the 26 and 40 GHz bands. If you are interested in responding to Ofcom’s latest Consultation on this, you have until 28 May 2024 to do so and can find more information here.

• Mobile Roaming

One of the ongoing favourite topics post-Brexit when it comes to mobile, is of course roaming fees. With the EU Roaming Regulations (Roam like at Home) falling away with Brexit, mobile operators have since been free to determine the charges they impose on customers for roaming on their UK contracts outside the UK. Ofcom has now reviewed the consumer harm that customers could face as a result, and have published a Statement introducing ‘new’ rules for mobile service providers in relation to the information they must provide to UK consumers regarding mobile roaming charges. The rules will be introduced by way of updates to Ofcom’s General Conditions of Entitlement (“GCs”) and are scheduled to take effect from 1 October 2024.

To find out more about the increased safeguards for consumers (and requirements for operators), see our article here.

• CMA releases its Annual Plan for 2024/2024

The Competition and Markets Authority (“CMA”) has released its Annual Plan for 2024/25, setting out its near-term areas of focus for the next 12 months. The report builds upon its wider strategic approach announced in its 2023/24 Annual Plan, and looks forward to the introduction of new statutory powers and responsibilities granted to the CMA under the Digital Markets, Competition and Consumer Bill currently passing through the legislative process (see Wiggin’s previous updates on the topic here and here). If enacted, the Bill will, in the words of the CMA, mark a “step-change in [its] work”, granting it powers to regulate digital markets, make decisions about when consumer law has been broken without going to court, and impose significant financial penalties on businesses responsible for those breaches.

For more detailed analysis about the CMA’s upcoming plans, see our article here.

• CMA is investigating the supply of public cloud infrastructure services in the UK

The CMA has initiated an investigation into public cloud infrastructure services in the UK, prompted by Ofcom’s concerns regarding competition issues. The investigation aims to address difficulties businesses face when switching between cloud service providers, and particularly the market dominance of Amazon and Microsoft. The investigation will examine technical barriers to switching, assess the impact of egress fees, and analyse the structure of discounts that providers offer. The inquiry will also scrutinise software licensing practices and their potential effects on competition. The CMA is expected to reach a conclusion by April 2025. To find out more, click here.

• Court of Appeal rules on CMA’s extra-territorial investigatory powers

The Court of Appeal ruled that under Section 26 (s26) of the Competition Act 1998, the CMA has the authority to issue notices to foreign-based companies even without UK connections, if suspected anti-competitive conduct impacts or is intended to impact the UK. The Court emphasized that the wording of s26(2) indicates no territorial limits on requiring information. This ruling was underscored by policy considerations, highlighting the necessity of the CMA’s effectiveness in combating anti-competitive practices, even if originating outside the UK. To find out more, click here.

• CMA opens Microsoft/OpenAI partnership merger inquiry

As part of its investigation concerning the partnership between Microsoft and OpenAI, the CMA solicited comments on whether the partnership, along with recent developments, constitutes a relevant merger situation and its potential impact on UK competition. This Invitation to Comment (ITC) precedes any formal phase 1 investigation. Given the rapid expansion of artificial intelligence (AI) and foundation models (FMs), the CMA aims to ensure sustained competition among AI developers, fostering innovation and responsible practices. The close collaboration between Microsoft and OpenAI, marked by significant investments and exclusive cloud services provision, prompts scrutiny regarding potential control changes or acquisitions. To find out more, click here.

• Government to review scope of National Security and Investment Act

The UK Government has conducted a Call for Evidence regarding the National Security and Investment (NSI) regime, which oversees the screening of transactions on national security grounds for both foreign and UK investors. The government’s aim is to make the regime more business-friendly and investment-oriented while safeguarding national security interests. Proposed changes include targeted exemptions from mandatory notification obligations and amendments to specified activities definitions, aiming to streamline the process and enhance clarity. The Call for Evidence ended on 15 January 2024, paving the way for potential legislative amendments. To find out more, click here.

• CMA launches phase 2 investigation into Vodafone – Three merger

The CMA has referred the anticipated joint venture between Vodafone Group Plc and CK Hutchison Holdings Limited concerning Vodafone Ltd and Hutchison 3G UK Ltd for an in-depth investigation due to concerns that the merger may result in a substantial lessening of competition within the market. The decision for a further investigation was taken after the firms failed to offer measures to ease the CMA’s concerns that mobile phone users could face higher prices and reduced quality of service if the merger plans went ahead. The Phase 2 investigation will run until 18 September 2024. To find out more, click here.

• CMA publishes update paper into AI Foundation Models
  

The Competition and Markets Authority (CMA) has put out an update paper as part of its review into AI foundation models (FMs). The CMA is concerned about potential risks to competition and consumer protection, particularly due to a small number of big tech firms like Google, Amazon, Microsoft, Meta, Apple and Nvidia (the “GAMMAN” companies) having a growing influence across the FM value chain. The CMA reckons these firms, which already have significant market power in key digital markets, are in strong positions for both developing FMs (including controlling critical inputs like data) and deploying the models through key access points. This raises the risk of the market developing a ‘winner-takes-all’ dynamic.

To address these concerns, the CMA has proposed some updated principles to promote fair competition and positive consumer outcomes. These cover things like ensuring access to key FM inputs, maintaining diversity of models, enabling user choice, preventing anti-competitive conduct, providing transparency, and ensuring accountability. The CMA plans to use its investigatory and enforcement powers to examine competition in areas like cloud infrastructure and AI chips, and to look into partnerships like the one between Microsoft and OpenAI. It also intends to work with the government and other regulators on targeted interventions where needed, while being mindful not to stifle innovation.

The CMA has also opened invitations to comment on stakeholder concerns about the effects on competition of the small number of companies in the market and the growing partnerships between them. The deadline for comment is 9 May 2024.

For a more detailed look into the updated paper, see our article here.

• Digital Markets, Competition and Consumers Bill soon to receive Royal Assent

The long-awaited Digital Markets, Competition and Consumers (DMCC) Bill has finally completed the Committee Stage in the House of Lords, ahead of the Report Stage. The aim of the bill is to establish a new pro-competition regime for digital markets which will address the significant market power of a small number of tech firms. The CMA will be given the tools to proactively drive more dynamic markets and prevent harmful practices that hold back innovation and growth. It will also create new protections for consumers. It has progressed through several stages in Parliament with minor amendments, including clarification on penalties and the incorporation of consequential amendments arising from the revocation of the Consumer Protection from Unfair Trading Regulations 2008 and a key update in the context of the new subscription regime, which the Government confirmed that it will publicly consult on, with secondary legislation governing returns and refunds to ensure the cooling-off period is not exploited. The bill is in its final stage of the legislative process which is likely to conclude during summer this year.

To keep up to date with the latest on the DMCC Bill, see our DMCC tracker here.

• European Commission joins CMA in examining application of merger control rules to Microsoft/OpenAI partnership

The European Commission (EC) is reviewing whether Microsoft’s investment in OpenAI falls under the EU Merger Regulation (EUMR), prompted by a similar investigation by the UK Competition and Markets Authority (CMA). Central to the inquiry is whether Microsoft exercises control over OpenAI, though the EUMR’s control threshold is higher than the UK’s, potentially making it harder to establish. If not deemed a merger, the EC may examine the arrangement under anti-competitive agreements laws. Additionally, the EC is investigating agreements between major digital players and AI developers, seeking stakeholder input on competition in virtual worlds and generative AI, with plans for a workshop in 2024. To find out more, click here.

• European Commission closes market investigation on Microsoft’s and Apple’s services under the Digital Markets Act, and opens non-compliance investigations against Alphabet, Apple and Meta

On 13 February 2024, the European Commission (EC) closed four market investigations under the Digital Markets Act (DMA), determining that Apple’s iMessage and Microsoft’s Bing, Edge, and Microsoft Advertising should not be designated as gatekeepers. Apple and Microsoft submitted arguments contesting the designation, leading to a thorough assessment by the EC, which concluded that these services do not meet the criteria. Monitoring will continue, and the decisions do not impact the gatekeeper designation for Apple and Microsoft.

The six designated gatekeepers (Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft) were required to comply with the Digital DMA in full from 7 March 2024. The EC futher issued templates to guide compliance, covering reporting requirements and consent for profiling. These templates have been revised to address feedback and improve clarity, including distinguishing between data sources and specifying impact indicators.

On 25 March 2024, the EC launched an investigation against Alphabet, Apple and Meta under the DMA for suspected non-compliance with obligations. The EC is concerned that measures implemented by the gatekeepers are not sufficient, with the proceedings meant to assess measures such as steering, self-preferencing and user-choice. The EC is also taking other investigatory steps to gather facts and information to clarify whether Apple’s new fee structure for alternative app stores may not be aligned with the DMA. To find out more, see the EC’s website here, here and here.

For more detailed analysis of post-implementation of the DMA, see our article here.

• App store updates

In March 2024, Apple announced changes to the App Store in the EU to comply with the Digital Markets Act (DMA), allowing app developers to use alternative payment processors and inform users of external purchasing options outside their apps. This came after the European Commission designated Apple as a “gatekeeper” under the DMA for its iOS, Safari and App Store businesses.

Epic Games, embroiled in a legal dispute with Apple since 2020 over App Store policies, is preparing to bring Fortnite back to the App Store and launch an Epic games store on iOS under the new rules, though there were issues with Apple initially blocking Epic’s new developer account.

Separately, in March 2024, following a 2019 complaint from Spotify, the European Commission fined Apple over €1.8 billion for abusing its dominant position by using “anti-steering” provisions that prevented developers from informing iOS users about cheaper subscription options outside the App Store. This practice was deemed to have harmed consumer interests and led to higher prices.

Meanwhile, the UK’s Competition and Markets Authority further extended its investigation into Apple’s App Store policies until April 2024. The investigation, which commenced in March 2021, concerns suspected infringements of the Chapter II prohibition of the Competition Act 1998 (abuse of a dominant position).

For a more detailed look into these topics, please see our article here.