The digital devil in the detail – first signs of UK/EU regulatory divergence
A new sort of digital divide will require ‘Internet of Things (IoT), ‘Machine-to-Machine’ (M2M) and ‘Over the Top’ (OTT) operators on both sides of the English Channel to be especially vigilant in a post-Brexit world.
Even days before the end of the Brexit implementation period and the UK’s effective exit from the EU, digital policy differences had already taken effect with the UK’s execution of statutory instruments amending the Communications Act 2003, Ofcom’s General Conditions and other supporting regulations. Implementing these changes on 21 December, the UK stayed true to its commitment to adopt the general principles of the European Electronic Communications Code (EECC), but it meaningfully diverged from the EECC’s definition of Electronic Communications Services (ECS), which will determine what service providers fall within the scope of a range of regulations such as consumer protection, reporting and even notification obligations. This may impact most prominently certain digital platform service providers and even some IoT/M2M product and service providers.
The EECC required EU Member States to transpose it into national laws and regulations by 21 December 2020. Its definition of ECS includes both number based and number-independent interpersonal communications services (ICS), which would include such OTTs as WhatsApp and Zoom. However, the UK has explicitly excluded number-independent ICS from its definition of ECS. The UK government made clear in 2020 that it did not consider the application of consumer protection rules to number-independent ICS a priority. While it seemingly left the door open to inclusion in the future, this light-touch regulatory approach may provide an easier road for such providers in the UK as compared to the EU.
Conversely, though, the UK has adopted a potentially broader reference to IoT/M2M connectivity services, amending its regulations and Ofcom’s General Conditions to apply to “any other service consisting
in, or having as its principal feature, the conveyance of Signal, such as a [M2M] Transmission Service or a transmission service used for broadcasting.” The EECC, on the other hand, refers to “services consisting wholly or mainly in the conveyance of signals such as transmission services used for broadcasting and [M2M] Transmission Services.” Given the legacy uncertainty around how inclusion of, or packaging connectivity components with, IoT/M2M products may bring otherwise non-ECS providers into regulated space—as well as what threshold tests may be applied at the national level to make such a determination—the distinction between the EU’s “consisting wholly or mainly” and the UK’s seemingly broader “consisting in, or having as its principal feature” warrants continued monitoring of how the UK will interpret and apply this clause.
These definitional differences may portend greater divergence on digital regulation between the UK and the EU. However, even these immediate differences will require those companies looking to launch products or services in both the UK and the EU—or those already operating in both jurisdictions—to assess carefully whether they will be captured by the definition of ECS in each, how to comply in order to ensure a smooth launch in target markets and the impact this may have on their business models.
If you are considering entry or expansion into the UK or the EU, you need to talk to people who have hands-on experience of the details who can offer you sound guidance. Please contact DT Economics for a copy of our Market Access brochure and to let us tell you about our Red Flag Review service.
For more information, contact David Darwin at email@example.com.