In: Ofcom

Under regulation 16(1) of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003, an Electronic Communications Code Operator is required to provide Ofcom on 1st April every year a certificate confirming how it is achieving its funds for meeting liabilities (“funds for liabilities”) obligations.

Non-compliance with the annual certification requirement can result in Ofcom issuing a direction against the the Code Operator.

This previous article provides a link to the Ofcom issued guidance on funds for liabilities.

Do note the point in our previous article that the level of funds for liabilities provision that may have been appropriate for a start up with no cable or apparatus in the ground may be significiantly different 3 or 4 years down the line when there may be significant amounts of cable and apparatus deployed in the public highway.

Contact us if you need any asistance with reviewing your funds for liabilities provision or preparing your annual certification.

One of the more complex aspects for applicants seeking Code Powers from Ofcom to consider is that of funds for liabilities. The idea behind funds for liabilities is that there is financial provision made by the applicant prior to it commencing operations against the possibility of it subsequently going ‘pop’, leaving other parties facing liabilities arising from its acts/omissions. Its aim is to avoid some of the problems that arose with the UK cable boom in the 1990s and its subsequent bust which saw various operators going to the wall with unfinished works and apparatus and infrastructure in need of removal.

For many start ups giving consideration to the possibility of failure and making provision for it before they can even commence operations is an unattractive proposition. No one wants to start a business by considering its possible failure. It is however something that has to be done as part of the application under s.106 of the Communications Act 2003 for a direction applying the Electronic Communications Code. The requirements for funds for liabilities arises under Regulation 16 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003. Those regulations detail the potential liabilities and circumstances that need to be addressed.

Ofcom does have Guidelines on Assessing Funds for Liabilities under Regulation 16 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 that can be found via this link. These guidelines are a useful starting point for an applicant considering this aspect.  

Determining what may be an appropriate level of funds for liabilities provision and how it should be made is something that requires careful consideration of the nature and scope of the proposed operation. One also has to take account of financial reality in terms of what provision a potential start up business might afford to make. There is not therefore a ‘one size fits all’ funds for liabilities provision and each application needs careful consideration to ensure that an appropriate level of provision is made.

There is no requirement that funds for liabilities are in place before the grant of Code Powers. However, provision of those funds does have to be in place before Code Powers are exercised.

Another aspect that does occasionally appear to get overlooked is that the funds for liabilities need to be reviewed on an annual basis by a party holding and exercising Code Powers. If an applicant has been successful in its roll out, the appropriate level of funds for liabilities provision in year three of its operation may be significantly different in terms of amount and method of provision.     

We:

  • advise companies on whether they are eligible to secure Code Powers;
  • advise on funds for liabilities requirements;
  • apply to Ofcom and secure Code Powers on behalf of companies; and
  • advise new and existing Code Power operators on the extent and operation of their Code Powers and their wider regulatory responsibilities.

Contact us if we can assist you in respect of the Electronic Communications Code.

The ongoing UK broadband roll out is providing real opportunities for existing and new companies in the telecoms sector.

Whilst companies can undertake many aspects of work without  having powers under the Electronic Communications Code (“Code Powers”), holding or obtaining Code Powers is likely to play a significant part in whether a new entrant can compete on a level playing field.

The Electronic Communications Code is contained within Schedule 3A to the Communications Act 2003. What it does is confer certain rights on a party that is granted Code Powers by Ofcom.  These rights include, amongst other things:

  • exemptions from certain aspects of planning requirements that may otherwise apply for the placing of telecoms apparatus;
  • rights to place and maintain electronic communications apparatus and infrastructure within the public highway; and
  • means to facilitate access to private land for the placing and maintaining of electronic communications apparatus and infrastructure.

Ofcom’s own website also provides some useful information on the Electronic Communications Code.

We regularly:

  • advise companies on whether they are eligible to secure Code Powers;
  • apply to Ofcom and secure Code Powers for companies; and
  • advise new and existing Code Power operators on the extent and operation of their Code Powers and their wider regulatory responsibilities.

Contact us if we can assist you in respect of the Electronic Communications Code.