Businesses that have had the Electronic Communications Code (“ECC”) applied to them pursuant to s.107 of the Communications Act 2003 (“Code operators”) are required under Regulation 16(1)(b) of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 (“the Regulations”) to file their annual certificate pursuant to that provision with Ofcom by 1^st April 2023, unless exempt from that requirement (see below for more detail).  

Ofcom provide on their website a specimen certificate that might be used or adapted. They also have guidelines on assessing funds for liabilities, which may be of assistance.

This note provides:

1. Some suggested action points; and
2. A General Background section, which provides additional explanation and context.

Suggested action points

1. Ignore this note if this is already being dealt with!
2. Commence review for purposes of determining the appropriate amount of funds for liabilities.
3. Determine how the financial provision is made.
4. Complete certificate and other required actions and file the certificate (together with additional required documents) with Ofcom by 1^st April 2023.
5. Diarise to repeat process in time for 1^st April 2024.
6. Contact us if it would be helpful to discuss the points raised in this email.

General background

Where a Code operator is subject to the requirement to provide the Regulation 16(1) certificate, failure to do so by the deadline can result in enforcement action being taken by Ofcom. It has been notable over the past 12-18 months that Ofcom has increased its enforcement investigation of Code operators, particularly where the certificate filing requirement has not been met.

The annual certificate is more than just a ‘tick box’ exercise. What the certificate does is require the Code operator to confirm, amongst other things:

1. How and on what basis the Code operator has assessed its potential specified liabilities for purposes of Regulation 16 of the Regulations;
2. The amount of funds for meeting liabilities that has been provided for; and
3. How that financial provision is being made (with evidence of the same).

In the case of a limited company, the certificate requires board resolution approval and also requires the board to state in its reasonable opinion that it has complied with its obligation under Regulation 16(1). This does potentially create wider risks to directors, particularly if it was subsequently determined that no reasonable director could have reached the opinion that the amount of funds for meeting specified liabilities was sufficient or the obligation satisfied on the information which was considered. This situation might only arise if the company suffered a “relevant event”, as defined in Regulation 16(10) of the Regulations.

The annual certificate provided to Ofcom can be subject to scrutiny and question by Ofcom. If Ofcom is not satisfied that the Code operator has met its obligations under Regulation 16(1) it may direct further action be taken by the Code operator to satisfy Ofcom that Regulation 16(1) has been complied with. 

With the economy and the communications sector currently facing some notable challenges, aspects we consider it is possible that Ofcom may pay increased attention to are:

1. the amount of funds for meeting liabilities detailed within the annual certificate; and
2. the means by which that provision is being made.

Whilst Ofcom does not prescribe the amount of funds for liabilities, it may start to ask questions if the amount of funds for liabilities made does not appear to them to be reflective of the potential risks attaching to the scale and nature of build works being undertaken or they are not content with the method of provision of the funds.

It is also the case that the amount of funds for liabilities that may have been entirely appropriate at the time Code powers were obtained may no longer be reflective of the potential specified liabilities risk that the Code operator might now face, particularly after several years of active and extensive ongoing network build.        

The requirement to provide the annual certificate under Regulation 16(1) only applies if the Code operator has exercised rights conferred by the Electronic Communications Code (“ECC”). If no such rights have been exercised, the annual certification obligation is not generally triggered (although it may still be, if a Code operator has acquired relevant apparatus and/or infrastructure from a 3^rd party where that apparatus/infrastructure would be subject to this requirement). Where however a Code operator intends to start exercising its rights under the ECC, it must provide the same certificate to Ofcom not less than 2 weeks before it exercises its right to install apparatus (and then annually thereafter by 1^st April). 

It should also be noted that the requirement to make provision of funds for liabilities (and provide the Regulation 16(1) certificate) will generally only be triggered where the Code operator has or is exercising its rights under the New Roads and Street Works Act 1991 that the ECC confers (but note the point in the paragraph above about acquired apparatus and infrastructure that might still be subject to the requirement). Those Code operators who undertake works solely in private land might not be subject to the requirement to make such provision.   

Where we might assist

We are experienced in advising:

1. New entrants to the sector and obtaining Code powers on their behalf;
2. New and existing Code operators on the amount of funds for meeting liabilities for purposes of Regulation 16 and on how it is provided;
3. Code operators on Code power rights and obligations;
4. Code operators on enforcement investigations and action by Ofcom; and
5. Code operators in respect of the wider regulatory framework, including the New Roads and Street Works Act 1991 and how that impacts on them.  

Contact us if we might assist you in relation to anything addressed within this briefing note.