Communications Act 2003, section 87

Conditions about network access etc

Part 2 Networks, services and the radio spectrum

(1) Where OFCOM have made a determination that a person to whom this section applies (“the dominant provider”) has significant market power in an identified services market, they shall—

(a)set such SMP conditions authorised by this section as they consider it appropriate to apply to that person in respect of the relevant network or relevant facilities; and

(b)apply those conditions to that person.

(2)This section applies to—

(a)a person who provides a public electronic communications network; and

(b)a person who makes available facilities that are associated facilities by reference to such a network.

(3)This section authorises SMP conditions requiring the dominant provider to give such entitlements as OFCOM may from time to time direct as respects—

(a)the provision of network access to the relevant network;

(b)the use of the relevant network; and

(c)the availability of the relevant facilities.

[F331 (3A)The assets as respects which entitlements may be given under subsection (3) include, in the case of assets which are not active, any which, although forming part of the relevant network or the relevant facilities, do not form part of the services market to which the determination relates.F331]

(4)In determining what conditions authorised by subsection (3) to set in a particular case, OFCOM must take into account, in particular, the following factors—

(a)the technical and economic viability [F332(including the viability of other network access products, whether provided by the dominant provider or another person)F332] , having regard to the state of market development, of installing and using facilities that would make the proposed network access unnecessary;

(b)the feasibility of the provision of the proposed network access;

[F333 (ba)any technological developments that, in OFCOM’s opinion, are likely to affect the design and management of the relevant network or (as the case may be) the relevant facilities;

(bb)the need to ensure that the provision of the proposed network access does not have the effect of favouring one form of technology over another in relation to the design and management of electronic communications networks;F333]

(c)the investment made by the person initially providing or making available the network or other facility in respect of which an entitlement to network access is proposed [F334(taking account of any public investment made)F334] ;

(d)the need to secure effective competition [F335(including, where it appears to OFCOM to be appropriate, economically efficient infrastructure based competition)F335] in the long term [F336and to support innovative business models that support sustainable competitionF336] ; [F337andF337]

(e)F338any rights to intellectual property that are relevant to the proposal; ...

F338 (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)The conditions authorised by subsection (3) may include provision—

(a)for securing fairness and reasonableness in the way in which requests for network access are made and responded to; and

(b)for securing that the obligations contained in the conditions are complied with within the periods and at the times required by or under the conditions.

[F339 (5A)The SMP conditions authorised by this section also include a condition which—

(a)is of a technical or operational nature; and

(b)appears to OFCOM to be appropriate for securing the proper operation of an electronic communications network in compliance with a condition under subsection (3).

(5B)A condition falling within subsection (5A) may provide that compliance with the condition is not required unless a person on whom an entitlement is or may be conferred in pursuance of a requirement imposed by a condition under subsection (3) fulfils such technical or operational requirements as may be specified by OFCOM.

(5C)It shall be the duty of OFCOM, when setting a condition falling within subsection (5A), to ensure that it contains all such provision as they consider appropriate for the purpose of taking account of the relevant international standards.F339]

(6)The SMP conditions authorised by this section also include one or more of the following—

(a)a condition requiring the dominant provider not to discriminate unduly against particular persons, or against a particular description of persons, in relation to matters connected with network access to the relevant network or with the availability of the relevant facilities;

(b)a condition requiring the dominant provider to publish, in such manner as OFCOM may from time to time direct, all such information as they may direct for the purpose of securing transparency in relation to such matters;

(c)a condition requiring the dominant provider to publish, in such manner as OFCOM may from time to time direct, the terms and conditions on which he is willing to enter into an access contract;

(d)a condition requiring the terms and conditions on which the dominant provider is willing to enter into an access contract to include such terms and conditions as may be specified or described in the condition;

(e)a condition requiring the dominant provider to make such modifications as OFCOM may direct of any offer by that provider which sets out the terms and conditions on which he is willing to enter into an access contract.

(7)The SMP conditions authorised by this section also include conditions requiring the dominant provider to maintain a separation for accounting purposes between such different matters relating—

(a)to network access to the relevant network, or

(b)to the availability of the relevant facilities,

as OFCOM may from time to time direct.

(8)The SMP conditions authorised by subsection (7) include conditions imposing requirements about the accounting methods to be used in maintaining the separation.

(9)The SMP conditions authorised by this section also include (subject to section 88) conditions imposing on the dominant provider—

(a)such price controls as OFCOM may direct in relation to matters connected with the provision of network access to the relevant network, or with the availability of the relevant facilities;

(b)such rules as they may make in relation to those matters about the recovery of costs and cost orientation;

(c)such rules as they may make for those purposes about the use of cost accounting systems; and

(d)obligations to adjust prices in accordance with such directions given by OFCOM as they may consider appropriate.

(10)The SMP conditions authorised by subsection (9) include conditions requiring the application of presumptions in the fixing and determination of costs and charges for the purposes of the price controls, rules and obligations imposed by virtue of that subsection.

(11)Where OFCOM set a condition authorised by this section which imposes rules on the dominant provider about the use of cost accounting systems, it shall be their duty also to set, and to apply to him, an SMP condition which imposes on him an obligation—

(a)to make arrangements for a description to be made available to the public of the cost accounting system used in pursuance of that condition; and

(b)to include in that description details of—

(i)the main categories under which costs are brought into account for the purposes of that system; and

(ii)the rules applied for the purposes of that system with respect to the allocation of costs.

(12)In this section—

Definitions used in section 87 16

OFCOM

“OFCOM” means the Office of Communications;

Defined in s.405(1) · see it in the full Act
significant market power

“significant market power” is to be construed in accordance with section 78;

Defined in s.151(1) · see it in the full Act
services market

“services market”, in relation to a market power determination or market identification, is to be construed in accordance with section 46(8)(a);

Defined in s.151(1) · see it in the full Act
SMP condition

(16) In this paragraph “Access Directive”, “electronic communications apparatus”, “the provision of premium rate services”, “SMP condition”, “SMP apparatus condition” and “Universal Service Directive” each has the same meaning as in Chapter 1 of Part 2 of this Act .

Defined in Sch.18 para.9(16) · see it in the full Act

“SMP condition” means a condition set as an SMP condition under section 45, and “SMP services condition” and “SMP apparatus condition” are to be construed in accordance with subsections (8) and (9) of that section respectively;

Defined in s.151(1) · see it in the full Act
public electronic communications network

“public electronic communications network” means an electronic communications network provided wholly or mainly for the purpose of making electronic communications services available to members of the public;

Defined in s.151(1) · see it in the full Act
associated facility

(3) In this Act “associated facility” means a facility, element or service which is available for use, or has the potential to be used, in association with the use of an electronic communications network or electronic communications service (whether or not one provided by the person making the facility, element or service available) for the purpose of—

(a)making the provision of that network or service possible;

(b)making possible the provision of other services provided by means of that network or service; or

(c)supporting the provision of such other services.

Defined in s.32(3) · see it in the full Act

“associated facility” has the meaning given by section 32;

Defined in s.405(1) · see it in the full Act
network access

“network access” is to be construed in accordance with subsection (3);

Defined in s.151(1) · see it in the full Act
electronic communications network

(1) In this Act “electronic communications network” means—

(a)a transmission system for the conveyance, by the use of electrical, magnetic or electro-magnetic energy, of signals of any description; and

(b)such of the following as are used, by the person providing the system and in association with it, for the conveyance of the signals—

(i)apparatus comprised in the system;

(ii)apparatus used for the switching or routing of the signals; ...

(iii)software and stored data ; and

(iv)(except for the purposes of sections 125 to 127) other resources, including network elements which are not active.

Defined in s.32(1) · see it in the full Act

“electronic communications network” and “electronic communications service” have the meanings given by section 32;

Defined in s.405(1) · see it in the full Act
provide

“provide” and cognate expressions, in relation to an electronic communications network, electronic communications service or associated facilities, are to be construed in accordance with section 32(4);

Defined in s.405(1) · see it in the full Act
business

“business” includes any trade or profession;

Defined in s.405(1) · see it in the full Act
relevant international standards

“relevant international standards” means—

(a)

any standards or specifications from time to time drawn up and published in accordance with Article 17 of the Framework Directive or Article 39 of the EECC Directive ;

(b)

the standards and specifications from time to time adopted by—

(i)

the European Committee for Standardisation,

(ii)

the European Committee for Electrotechnical Standardisation; or

(iii)

the European Telecommunications Standards Institute; and

(c)

the international standards and recommendations from time to time adopted by—

(i)

the International Telecommunication Union;

(ii)

the International Organisation for Standardisation; or

(iii)

the International Electrotechnical Committee;

Defined in s.151(1) · see it in the full Act
information

“information” includes accounts, estimates and projections and any document;

Defined in s.405(1) · see it in the full Act
modification

“modification” includes omissions, alterations and additions, and cognate expressions are to be construed accordingly;

Defined in s.405(1) · see it in the full Act
provider

“provider”, in relation to a premium rate service, is to be construed in accordance with section 120(9) to (12), and cognate expressions are to be construed accordingly;

Defined in s.151(1) · see it in the full Act
made available

(7B) Subsection (13) of section 264 (interpretation of “made available”) applies for the purposes of sub-paragraph (7) as it applies for the purposes of that section.

Defined in Sch.12 para.3(7B) · see it in the full Act
allocation

“allocation” and “adoption”, in relation to telephone numbers, and cognate expressions, are to be construed in accordance with section 56;

Defined in s.151(1) · see it in the full Act

Cases considering section 87 5

British Telecommunications plc v Office Of Communications (OFCOM) & Ors

[2017] EWCA Civ 330 · 4 May 2017Limits

Section 87 governs the setting of SMP conditions. Its powers operate prospectively, but do not exhaust Ofcom’s dispute-resolution and enforcement powers. (see paras [26]-[28]) The subsection permits SMP conditions concerning price controls, cost recovery, cost orientation and cost accounting. (see paras [26]-[28]) The price-adjustment power is prospective and does not exhaust the wider powers required by Article 13(3) of the Access Directive. (see paras [27]-[28])

Hutchison 3G UK Ltd v The Office of Communications & Anor

[2009] EWCA Civ 683 · 16 July 2009

The court treated section 87 as empowering Ofcom to impose appropriate SMP conditions after a finding of SMP. (see para [30]) Cited only. The court treated section 87(9) as authorising price-control conditions subject to the additional requirements in section 88. (see paras [30]; [73])

Talktalk Telecom Group Plc v Office of Communications & Anor

[2013] EWCA Civ 1318 · 30 October 2013

Confirms the statutory context for imposing a charge control as an SMP services condition. The judgment did not decide the separate merits of the charge-control structure, which was not challenged on this appeal (see paras [4]; [106]).

What each judgment says about section 87 is in the case-law panel in the full Act.

Explanatory note

222.Sections 87 to 92 make provision about the subject matter of SMP services conditions. Where OFCOM have identified a provider of a public electronic communications network or a person who makes available associated facilities in connection with such a network as having SMP in a services market, they may impose such SMP conditions authorised by this section, as they consider appropriate. These may include conditions requiring the provider to confer entitlements on other providers regarding the provision of network access, the use of that network, and the availability of facilities. Such conditions may include provision for securing fairness and reasonableness in the process and should be set having taken into account the matters set out in subsection (4). These include the feasibility of providing network access; the need to ensure effective long-term competition in the markets; the investment made by the person initially providing or making available the network or facility in respect of which an entitlement to network access is proposed; the technical and economic viability of installing and using facilities that would make the proposed network access unnecessary; intellectual property rights; and the availability of services throughout the European Union.

223.Subsection (6) provides that SMP service conditions may require a person with SMP to publish such information as OFCOM may direct for the purpose of securing transparency in relation to network access. They may require such a person not to discriminate in relation to any matter connected with network access. They may require such a person to publish the terms and conditions on which the provider will enter an access contract and to modify those terms and conditions.

  • *an access contract is defined in subsection (12) as any contract for the provision, by a dominant provider, of network access, or of associated facilities made available in relation to a public electronic communications network.

224.Subsection (7) provides that OFCOM may set SMP services conditions obliging a dominant provider to maintain separate accounts for such different matters relating to network access or the availability of associated facilities as OFCOM may direct.

225.Subsection (9) provides that OFCOM may set SMP services conditions requiring a person with SMP to comply with price-controls, rules on cost-recovery and cost accounting systems in relation to matters connected with network access or the availability of associated facilities. OFCOM may also, by setting such conditions, direct the provider to adjust its prices.

226.This section, together with sections 88 and 89, implement Articles 8 to 13 of the Access Directive, Article 6(2) of the Authorisation Directive and Article 16(4) of the Framework Directive.

All the explanatory notes for the Act

Amendments and notes

11 notes from legislation.gov.uk

Amendments

  1. F331S. 87(3A) inserted (21.12.2020) by The Electronic Communications and Wireless Telegraphy (Amendment) (European Electronic Communications Code and EU Exit) Regulations 2020 (S.I. 2020/1419), reg. 1(2), Sch. 1 para. 41(2)
  2. F332Words in s. 87(4)(a) inserted (26.5.2011) by The Electronic Communications and Wireless Telegraphy Regulations 2011 (S.I. 2011/1210), reg. 1(2), Sch. 1 para. 49(a) (with Sch. 3 para. 2)
  3. F333S. 87(4)(ba)(bb) inserted (21.12.2020) by The Electronic Communications and Wireless Telegraphy (Amendment) (European Electronic Communications Code and EU Exit) Regulations 2020 (S.I. 2020/1419), reg. 1(2), Sch. 1 para. 41(3)(a)
  4. F334Words in s. 87(4)(c) inserted (26.5.2011) by The Electronic Communications and Wireless Telegraphy Regulations 2011 (S.I. 2011/1210), reg. 1(2), Sch. 1 para. 49(b) (with Sch. 3 para. 2)
  5. F335Words in s. 87(4)(d) inserted (26.5.2011) by The Electronic Communications and Wireless Telegraphy Regulations 2011 (S.I. 2011/1210), reg. 1(2), Sch. 1 para. 49(c) (with Sch. 3 para. 2)
  6. F336Words in s. 87(4)(d) inserted (21.12.2020) by The Electronic Communications and Wireless Telegraphy (Amendment) (European Electronic Communications Code and EU Exit) Regulations 2020 (S.I. 2020/1419), reg. 1(2), Sch. 1 para. 41(3)(b)
  7. F337Word in s. 87(4)(d) inserted (31.12.2020) by The Electronic Communications and Wireless Telegraphy (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/246), reg. 1(2), Sch. 1 para. 32(a); 2020 c. 1, Sch. 5 para. 1(1)
  8. F338S. 87(4)(f) and word omitted (31.12.2020) by virtue of The Electronic Communications and Wireless Telegraphy (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/246), reg. 1(2), Sch. 1 para. 32(b); 2020 c. 1, Sch. 5 para. 1(1)
  9. F339S. 87(5A)-(5C) inserted (26.5.2011) by The Electronic Communications and Wireless Telegraphy Regulations 2011 (S.I. 2011/1210), reg. 1(2), Sch. 1 para. 49(d) (with Sch. 3 para. 2)

Commencement

  1. I153S. 87 in force at 25.7.2003 for specified purposes by S.I. 2003/1900, arts. 1(2), 2(1), Sch. 1 (with art. 3) (as amended by S.I. 2003/3142, art. 1(3)) text for certain specified purposes only, see the commentary.
  2. I154S. 87 in force at 29.12.2003 in so far as not already in force by S.I. 2003/3142, art. 3(2) (with art. 11)