Communications Act 2003, section 88

Conditions about network access pricing etc

Part 2 Networks, services and the radio spectrum

(1)OFCOM are not to set an SMP condition falling within section 87(9) except where—

(a)it appears to them from the market analysis carried out for the purpose of setting that condition that there is a relevant risk of adverse effects arising from price distortion; and

(b)it also appears to them that the setting of the condition is appropriate for the purposes of—

(i)promoting efficiency;

(ii)F340promoting sustainable competition; ...

(iii)conferring the greatest possible benefits on the end-users of public electronic communications services[F341 having regard, where relevant to the market analysis, to the long-term interests of end-users in the use of next-generation networks; andF341]

[F342 (iv)where relevant to the market analysis, promoting the availability and use of new and enhanced networks.F342]

[F343 (1A)Even if the tests in subsection (1)(a) and (b) are satisfied, OFCOM may consider not imposing an SMP condition if they consider—

(a)that a demonstrable retail price constraint is present; and

(b)that obligations imposed by SMP conditions not falling within section 87(9) ensure effective and non-discriminatory access.F343]

[F344 (2)In setting an SMP condition falling within section 87(9), OFCOM must take account of—

(a)the extent of the investment in the matters to which the condition relates of the person to whom it is to apply; and

(b)where the condition involves price controls on the provision of network access to existing network elements, the benefits of predictable and stable wholesale prices in ensuring—

(i)efficient market entry; and

(ii)sufficient incentives for all undertakings to bring into operation new and enhanced networks.F344]

(3)For the purposes of this section there is a relevant risk of adverse affects arising from price distortion if the dominant provider might—

(a)so fix and maintain some or all of his prices at an excessively high level, or

(b)so impose a price squeeze,

as to have adverse consequences for end-users of public electronic communications services.

(4)In considering the matters mentioned in subsection (1)(b) OFCOM may—

(a)have regard to the prices at which services are available in comparable competitive markets;

(b)determine what they consider to represent efficiency by using such cost accounting methods as they think fit.

(5) In this section “the dominant provider” has the same meaning as in section 87.

Definitions used in section 88 6

OFCOM

“OFCOM” means the Office of Communications;

Defined in s.405(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
end-user

(10) In sub-paragraph (8) “public electronic communications service” and “end-user” each has the same meaning as in Chapter 1 of Part 2.

Defined in Sch.12 para.5(10) · see it in the full Act

“end-user”, in relation to a public electronic communications service, means—

(a)

a person who, otherwise than as a communications provider, is a customer of the provider of that service;

(b)

a person who makes use of the service otherwise than as a communications provider; or

(c)

a person who may be authorised, by a person falling within paragraph (a), so to make use of the service;

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

(10) In sub-paragraph (8) “public electronic communications service” and “end-user” each has the same meaning as in Chapter 1 of Part 2.

Defined in Sch.12 para.5(10) · see it in the full Act

“public electronic communications service” means any electronic communications service that is provided so as to be available for use by members of the public;

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

“access” is to be construed in accordance with subsection (4);

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

Cases considering section 88 4

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

[2017] EWCA Civ 330 · 4 May 2017

Section 88 gives Ofcom considerable regulatory judgment in selecting SMP obligations and cost-orientation methods suited to the statutory objectives. (see paras [131] and [184]-[190])

Everything Everywhere Ltd v Competition Commission & Ors

[2013] EWCA Civ 154 · 6 March 2013Interprets

The judgment treats section 88, particularly section 88(1)(b), as part of the statutory framework governing whether the selected cost standard was appropriate. (see paras [13], [57]-[59]) The judgment treats section 88(1)(b) as requiring a price-control condition to promote efficiency, sustainable competition and the greatest possible benefits for end-users. (see paras [13], [57]-[59])

Vodafone Ltd & Ors v British Telecommunications Plc & Anor

[2010] EWCA Civ 391 · 20 April 2010Limits

Constrains the setting of SMP price controls by reference to price-distortion risk, efficiency, sustainable competition, consumer benefit and investment. The court used these forward-looking purposes in construing the modification power. (see paras [18], [36]–[40]) Cited only. Requires a relevant risk of adverse effects arising from price distortion before an SMP price-control condition is set. The risk is assessed by reference to future pricing behaviour, supporting prospective rather than retrospective regulation. (see paras [18], [26], [39]) Requires the price-control condition to be appropriate for promoting efficiency, sustainable competition and end-user benefits. The judgment holds that these purposes are directed towards the future, not the past. (see paras [18], [39]) Cited only. Defines the relevant risk of price distortion by reference to excessively high prices or a price squeeze with adverse consequences for end-users. The judgment uses this future-oriented wording in construing the modification power. (see paras [18], [39])

What each judgment says about section 88 is in the case-law panel in the full Act.

Explanatory note

227.OFCOM may not set conditions under section 87(9) unless it appears to them from a market analysis that the provider in question might charge excessive prices or engage in other anti-competitive pricing behaviour. The condition must also be perceived by OFCOM as being efficient and pro-competitive, and as resulting in the maximum benefit to end-users. In setting an SMP services condition falling within section 87(9), OFCOM must take into account the extent of the investment that the person to whom the condition is to apply would need to make if the condition were to be applied.

All the explanatory notes for the Act

Amendments and notes

7 notes from legislation.gov.uk

Amendments

  1. F340Word in s. 88(1)(b)(ii) omitted (21.12.2020) by virtue of 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. 42(2)(i)
  2. F341Words in s. 88(1)(b)(iii) 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. 42(2)(ii)
  3. F342S. 88(1)(b)(iv) 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. 42(2)(iii)
  4. F343S. 88(1A) 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. 42(3)
  5. F344S. 88(2) substituted (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. 42(4)

Commencement

  1. I155S. 88 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. I156S. 88 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)