Brexit? Keep Calm and Carry On, But Guard Your Wallet

I. Grant
I. Grant

Summary Bullets:

• Brexit, if it happens, will take longer than anyone thinks, so don’t panic.

• UK users should prepare for price increases and slower network builds as hedged contracts mature and investment slows.

Two weeks on from the unprecedented decision to quit the EU, a couple of things are clear. As far as the regulatory regime that govern telco behaviour goes, it is business as usual – Brexit talks, if and when they start, will take two years, so regulations like Roam like at Home will come into force from June 2017. Enterprise users can simply carry on.

However, there are some immediate effects. Most obvious is the effective devaluation of sterling against the euro, domestic UK prices for mobile calls to the continent, as well as equipment purchases are likely to rise, pushing up UK prices generally. This will raise UK communications costs in the short and medium term, and may slow down network builds, frustrating firms that seek faster and more ubiquitous connectivity in Britain. Further, Brexit, BT’s reinforcement of its dominant position through the purchase of EE and regulatory hurdles for merging O2 UK and Three seem to have capped investor interest in the UK telecom market. Telefonica announced its O2 UK subsidiary is no longer for sale, and Vodafone had to play down reports it may seek a new financial headquarters. This would be a good time for UK-based enterprise customers to seek clarity on O2 and Vodafone plans, and to push them for connectivity options and applications that suit them better in return for extended contracts.

TA deteriorating technology base in the UK compared to Europe could well result from Brexit if network investment slows and talented young developers and entrepreneurs seek bigger markets in Berlin, Barcelona and Oulu. To encourage network operators to invest, the government published the Digital Economy Bill. Aimed largely at consumers, the bill largely cements the status quo between operators, but it might make it cheaper to build networks because landlords will be forced to come to terms with operators. Enterprise users can afford to ignore the bill. It will not turn Britain into what Hong Kong and Taiwan are to China and the rest of the world, or BT into SK Telekom.

Much more relevant is the growing rift between Britain and the EU over data privacy and surveillance. The British government has published the Investigatory Powers Bill, which proposes to legalize mass surveillance of electronic communications. It would nullify a European Court of Justice ruling that such things, as enabled by the EU Data Protection Directive, were too ill-defined and broad to be legal.

To fight the growing confusion over data privacy and surveillance. European operators have called for EU legislation to be harmonized, with strong safeguards for privacy. Deutsche Telekom last month pre-empted such calls and introduced Volksverschlüsselung (People’s Encryption), a free, easy to use cloud-based email encryption tool. It strongly suggested enterprises use it to protect their correspondence against prying eyes and email-enabled malware. Enterprise users should heed this, given the growing threats of industrial espionage, abuse of intellectual property rights and ransomware, and safeguard their electronic communications, irrespective of Brexit talks and pending legislation.

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