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Summary

As a result of the vote in a referendum held on June 23, 2016, it is now likely that the UK will start the process that will lead the country to leave the European Union (EU), a move commonly known as "Brexit." This will not happen overnight because it will require lengthy negotiations, and it is expected to be completed in roughly two years.

However, it is expected that, once completed, Brexit will have little impact on the UK's regulatory environment.

The EU's regulatory framework is largely inspired by the UK's experience of the previous decades

Brexit is likely to have a minimal effect on the UK's regulatory environment for at least two reasons.

First, it is highly likely that the UK will continue to be part of the European Economic Area (EEA). As other EEA countries do (e.g. Norway), Ofcom will likely follow a regulatory approach very close to the approach stemming from the European Commission's (EC's) regulatory framework.

Second, the European approach to regulation actually borrows a great deal from the UK's experience of privatization and market liberalization. It is unlikely that the UK will adopt a radically different regulatory approach, which will still be characterized by regular market reviews. However, one aspect that could change is the frequency of such reviews, which is currently set at three years for all markets warranting regulation. Ofcom could look to be more flexible about the time frames for reviewing markets once it is no longer bound to the EC's framework.

Another impact is that UK consumers could lose the benefits of the "roam-like-at-home" regime recently implemented by the EC for international mobile roaming because UK operators will no longer be subject to the EC's roaming regulation. However, this is an area that could ultimately depend on the UK remaining part of the EEA. Market forces could also contribute to keep roaming prices low because operators' recent offers have shown a tendency to package roaming to some destinations inside and outside the EU in an increasingly attractive way for customers.

Appendix

Author

Luca Schiavoni, Senior Analyst, Regulation

luca.schiavoni@ovum.com

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