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JILT 1996 (1) - Colin Scott

Review of Colin D Long (ed.)

Telecommunications Law and Practice

(2nd edition, London, Sweet and Maxwell, 1995) 709 pp (including index)

Reviewed by Colin Scott
c.scott@lse.ac.uk


I am grateful to Colin Long for commenting on a first draft of this review.

Contents

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This is a Book Review published on 31 January 1996.

Citation:Scott C, 'Colin D. Long's Telecommunications Law and Practice ', Book Review, 1996 (1) The Journal of Information, Law and Technology (JILT). <http://elj.warwick.ac.uk/jilt/bookrev/1scott/>. New citation as at 1/1/04: <http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/1996_1/scott/


Introduction


Colin D Long, a solicitor and partner in Coudert Brothers, was the bold soul who, in 1988, published the first and, to date, only book setting out the law in relation to UK telecommunications after privatisation. Since then the legislative framework has barely changed, but very substantial change has occurred in the implementation and application of the law through the issuing of licences to new operators and changes to licence conditions of the existing telecommunications operators. It may be pointed out that Parliament has had very little role in these changes. Rather, they have been pursued through the exercise of statutory licensing powers by ministers, and by statutory powers to regulate held by the Office of Telecommunications. Additionally, since 1988 the importance of comparative and international telecommunications law has become more apparent, partly because of the development of EC telecommunications policy, and the inclusion of telecommunications in the Uruguay round of the GATT, but also because national telecommunications operators and new market entrants increasingly want legal advice on entering other national and international markets. These phenomena provide more than ample excuse for the publication of a second edition of Telecommunications Law and Practice and its extension to include sections on EU policy and on the experience of telecommunications regulation in other key jurisdictions.

Since no one person is likely to have a command of such diverse sources of law and policy, the editor has enlisted the assistance of many contributors, chiefly practitioners, leaving the editor to write eleven of the thirty chapters. About two-thirds of the book is now devoted to comparative and international discussion, leaving the core fifteen chapters on the UK at 219 pages. Thus, the book provides an excellent resource for those needing to get to grips with telecommunications law not just in the UK, but also in other jurisdictions, for some of which there is little other analysis available in English.

Long's Critique

This is a welcome book, then, and one which clearly places considerable demands on the authors who must simultaneously cope with a fast-moving legal environment and, in a sense, 'construct' the juridical field about which they write, for there is little systematic legal analysis of telecommunications, at least outside the United States. If the performance of this difficult task is not wholly successful, this should not be surprising nor take away too much from the achievement. The curious thing about the book is that it appears to be simultaneously too formal in its view of the legal field, but not sufficiently formal in the way in which it is constructed as a text.

The first aspect of this problem is that the biting critical analysis of UK telecommunications law is only provided in Long's preface. Formality prevents such critique getting in the way of description in the main body of the text, and yet it is this critique which shows Long's true depth of knowledge. First he asserts that interconnection is developing into the key issue in telecommunications regulation. Underlying this claim is the fact that in most countries one company has control of a substantial amount of the network infrastructure and may be able to use that control to compete unfairly with new entrants in service provision.

The argument arises from the reluctance of governments to separate network ownership from service provision (other than for accounting purposes as in the UK). If a model similar to the present model of provision for UK railway infrastructure were adopted, whereby a public body owned the infrastructure and leased its use to competing service providers, then the interconnection problem would be much more straightforward. But the telecommunications network, extending as it does into people's homes, is much more complex than the railway network, and (enforced) cooperation between service providers over use of infrastructure would inevitably be a problem.

An alternative solution has been to encourage the development of so-called 'alternative infrastructures', both for long-distance telecommunications (for example, the telecoms networks operated by many rail service providers) and local transmission (notably the infrastructure developed by cable-TV companies). The liberalisation of these alternative infrastructures allowing them to carry telecommunications traffic, already substantially carried out in the UK and planned at EC level, will not remove the need for cooperation between service providers in order to ensure comprehensive coverage for telecommunications traffic, but will substantially reduce the problem of dominance. We are fortunate in that we can see what a system without sectoral regulation looks like, as liberalisation of the New Zealand market was carried out without setting up a sectoral regime. The consequences of that decision, reflected in the Clear Communications case, [1994] 6 TCLR 138 before the Privy Council in 1994, have led the New Zealand government to review its reliance on the general competition rules to provide the norms for the telecommunications sector.

In addition to setting out the key policy questions, Long supplies a forthright attack on the institutional structure of UK telecommunications regulation. The thrust of this critique is the claim that the failure adequately to review and reform the legislative structure in the UK at the time of the duopoly review in 1991 has led to more costly and complex regulation than was necessary, and has hindered the entry of new entrants into the market. Long could usefully have drawn on some of the comparative material in later chapters of the book, to demonstrate that this legislative inflexibility was unnecessary. For example, the description of telecommunications law in Australia in chapter 17 suggests that the Australian government both used separate statutes to deal with different aspects of telecommunications regulation and has amended legislation frequently. Not only does this have the potential to make the Australian regime more workable, but it also gives to Parliament a greater input on the development of policy.

The criticism of the UK extends beyond the Telecommunications Act 1984 into the general competition rules, which Long argues should be reformed to align the UK with the prohibition system of the European Community. Realising that such a reform is not likely to occur under the present government, the Director General of Telecommunications (DGT) is seeking to amend British Telecom's (BT's) licence to implement this prohibition system by the back-door method of licence reform. BT has proved extremely hostile to this proposal, so it may have to go to the Monopolies and Mergers Commission (MMC) for review. Such a change would not, in any case, satisfy Colin Long. The general rules for the sector concerning economic regulation and competition should, Long argues, have been removed from BT's licence, thereby removing the requirement that BT consent to changes in them (if the lengthy and uncertain process of MMC review is to be avoided). The consent of BT to modifications to its licence is, suggests Long, an important safeguard against arbitrary regulation, but, applied in relation to the general rules for the sector, it creates the risk of 'regulatory capture' of Oftel by BT. More generally, the 'dominance' provisions of the licences of the other public telecommunications operators should be removed, providing for a substantial deregulation for those firms (as occurred in the United States). On this issue Oftel is clearly listening, as it has recently commenced a review of Mercury's licence with a view to removing the dominant operator provisions, and more generally will be slimming down PTO licences as part of the process of creating a general condition prohibiting anti-competitive conduct.



Formalism in Telecommunications Law

Turning to the main body of the text, the reader will find in chapter 1 a very readable introduction to telecommunications technology, and in the following UK chapters a history of UK telecommunications policy and chapters on regulation, licensing, terminal equipment, cable and satellite broadcasting, competition law, property rights and the environment, intellectual property rights, liability (called legal issues), interconnection and the impact of international regulation in the UK. The exposition of the UK law provides a rather formal account in which the reader who wants to know the content of the actual regulatory regime may not always discover what is actually going on. This is well illustrated by discussion of the new powers given to the DGT in the amendments to the Telecommunications Act 1984 by the Competition and Service (Utilities) Act 1992. Among these new powers are the power to set service standards and require provision to customers of information in relation to designated operators, BT and Kingston Communications. While the scope of such possible regulations is amply described, the fact that such regulations have not been issued does not even warrant comment in the text. The true position appears to be that Oftel has preferred to concentrate its energies in securing voluntary service standards, provision of information, etc from all operators (including mobile operators), rather than imposing compulsory provisions on the designated operators. In other words, the model of partial industry regulation set up in the legislation, under which it is presumed that the non-designated operators do not need such regulation or that they will follow the compulsory practice of the regulated firms, has been rejected by Oftel. This is not mentioned in the text.

This formality occasionally leads the author to fail to cross-reference matters which, though formally separate, are substantively linked. For example, the section dealing with the universal service obligation in BT's licence (p66) fails to cross-refer to the discussion of Timeload Communications v BT CA, 30 November 1993, in which, as Long points out (p182), the Master of the Rolls held that in interpreting BT's contractual obligations it may be relevant to have regard to BT's licence conditions. The pioneering decision linking licence obligations to interpretation of contracts is actually the decision of Drake J in Megaphone International Ltd v British Telecommunications plc The Independent, 1 March 1989, which does not receive any mention in the text.

Thus the universal service condition may place a constraint on BT's capacity to terminate contracts, even though the appropriate contractual notice is given. The formality of the approach occasionally leads the author into a certain narrowness. For example, though the general consumer protection obligations on telecommunications firms are briefly mentioned (at p184, though regrettably the Sale of Goods Act 1979 is dated at 1976 on its second appearance), particularly in relation to quality and safety of goods, the general regulation of marketing, whether under the statutory provisions of the Trade Descriptions Act 1968 and the Consumer Protection Act 1987, or under the codes operated by the Advertising Standards Authority (ASA) and the Independent Television Commission (ITC), is wholly neglected.

This is the more regrettable as allegations in relation to price claims and decency of advertising in relation to telecommunications services have become a key part of the armoury of telecommunications firms seeking to prevent others from securing competitive advantage, as the study of the ASA monthly case reports demonstrates. BT's aggressive television marketing has been the subject of complaints about manipulation of viewers to the ITC.

In other respects the text has a firm grip on the reality of regulation in an aggressive market place. For example, the restrictions which prevent BT from using its national network for broadcasting, which remain very controversial, are extensively detailed. In the chapter on broadcasting the text provides a detailed account of the means by which BT is seeking to develop video-on-demand, which had not been thought of at the time of the Broadcasting Act 1990, and, because it is not simultaneously transmitting to more than one home, is not broadcasting and does not come within the restriction (see p137). Labour's proposals for addressing the prohibition on BT carrying entertainment services were published too late to receive consideration in the text.

The formality of the text seems also to lead to the neglect of relevant history. This contrasts with the later chapter on the United States, where there is a fuller history which usefully explains where the current regime comes from. In relation to the UK, Long points out correctly that in 1880 the High Court held that the Telegraph Act 1869 gave to the Post Office a monopoly not just over telegraph, but also over telephonic communication, but he fails to point out that the Post Office did not assert this monopoly.

The consequence of the Post Office's action was that there was some competition in telephone service provision in the 1880s, prior to nationalisation of the trunk network in 1892, with the purchase by the government of the National Telephone Company lines. (The fact of competition in early telephone supply is referred to, however, in the chapter on interconnection, p189). Additionally, there was local competition between municipal and post office authorities up until complete nationalisation in 1912.

Kingston-upon-Hull's municipally owned telecommunications system provides a lone reminder of those days. Discussion of Kingston Communications, the only other Public Telecommunications Operator (PTO) apart from BT exercising clear market dominance, albeit only within the confines of Hull, is curiously absent from Long's book. Kingston Communications features only belatedly in the discussion of the application of new service standards to 'designated operators', BT and Kingston Communications (p47).

The further exploration of this early history would provide a fascinating insight into some of the problems of regulating a competitive environment today. The failure to address the juridical character of the telecommunications sector up until 1981 runs the risk of neglecting important factors in shaping the present regime. One such issue is the status of relations between the Post Office and its customers. It is important to know whether, prior to liberalisation, telephone customers were regarded as contracting with the Post Office, or whether, as with electricity, the supply of service is regarded as arising from a statutory obligation. Such discussion would enrich the brief analysis of the present contractual position of BT in relation to its customers at p182.

Judicial Review and Telecommunications Regulation

I sense that the author is not on his most comfortable territory in dealing with the potential for the Director General of Telecommunications to be subject to judicial review. The discussion is apt to be misleading as to the grounds for judicial review and would benefit from fuller consideration of judicial review cases in the other utilities sectors. Long legitimately (though perhaps not uncontroversially) takes the speech of Lord Diplock in CCSU v Minister for Civil Service [1985] AC 37) as providing the modern definitive statement of grounds for review (p36).

Lord Diplock held that there are three grounds upon which judicial review may be sought: illegality, irrationality and procedural impropriety. These terms are not precisely defined, but to the extent to which they are capable of definition they purport to be exhaustive (save for the possible development of a ground of lack of proportionality) and have fairly well understood meanings.

Ultra vires acts are correctly identified as falling within the category of illegality, but failure to take into account all relevant considerations, or taking into account irrelevant considerations belongs not, as Long suggests, in the category of illegality, but rather in the second category of irrationality as a form of Wednesbury unreasonableness. Failing to follow specified procedures might be an example of procedural impropriety, as Long suggests, but could equally come within the category of illegality as ultra vires. Errors of law and breach of principles of natural justice are cited by Long as examples of additional grounds for judicial review. In fact, errors of law are likely to come within the category of either illegality or irrationality, and breach of the principles of natural justice is the central aspect of procedural impropriety. The simple precaution of consulting one of the leading texts on administrative law would have prevented the author from falling into these errors. Within the catalogue of Long's own publisher we find a clear and authoritative exposition of Lord Diplock's judgement provided by Paul Craig in his Administrative Law (London, Sweet & Maxwell, 3rd ed, 1994) (see p441).

It was unfortunate for Long that a number of recent cases concerning judicial review of regulators, which might have changed his view on the courts' likely attitude in the case of challenges to Oftel, came too late for inclusion in the text. For example, Long discusses Maystart Ltd Director General of Telecommunications 17 February 1994, unreported (pp37-38), in which the courts take a non-interventionist approach, leaving the Director General of Telecommunications to decide matters within his jurisdiction. But this may be contrasted with the more interventionist approach of R v Director General of Electricity Supply ex p Redrow QBD, 21 February 1995, unreported, in which it was held that the Director General of Electricity Supply would be required to make a determination in a matter in which the Director General had not wished to get involved. The recent Court of Appeal decision in R v Director of Passenger Rail Franchising ex p Save Our Railways 15 December 1995 also demonstrates a willingness by the courts to intervene. In this case, the Office of Passenger Rail Franchising was prevented from using regulatory techniques which depend on the market to maintain rail service levels, where the Secretary of State had promised to Parliament and laid down in guidance that standards would be maintained through mandatory standards based on existing levels of service. Overall, this section of the book could attempt to give a clearer idea as to what circumstances and grounds are likely to lead to a successful judicial review. Had the decision been handed down earlier, no doubt the author would have wanted to make a fuller analysis of the important House of Lords decision in which it was held that Mercury Communications Ltd could challenge the interpretation of BT's licence by the Director General of Telecommunications by means of an application for declaratory relief in the Commercial Court (Mercury Communications Ltd v Director General of Telecommunications The Times, 10 February 1995). This decision permits Mercury to avoid the procedural protections for the Director General provided by the procedure for judicial review.

A further related question, not considered at all in the text, is the status of British Telecom for the purposes of public law. Could BT itself, notwithstanding the fact that it is a private body, be regarded as exercising public functions, for example in relation to universal service, such that its decisions on that matter would be subject to judicial review? This point is considered by Paul Craig in the third edition of his Administrative Law, mentioned above, at p240. A related question arising out of BT's hybrid status is whether it might be considered 'an emanation of the state' and therefore subject to the direct effect of improperly implemented directives, following Foster v British Gas [1990] ECR I-3133. We may presume that the further the market for telecommunications services is liberalised, the less likely is BT to be so regarded.

EU Law and Comaprative Analysis

The 73-page chapter on EU telecommunications policy and law (supplied by Peter Alexiadis) is a model of clarity and authority. Discussion of the use of Article 90(3) measures for liberalising the market, and Article 100A measures for harmonisation, particularly in relation to Open Network Provision, is squarely located within the broader Treaty jurisprudence in relation to these legal instruments, and thoroughly grounded in the Commission's policy documents. The author had the difficulty of trying to hit a particularly fast-moving target, but was fortunate to be able to include discussion of the Green Paper on the Liberalisation of Telecommunications Infrastructure and Cable Television Networks Part I COM (94) 440 Final, October 1994; Part II COM (94) 682 Final, January 1995, which sets out Community policy for the next few years leading up to services and infrastructure liberalisation in 1998 (with extensions for some smaller and less developed Member States).

Thus the discussion will have a good shelf life, even as new implementing measures are adopted in accordance with the policy. The discussion of competition policy provides the best analysis of the application of EC competition rules to strategic alliances in telecommunications that I have seen. Space prevents any discussion of the other chapters outlining experience in other jurisdictions.

Suffice it to say that the 'moving target' problem is manifest in nearly all the chapters, as EU member states are presently engaged in legislating to meet EC policies on liberalisation, a new US federal statute is presently passing through Congress with a view to sorting out the long-standing bifurcation between communications and competition law which has plagued US telecommunications regulation for the past 20 years, and the New Zealand government is considering whether the Clear Communications case (noted above) demonstrates that a statutory regime of regulation is, after all, necessary for telecommunications.

Conclusion

This book provides the only published account of the system of UK telecommunications law and regulation and does so in a clear manner. Overall, the book is well produced and is sure to become the standard work on the desk of the telecommunications lawyer. However, in one sense the book is not sufficiently formal, failing to always provide full references for statutory provisions (for example in relation to the new powers for the DGT created by the Competition and Service Utilities Act 1992, where neither the sections of that Act nor of the amended Telecommunications Act 1984 are cited p47), and neglecting to include references to case names in text, footnote and table to cases.

The most glaring example is in relation to the House of Lords decision in Mercury Communications Ltd v Director General of Telecommunications The Times, 10 February 1995, which is discussed but not named or referenced anywhere. As already noted, the decision was handed down after the completion of the text, and the author may be regarded as having done well to discuss the case at all. The next edition will want to cross-reference the discussion of it at p38 to the further discussion of the decision at pp89-90. Minor typographical errors may be found in the text, notably the repeated reference to RP1-x regulation in the preface, which is stated correctly as RPI-x in the chapter discussion price controls (pp73-). The reference to Roy v Kensington & Chelsea & Westminster FPC (footnote 11, p90) misleadingly gives two page references for the Appeal Cases of 1992 (pp 64 and 628), where only the latter is correct. The old error of writing 'principle' when one means 'principal' (an error I admit to making myself) is to be found in the chapter on EU policy (p224). However, such blemishes should not distract from the overall achievement.

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