Will Brexit have a positive or negative impact on telecoms?

Written by on September 20, 2017 in Guest Blog with 0 Comments

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With 18 months to go before the UK’s formal exit from the EU, Brexit is rolling in fast, pushing a bow-wave of uncertainty ahead of it. When the wave breaks, which way up will it leave the UK telecoms industry?

The biggest impact is likely to result from changing patterns of movement within the EU. It seems inevitable that the flow of people between the UK and the European mainland will be somewhat slowed, as travellers find it more expensive and more bureaucratically onerous to cross the English Channel or the Irish Sea. That looks like a hit on revenue, particularly as the demographic most severely impacted by Brexit is likely to be holidaymakers, students and young travellers, who have been increasingly ready to use their phones abroad in recent years.

That said, recent changes to EU roaming regulations meant that operators and service providers were resigned to a fall in roaming revenues, so being ‘unshackled’ from EU regulation might be no bad thing – particularly for MVNOs, for whom roaming was shaping up to become a loss-making business. So perhaps the net effect will not be so severe, and for MVNOs, could even be marginally positive.

Should they choose to do so, UK operators could reintroduce surcharges for roaming outside the UK (and EU operators will be able to increase charges for European subscribers roaming into the UK). This would lead to a higher unit revenue, but a likely decline in traffic – ironically, just as subscribers were becoming less fearful about switching on their data while abroad. Whether this happens, or whether operators will continue with prevailing European charging principles post-Brexit remains to be seen – operators and service providers may well choose to continue their own ‘transition period’ for some considerable time.

Much of this is uncertain of course, and depends on how the UK decides to regulate itself when it once again has the freedom to do so. And there may be some benefits – if travel into and out of the EU post-Brexit proves inconvenient and costly, many holidaymakers and travellers may take themselves off on cheap flights to Asia and the US, where roaming charges won’t be regulated.

It’s not all about customer movement of course. We also need to consider the effect on resources and assets. Eliminating the free movement of skills and people is likely to hit operators, as it will other tech industries, who won’t have such easy access to skilled staff from across Europe. Already we are seeing a decline in students wanting to come to the UK – many of whom, graduating in technical disciplines, might have been expected to enter the telecoms industry, bringing fresh skills and innovative ideas. This is particularly concerning when there is already a recognised IT skills gap in the UK.

Telcos that are part of multinationals – which is the majority – may choose to relocate key technical functions into the EU where practicable, to enable freer access to skills and other resources, further accelerating the UK brain drain.

It is too early to be conclusive, particularly as so little has been decided or agreed between the UK and EU, but if I was a betting man, I’d back the UK telco industry to weather early storms but struggle in the longer term from changes in its economic climate, and in particular from being adrift in what is an increasingly global and consolidated business.

It’s not too early to start the lifeboat drills.

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Robert Machin

About the Author

About the Author: Robert has worked in the telecommunications industry for more years than he cares to remember and is a regular contributor to industry forums, conferences and publications, most commonly on the impact of new technologies on billing, charging and the customer experience. He is currently helping Openet to develop its proposition to the wholesale and virtual operator market. .

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