Licensing implications for ISPs – in a nutshell (or two)

1. Licensing implications for ISPs – in a nutshell (or two) Ritu Manhas PolicyAdvisor

2. Are we trying to regulate the Internet? • Yes and no • Everyone running a telecoms system needs a licence and these contain obligations • Our main concern is access to the Internet, rather than the Internet itself

3. ‘Regulation’ and ‘licensing’ - not as ominous as it sounds! • Doing nothing new – regulating conveyance, not content • Class licences – even residential customers picking up home phone to make a call are doing so under a licence

4. The Telecommunications Act 1984 (“the Act”) • “Internet Service Provider” not defined • Offence under the Act to run a telecommunication system within the UK without a licence which authorises the running of that system

5. Definition of “telecommunication system”: • a system for the conveyance, through the agency of electric, magnetic or electro-magnetic energy of – • speech, music and other sounds; • visual images; • signals serving for the impartation (whether as between persons and persons, things and things or persons and things) of any matter otherwise than in the form of sounds or visual images, [ie data]; or • signals serving for the actuation or control of machinery or apparatus [ie telecontrol systems] • The Internet is therefore a set of telecommunications systems

6. “Running a system” is not defined • Who has managerial control over the makeup of the system and the services provided? • Not necessarily ownership or day-to-day operation • Many ISPs are doing something which needs a licence, eg conveying, switching or routing • VISPs with no system, just reselling (like mobile service providers) – no licence required

7. Telecommunications Services Licence (“the TSL”) • class licence / general authorisation • granted to all persons • no application procedure • no fee – unless applying for Schedule 2 status under the Interconnection Regulations • DTI web site: www.dti.gov.uk/cii/docs/tsl.pdf

8. TSL conditions • ‘Approval of equipment’ • Publication of interfaces • Restrictions on advertising • Privacy, confidentiality and metering systems • Requirement to furnish information to the Director

9. Nothing too onerous for ISPs so far… • Further conditions apply if: • providing telephone services • interconnecting

10. Revised Voice Telephony Directive conditions: eg • access to emergency services • requirement to provide itemised billing • only apply where licensee provides “Publicly Available Telephone Services” • emphasis on telephone services - this includes calls to ISPs over the PSTN • don’t apply to IP transport, E mail, Web services and content, and other value add services

11. Interconnection • ISPs may apply for Schedule 2 status under Interconnection Regulations • Entitled to interconnection from BT at cost-oriented rates • Required to negotiate interconnection where requested by another Sched 2 operator

12. What can be done under the TSL? TSL permits the provision of all types of telecommunication services BUT with a few exceptions, including: • International Simple Voice Resale Services (“ISVR”) • certain broadcasting services • mobile services

13. International simple resale (of voice or data): simple conveyance of a message with no added value element where the message is carried by the PSTN of the UK and another country, irrespective of where the message originates or terminates TSL:- • does not allow ISVR (but break out at one end is fine) • does not allow international simple resale for data ISVR licence - almost identical to TSL but does permit ISVR. Registerable class licence.

14. Restrictions on System • Applicable systems described at Annex A of the licence • 2 restrictions upon the nature and extent of the system that can be run under the licence: 1. System must not comprise any mobile radio apparatus 2. 20 site rule NB/ TSL operator can connect to another TSL operator within same premises without limit

15. 20 Site Rule • All of the self-provided apparatus comprised in the system must be situated within a maximum of 20 single sets of premises. • Sites connected by leased lines outside the 20 site rule - not part of TSL system. • Single set of premises: “premises within a single contiguous boundary under a common management regime where no two points on the boundary of those premises are more than 5 kilometres in lateral distance from each other”.

16. TSL: ‘proportionate’ regulationThe fact that many of you are running under it and don’t even know proves this! But:-problem for an ISP who wants to build an extensive network of its own, ie using self-provided links to connect up more than 20 sets of premises. ISP will then need an individual licence This is where things get more complicated...

17. Code Powers • legal vehicle to obtain rights over land, and to install and maintain telecommunicationapparatus on public and private land, if such rights cannot be obtained by agreement • also enable operators to obtain exemption from the need to apply for planning permission for certain limited kinds of infrastructure • application to the DTI • under the Act, only granted in limited circumstances and to certain types of operators

18. Public Telecommunications Operator licence (“PTO licence”) • individual licence • application procedure • initial fee payable to DTI of £40,000 • annual fee payable to OFTEL, based upon turnover – minimum of £3000

19. Like the TSL:- • Any telecommunications service is permitted subject to a number of exclusions • Any new services will be authorised unless specifically added to list of exceptions Unlike the TSL:- • no restriction upon the number of premises that may comprise part of the system • ISVR permitted (ie not excluded)

20. Mobile • MRTS (Mobile Radio Tails Service) excluded from fixed PTO licence • Mobile PTO can do fixed as well • Need Wireless Telegraphy Act licence from the Radiocommunications Agency (also for fixed radio access)

21. Under the Act: • PTO licence must contain at least one obligation to provide service • Publication of charges and non-discrimination conditions then attach to that obligation

22. Publicly Available Telephone Services (“PATS”) • Generally available to the public • Telephone service: uninterrupted simultaneous 2 way direct conveyance of speech and other voice frequency signals between end users, provided by calls set up over a switched network • PATS triggers obligation to provide directory services

23. PTO service obligations • PTO provides Publicly Available Telephone Services (“PATS”) in which case it has to provide national DQs or • it is not doing PATS and must therefore provide either international conveyance services or international DQs  Hobson’s choice for an ISP?

24. Many ISPs are not doing PATS. Therefore they must satisfy the other ‘prong’ of the requirement to provide some kind of service: • provide international conveyance services [ie could be requested to provide connection services to Schedule 2 operators]; or • international directory services NB/ obligation to provide service triggers: • obligation to publish charges, terms and conditions • prohibition on undue preference or undue discrimination

25. ISP will have to be sure that it can satisfy obligations in PTO licence: • Not easy for non-voice ISP to satisfy DQ obligation, particularly for international DQs • OFTEL and DTI are considering possibility of a new data licence

26. Voice over Internet Protocol • Subject of continuing discussion at European level • Our view is VoIP is voice telephony if: • provided by ISP, eg break-in/break-out gateways, rather than merely allowed (ISVR) • presented and provided as PSTN substitute

27. ISPs must also be aware of: • Telecoms Data Protection and Privacy Regulations • Distance Selling Directive • Regulation of Investigatory Powers Act • Advertising Standards Authority