After a rollercoaster three years, Brexit is still causing headaches across the UK and throughout the European Union. Deal or no deal, there will be significant consequences for the digital economy. With the internet as essential to running a business as electricity and running water are to a house, none of us can afford to be complacent about the potential effects of Brexit.
In the run-up to the referendum way back in 2016, the headlines were full of scare stories from both sides of the campaign, but where do we stand now? We’re here to help business owners get a clearer idea of the pros and cons of Brexit. Read on to find out what the repercussions will be for your business broadband costs.
What are the Odds on No Deal Brexit?
Since bookmakers change the odds constantly it’s difficult to keep track, but at the time of writing, the odds of leaving the EU sometime in 2019 without a deal are shortening all the time. In other words, it’s looking increasingly likely that the UK and the EU will not come to an agreement.
However, no matter what the no deal Brexit odds are, our advice would be not to rush to the bookies but take a minute to think about the implications for your business of leaving the EU. To understand the consequences of Brexit, we need to take a step back and get our heads around the current position of telecommunications in the UK-EU relationship.
Telecommunications Regulation in the EU
UK telecommunications are currently part of the European Union’s Regulatory Framework for Communications. This framework ensures there is competition between telecoms companies, which includes internet service providers, and this helps to keep prices relatively low for consumers. At the moment it’s unclear to what extent EU framework will be transferred into UK regulations or how long this would take.
However, it might not all be doom and gloom. The UK’s national telecoms regulatory body, the Office of Communications, has had a considerable influence in shaping the EU framework. With that in mind, it seems reasonable to assume that Ofcom will continue in the same vein, i.e. ensuring fair competition and protecting consumers and businesses from substandard service and high prices.
It’s even conceivable that, without the need to negotiate with another 27 countries, the UK’s newfound freedom to make its own decisions could be beneficial. For instance, the UK could tighten up price regulation for broadband providers, which could mean a fairer deal for customers. As an entrepreneur with broadband bills to pay to keep your business going, this will benefit you as well. Of course, the more you keep your outgoings under control, the better for your profit margins.
Brexit Consequences for UK Telecoms Technology
Under the EU’s digital single market strategy, there are broadband investment tools available to help improve telecommunications infrastructure in EU member states. The idea is that faster broadband speeds, more reliable internet connections and wider broadband coverage lead to better productivity for businesses and to the creation of more jobs. Further benefits of being part of the EU’s vision for a digital society are widening access to the internet for citizens and being at the forefront of developing technologies and enhanced cybersecurity.
In the 2014-2020 timeframe, the UK was set to benefit from EUR212 million in EU funding for broadband investment. Post-Brexit, funding for these projects aimed at developing technologies, such as gigabit-capable internet connections and 5G, will no longer come from the EU. If there is less funding available for telecoms innovations, then clearly the UK will be less able to compete with its European neighbours.
After Brexit, the UK will lose access to the EU’s broadband funding schemes. Many parts of the UK suffer from poor internet coverage and slow broadband connection speeds, which can have considerable consequences if you’re trying to run a business online, work from home or simply maintain your business broadband connection for everyday operations in your company.
According to analysis from Plimsoll Publishing, internet service providers (ISPs) are amongst the ten industries most likely to be negatively affected by a no deal Brexit, On the other hand, independent financial advisors, software developers and, interestingly, producers of perfume feature in the list of industries most likely to do well after the UK leaves the EU.
One of the reasons ISPs are predicted to see adverse effects after Brexit is to do with employment and free movement of labour. Currently a high proportion of the workforce employed in the expansion of broadband networks are low-skilled EU workers. UK industries also rely heavily on EU nationals for cutting-edge research and development in new technology, including 5G and cybersecurity. Brexit makes it more difficult to attract and recruit the best people into these jobs, which is bad news for UK technology as a whole.
Many of our most familiar ISP brands operate throughout the EU. For example, BT broadband is one of the biggest providers of internet services in the UK and they have a strong presence throughout the EU. Vodafone is not only one of Britain’s telecoms giants but it also earns a substantial chunk of its income from the EU. The position and status of these companies is likely to change if it becomes more difficult for them to operate across borders (assuming the UK does not have a free-trade agreement with the EU). The knock-on effect is likely to be passed onto customers, which of course means a higher bill for you as a business owner.
Broadband Speed and Brexit
The EU’s 2020 target is to provide access to high speed broadband (at least 30 Mbps) for everyone and there are various EU funding opportunities to help meet that goal. Ofcom’s latest report on broadband performance indicates that 54% of residential broadband connections achieve average speeds of at least 30 Mbps, which leaves a lot to be desired.
We could not find Ofcom data specifically for business broadband connections but if the home broadband speeds are anything to go by, UK businesses are seriously suffering from being stuck in the slow broadband lane. Without access to EU funding, there are fewer opportunities open to businesses to improve their internet connectivity and broadband speed. Businesses in rural communities could be left further behind than ever since rural broadband availability tends to suffer the most from lack of investment.
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Why is broadband speed so important for businesses and the wider economy?
Let’s put this into context with some real figures. The UK Government’s Superfast Broadband Programme uses public funds to extend the UK’s fibre broadband network to all types of premises. Figures from the scheme show that the benefit to cost ratio for improving non-residential broadband provision is £12.28. In other words, for every pound spent through the Superfast Broadband Programme, the return for businesses is £12.28 (significantly higher than the £1.16 benefit to cost ratio for residential broadband).
More specifically for small and medium-sized businesses (SMEs), the Broadband Connection Voucher scheme saw similar success. UK SMEs benefited to the tune of £8 for every £1 spent on improving business broadband provision through the government’s programme. It has now been re-launched and re-branded as the Gigabit Broadband Voucher Scheme, which provides grants to help fund the installation of fibre optic ultrafast broadband connections. The name ‘Gigabit’ refers to the download speed of the new connections: an impressive 1 Gbps.
Will Roaming Charges be Re-introduced?
In June 2017 roaming charges were abolished across the whole European Union, which means that if you have a mobile phone tariff from an EU country you are not charged extra for calls, texts or mobile data when travelling anywhere in the EU. Before 2017, using your mobile phone abroad was equally expensive no matter what country you were in. Whether or not roaming charges will be implemented once more depends on if the UK leaves the EU with or without a deal.
Firstly, in the scenario where Theresa May’s Brexit deal is passed by parliament, nothing changes until after the end of the transition period, which will last until at least December 2021. This time period was agreed back in 2018. At the moment it’s not clear if the transition period will now be longer since the new date for Brexit has been pushed back to 31st October 2019. It remains to be seen exactly what details will be worked out in any UK-EU trade agreement with regard to roaming.
When does EU law no longer apply to the UK?During the transition period - officially called the implementation period - the UK has to continue to abide by all EU laws, rules and regulations, as well as paying into the EU budget. However, the UK will not have any say at all in making those rules or in how the budget is spent.
No deal means that, in theory, mobile providers can re-introduce roaming charges whenever they like at whatever cost they like. Nevertheless, it’s distinctly possible that the UK Government will legislate to prevent customers’ phone bills spiralling out of control after having been abroad. Some mobile phone operators have even stated explicitly that they do not intend to implement roaming charges post Brexit.
If you travel in the EU for business, or if you have visits from clients or customers from the EU, keep in mind that the costs of calls and data usage could change. Contact your provider in advance of any business trips abroad to get a clear idea of how much it will cost you to use your smartphone.
Are There any Benefits of Brexit for UK businesses?
Most of the signs are that, in general, the UK economy will suffer as a result of leaving the EU. One of the consequences of a slower economy is likely to be less investment in telecommunications infrastructure, such as rolling out faster broadband. This means that businesses will lose out on the gains that they could have otherwise benefited from.
On the other hand, some politicians argue that the money the UK currently pays into the EU can be put to better use, for example, by investing in broadband upgrades and other telecoms infrastructure improvements. However, bearing in mind the wild claims that were made and subsequently discredited about redirecting the UK’s contribution to the EU towards the NHS, we would take any such promises with a pinch of salt.
Nevertheless, the fact that the Brexit deadline is now set for 31st October can be seen as a silver lining. Without a doubt, the extra time to prepare your business for the UK’s departure from the EU will be invaluable. You and your staff can build contingency plans into your strategy; for example, in terms of your broadband service you can adjust your budget to allow for price rises in your telecoms bills.
GDPR Compliance After Brexit
Under EU law your business has to adhere to the General Data Protection Regulations (GDPR), which means you must take appropriate steps to protect customers’ personal information. An important aspect of GDPR compliance is ensuring your internet security is up to scratch. High quality antivirus software should be part of your data protection policies and practices, as well as encrypting personal information and restricting access to confidential data.
After Brexit your business will almost certainly still have to comply with GDPR, even though the UK will no longer be part of the EU. GDPR applies not only to organisations within EU member states, but also to any company that offers services to clients and customers in EU countries. For instance, a UK-based business that sells its products in the EU as well as in Britain must continue to abide by the EU’s data protection regulations. Effectively, unless you block all traffic from the EU to your website, you must comply with GDPR.
As you will know if you’ve paid the slightest bit of attention to the news over the last few months, the only certainty about Brexit is that nothing is certain. Whether the UK leaves the EU with a deal, without a deal, or doesn’t leave at all we still have months of suspense ahead of us. In the meantime, you can at least stay in control of your internet costs by keeping an eye out for the best business broadband deals.
You might also want to switch the gas and electricity for your business. For more on Brexit, read our article about what happens to the UK energy industry post Brexit.