Funds for liabilities: Ofcom opens an enforcement programme into code operator compliance
In short: Ofcom opened a funds for liabilities enforcement programme on 16 July 2026 into code operators’ compliance with regulation 16 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003, with immediate investigations into six operators it has reasonable grounds to believe may not have complied. The most recent annual certificate deadline was 1 April 2026.
A company that digs up roads to build its network under code powers must set aside funds, usually a performance bond, so that if it fails the public does not pay to reinstate the streets or remove its redundant apparatus. Every code operator that has exercised those powers must certify its funds for liabilities cover to Ofcom by 1 April each year. Ofcom made that duty an enforcement priority on 16 July 2026: it opened a monitoring programme across the industry and six immediate investigations into operators it has reasonable grounds to believe missed this year’s requirement.
The funds for liabilities regime
Regulation 16 of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 (SI 2003/2553) requires every code operator to ensure that sufficient funds are available to meet specified liabilities arising from its street works, and to certify that position to Ofcom every year. Ofcom confers code powers by a direction under section 106 of the Communications Act 2003 (CA 2003), and the 2003 Regulations attach conditions to those powers under section 109. The specified liabilities centre on the costs a highway authority would reasonably incur in making good damage caused by the installation or removal of electronic communications apparatus and in removing redundant apparatus from the street, together with street works liabilities under the New Roads and Street Works Act 1991. The funds must be available where a relevant event occurs, which includes the operator entering administration, receivership or liquidation, being deemed unable to pay its debts, or ceasing to provide its network. Cover must run for a liability period of three years from the relevant event.
The annual certificate is a board-level document. The board must state, after appropriate enquiries, its reasonable opinion that the duty is met, name the amount provided and the systems relied on, and attach the insurance policy, bond or guarantee that provides the funds. An operator that has never exercised code rights owes no annual certificate, but must file one at least two weeks before it first installs apparatus. Ofcom’s funds for liabilities page collects the guidelines on assessing the cover, a specimen certificate and a specimen performance bond.
Six funds for liabilities investigations and an industry-wide programme
Ofcom opened six investigations on 16 July 2026 into Internetty Ltd, Cambridge Fibre Networks Ltd, Optical Fibre Infrastructure Limited, Pine Media Limited, Trooli Ltd and Trooli Thistle Limited, stating that it has reasonable grounds to believe those operators may not have complied with regulation 16. The most recent deadline for submitting certificates was 1 April 2026. The programme is not limited to the six: Ofcom will engage with other operators whose compliance concerns it, expects the work to run for several months, and may open further investigations. It also encouraged operators that hold code powers but have never exercised them to tell it so, so that they are not subject to potential enforcement action. Its explanation for acting now is market change: “Given how quickly the market is changing, ensuring that Code Operators are securing the right funds is more important than ever before” (Ofcom, enforcement programme announcement, 16 July 2026).
The enforcement toolkit is specific to the code. Where Ofcom is not satisfied that the duty is met, it may direct the operator to take steps to secure sufficient funds and may publish that direction (regulation 16(7)). A contravention of the 2003 Regulations is enforceable by notification under section 110 CA 2003, with penalties under section 110A of up to £10,000 per contravention, plus up to £100 per day where a contravention continues after a confirmation decision under section 111. For serious or repeated contraventions, section 113(4) lets Ofcom suspend the application of the code to the operator’s future build, networks and conduit systems not yet in existence, which for a fibre builder is the roll-out itself.
Implications for code operators and their boards
Regulation 16(1)(a) requires the funds themselves; the annual certificate under regulation 16(1)(b) evidences them. An operator that files its certificate on time but holds an undersized bond has not discharged regulation 16(1)(a). Quantum is therefore a board decision. The non-binding guidelines Ofcom has adopted offer several methodologies for sizing the cover, from annual maintenance cost to depreciated replacement cost, and leave the choice to the operator. The board then certifies that choice after appropriate enquiries.
Parts of the alternative network (altnet) sector now present the scenario the regime was written for: an operator fails or restructures, and the cost of reinstating streets and removing stranded apparatus would otherwise fall on the public. A published regulation 16(7) direction is visible to funders, counterparties and highway authorities. Operators with dormant code powers are in a different position: they owe no annual certificate, but Ofcom’s request that they identify themselves shows the register is being read. The response workstreams for an Ofcom investigation are set out on the investigations and enforcement support page.
Viewpoint
I wrote about code operators being caught out by the annual renewal of funds for liabilities certification in March 2011. Fifteen years on, the substance of the duty has not changed, and the market has turned it from an administrative ritual into the code’s insolvency backstop. In my experience advising code operators on these arrangements, sizing the cover is more sensitive than the form of the instrument: several methodologies are open, and an undersized number is what draws a regulation 16(7) direction. Ofcom has said it will publish updates at relevant points, and any of the six investigations may yet proceed to a section 110A penalty. The question I will be watching is whether Ofcom takes the opportunity to refresh guidelines Oftel published in December 2003 for a market now built on fibre street works.
For advice on funds for liabilities certification, sizing and instrument drafting, or on responding to an Ofcom investigation, contact Rob Bratby at Bratby Law.
