Trigger situation

A network operator cannot agree commercial terms for interconnection with another operator. An SMP provider receives a direction from Ofcom regarding its access obligations. A new entrant needs interconnection to reach its customers and the incumbent is not responding or is offering unreasonable terms. A business is involved in an interconnection dispute referred to Ofcom under section 185 of the Communications Act 2003.

Why it matters now

Interconnection is the gateway to market entry in telecoms. Without interconnection, a new provider cannot reach customers. Incumbents therefore have substantial bargaining power in interconnection negotiations, and this power is subject to regulatory control through both the General Conditions (obligations on all providers) and SMP access conditions (obligations on providers with Significant Market Power). The regulatory framework governing interconnection has not substantially changed since 2003. But the market has. The growth of mobile operators, the rise of over-the-top services and cloud platforms, and the consolidation of the sector have created tension between the original regulatory design (protecting new entrants from incumbent abuse) and the current market structure (where incumbents themselves may be network new entrants in other markets, or where dominance is exercised in ways the 2003 Act did not anticipate). At the same time, Ofcom has signalled that it is prioritising enforceability of access conditions and is willing to escalate disputes to formal determination when commercial negotiations fail. This makes interconnection disputes more likely and more expensive to resolve. Understanding the regulatory framework, the dispute resolution process, and the practical negotiation dynamics is essential for any operator.

Where clients get it wrong

The first and most dangerous error is treating interconnection as purely a commercial and technical negotiation. Interconnection is also a regulatory negotiation. The terms of an interconnection agreement must be consistent with the General Conditions of the Communications Act 2003 and with any applicable SMP access conditions. An operator that negotiates interconnection terms without checking regulatory consistency creates compliance risk that surfaces later, often during a dispute. We see operators discovering, years into an interconnection relationship, that the agreed terms do not comply with the relevant regulatory obligations, and that renegotiation is now costly and contentious.

The second widespread mistake is failing to understand which regulatory regime applies. Interconnection is governed by three overlapping legal regimes. General Condition A1 (set out in the General Conditions of Entitlement, consolidated version effective 15 December 2022) imposes an obligation on all providers to negotiate interconnection on a reasonable request. This is a baseline obligation. If an operator has SMP in a relevant market, that operator is subject to specific SMP access conditions, which are typically set by Ofcom and impose additional obligations regarding access pricing, non-discrimination and transparency. Beyond both of these regimes, competition law applies. Under the Competition Act 1998, a provider with dominance (often, but not always, the same as SMP for telecoms purposes) cannot refuse access where that refusal amounts to abuse of dominance. Most operators focus on one regime and miss the others. The practical consequence is that when a dispute arises, the operator discovers that the other party has alternative legal claims it did not anticipate.

The third error is underestimating the section 185 dispute resolution process. The Communications Act 2003, sections 185 to 191, gives Ofcom the power to resolve disputes about network access when the parties cannot agree. This is not mediation; it is binding determination. Ofcom can impose access terms, pricing, and technical conditions. Once Ofcom has made a determination under section 185, the parties are bound by it. Many operators treat section 185 as a last resort and engage Ofcom only when negotiation has broken down. By that stage, positions are entrenched and the cost of resolution is very high. Operators that understand section 185 earlier in the negotiation process, and that use the prospect of Ofcom determination as an incentive to move toward commercial agreement, often achieve better outcomes.

The fourth mistake is failing to understand Ofcom’s approach to access pricing. Ofcom has published detailed guidance on how it assesses the reasonableness of access pricing under the access conditions. But Ofcom’s approach has evolved, and it varies depending on the type of access being provided. Pricing for access to core network elements (such as ducts, poles, dark fibre) is assessed differently from pricing for bitstream access or switching services. Operators that do not keep track of Ofcom’s current pricing methodology, or that negotiate pricing on an assumption that Ofcom rejected in an earlier decision, waste time in negotiation and often end up at an Ofcom determination that requires repricing.

What good looks like

Bratby Law’s approach to interconnection is structured around understanding the regulatory constraints upfront and factoring them into negotiation strategy from the beginning.

First, we advise on which regulatory regime applies and what obligations each regime imposes. For a non-SMP provider, the starting point is General Condition A1. This imposes an obligation to negotiate interconnection on reasonable request, but it does not specify what terms are “reasonable”. We help clients understand how Ofcom interprets “reasonable” interconnection terms by reference to Ofcom’s published guidance and recent enforcement decisions. We also advise on the competition law dimension: even a non-SMP provider can commit an abuse of dominance by refusing interconnection if the provider has dominance in a relevant product or geographic market. This is rare but not impossible.

For an SMP provider, we advise on the specific SMP access conditions that apply. These conditions are set by Ofcom and typically require the SMP provider to make access available on published terms, on terms proposed by the requesting party if no published terms exist, and subject to a requirement of non-discrimination and transparency. Many SMP access conditions also specify pricing methodologies, such as cost-plus or retail-minus, or they impose a requirement to make access available at a level of cost-orientation. We help clients understand their own SMP access conditions and the legal constraints those conditions place on negotiation.

Second, we advise on what constitutes a reasonable interconnection agreement. We review draft interconnection agreements against the General Conditions, applicable SMP conditions and competition law. We identify clauses that create compliance risk: for example, terms that impose unreasonable switching costs, terms that discriminate between different access requestors, or terms that reserve rights that have been conditionally foreclosed to the SMP provider by Ofcom. We advise on whether such terms are likely to survive an Ofcom dispute determination or a competition law challenge. The goal is to achieve an agreement that the parties can both live with and that Ofcom would likely endorse if the dispute went to Ofcom for determination.

Third, we advise on the section 185 dispute resolution process and how to engage with it strategically. Section 185 gives Ofcom binding determination powers. Once a dispute is referred to Ofcom, the regulator will make a determination on the terms of access. Ofcom’s determination is based on the statutory test: access must be granted on fair and reasonable terms. Ofcom applies this test by reference to the General Conditions and any applicable SMP conditions, and by reference to principles of non-discrimination, cost-orientation and economic sustainability. We advise operators on how to structure their section 185 submission to respond to Ofcom’s actual concerns. We also advise on whether settlement is likely at different stages of the Ofcom process, and when the costs of continued dispute escalation are likely to exceed the benefits of holding out for better terms.

Fourth, we advise on access pricing using Ofcom’s published pricing guidance. Ofcom has published detailed position papers on how it assesses cost-orientation, retail-minus pricing, and other pricing methodologies. These documents are the key to understanding what Ofcom considers a reasonable price for access. We help clients understand Ofcom’s pricing approach and advise on what price is likely to be acceptable. We also advise on where operators can challenge Ofcom’s pricing guidance or propose alternative methodologies that better reflect the costs and risks of providing access.

Finally, we advise on the relationship between interconnection and other regulatory obligations. Access conditions are sometimes linked to other regulatory obligations, such as requirements to provide transparency, number portability, or co-location. Understanding how these obligations interact helps clients negotiate interconnection agreements that are comprehensive and do not create surprises later.

When to instruct

You should instruct Bratby Law if you are negotiating an interconnection agreement and want to ensure that the agreed terms are legally sound and are likely to be acceptable to Ofcom. You should instruct if you are the subject of an access request and want to understand your obligations and the commercial terms you should propose. You should instruct if you are involved in a section 185 dispute or are considering referring a dispute to Ofcom. You should instruct if you are acquiring a business with existing interconnection obligations and want to understand the compliance risks. You should not instruct for routine questions about whether interconnection is technically possible or about standard technical specifications, unless those questions have regulatory implications.

How Bratby Law helps

We advise on which regulatory regime applies to your interconnection (General Conditions, SMP access conditions, or competition law). We review interconnection agreements for regulatory compliance. We advise on what constitutes a fair and reasonable interconnection agreement under Ofcom’s published guidance. We advise on access pricing using Ofcom’s pricing methodologies. We advise on the section 185 dispute resolution process and represent clients in Ofcom disputes. We help clients understand their options when negotiation reaches an impasse and advise on the likely outcomes of Ofcom determination. We advise on the relationship between interconnection obligations and other regulatory obligations such as transparency and number portability.

Related Telecoms Regulation pages

Am I regulated?

Network Access

Ofcom investigations and enforcement

SMP regulation and competition law

Frequently asked questions

What is interconnection and why does it matter?

Interconnection is the arrangement that allows one electronic communications network to connect to another network, so that customers on one network can communicate with customers on another network and can access services provided via other networks. Without interconnection, a network would be isolated and its customers could not reach anyone outside that network. Interconnection is the regulatory mechanism for ensuring that network dominance does not foreclose access to customers.

What is the difference between interconnection and access?

Interconnection and access are related but distinct concepts. Interconnection typically refers to the physical connection between two networks, allowing customers on one network to reach the other network. Access typically refers to the services and facilities provided by one provider to another, such as access to duct, fibre, or switching capacity. In practice, the terms are sometimes used interchangeably, but they describe different things. The Communications Act 2003 uses the term “network access” in section 73 to describe the general obligation to provide access to networks and services on fair and reasonable terms.

What is General Condition A1?

General Condition A1 sits in Part A of the General Conditions of Entitlement (consolidated version effective 15 December 2022). It imposes an obligation on all electronic communications providers to make available their electronic communications network or service (or both) to other providers on request, provided the request is reasonable. The obligation is to negotiate in good faith and to agree to interconnection on fair and reasonable terms. General Condition A1 does not specify what fair and reasonable terms are, but Ofcom has published guidance on how it interprets this concept.

What are SMP access conditions?

If Ofcom finds that a provider has Significant Market Power (SMP) in a relevant market, Ofcom can impose specific obligations on that provider, including obligations to provide access to its network on specific terms. These SMP access conditions are typically set out in Ofcom decisions and in the provider’s electronic communications conditions of entitlement. SMP access conditions typically require transparency (publishing of access terms), non-discrimination, and cost orientation of pricing. They often specify technical parameters and security requirements for access. SMP conditions are more stringent than the baseline General Condition A1 obligation.

What is section 185 of the Communications Act 2003?

Section 185 of the Communications Act 2003 gives Ofcom the power to determine disputes about network access when two providers cannot agree on the terms. Either party can refer a dispute to Ofcom. Ofcom can then investigate and determine what access terms are fair and reasonable. Ofcom’s determination is binding on the parties. The determination must include details of the access that is required, the price to be charged, and the terms and conditions on which access is provided. Section 185 determination is a formal process that can take many months.

Can Ofcom force a dominant network to provide access at cost?

Ofcom can direct an SMP provider to provide access on cost-oriented terms if that is what Ofcom’s published access conditions require. Cost-orientation typically means that the price charged for access should reflect the cost of providing the access, plus a reasonable margin for recovery of common costs and a competitive return on capital. Cost-oriented pricing is lower than commercial pricing would be, but it is not below-cost pricing. Ofcom’s approach to cost-orientation is set out in its published pricing guidelines.

See also

• Why Bratby Law? UK Telecoms Lawyers and AI Lawyers for Regulated Markets
• Services
• Transactions
• Co-counsel
• Fractional General Counsel

Frequently asked questions

What is interconnection regulation?

Interconnection regulation ensures that communications providers give each other fair, reasonable and non-discriminatory access to their networks under GC A1 and any SMP obligations.

Who must comply with GC A1?

All providers of public electronic communications networks must comply with GC A1, regardless of their size or market position.

What are SMP access obligations?

SMP obligations are additional duties imposed on providers with Significant Market Power, requiring them to provide specified network access on regulated terms.

Can Ofcom resolve interconnection disputes?

Yes. Ofcom must resolve qualifying interconnection disputes within defined statutory timeframes and may impose binding determinations.

How does competition law apply?

Competition law may apply where conduct amounts to refusal to supply, discrimination, margin squeeze or other anti-competitive practices.

Independent directory rankings

Our specialist expertise is recognised in major independent legal directories:

• Chambers & Partners: Rob Bratby is ranked as a band 2 lawyer in the UK Guide 2026 in the “Telecommunications” category: Chambers
• The Legal 500: Rob Bratby is listed as a “Leading Partner – Telecoms” in London (TMT – IT & Telecoms): The Legal 500
• Lexology: Rob Bratby is featured on Lexology’s expert profiles as a Global Elite Thought Leader for data: Lexology