Most interconnection in UK telecoms is commercially negotiated between operators. It is not regulated in the sense that Ofcom prescribes terms. But it is specialist work that requires deep industry context and an understanding of where the regulatory backstop sits. The Communications Act 2003 provides that backstop: section 73 empowers Ofcom to set access-related conditions on providers, and section 87 authorises Ofcom to impose pricing and access obligations on operators with significant market power, including cost orientation under subsection (9). Where one party has SMP, the commercial negotiation takes place against a regulatory framework that cannot be contracted out of. Even where neither party has SMP, the agreements are technically complex and require familiarity with industry norms, numbering conventions and network architecture.

Why interconnection regulatory framework matters now

The interconnection landscape is changing. IP migration has replaced traditional circuit-switched interconnection with new technical and commercial arrangements. Where one party has SMP, Ofcom’s periodic market reviews (including the Telecoms Access Review 2026-31 and reviews of business connectivity, mobile and other markets) set regulatory terms that the commercial agreement must reflect. But most interconnection agreements are between non-SMP parties and are entirely commercial. Peering agreements at internet exchange points are increasingly subject to data protection and cybersecurity requirements.

Where interconnection agreements fail

Four common failures. First, where one party has SMP, pricing without proper cost orientation analysis. Section 87(9) requires SMP operators to offer interconnection on cost-oriented terms. Cost orientation means the operator’s actual costs plus a reasonable return on capital, not a loosely negotiated “reasonable price”. An agreement that prices above cost orientation is vulnerable to Ofcom challenge. For non-SMP agreements, pricing is commercial, but the agreement still needs clear pricing review mechanisms and benchmarking provisions.

Second, inadequate service level and traffic handling provisions. Interconnection agreements need precise technical specifications: traffic parameters, measurement methodology, service levels and remediation processes. Agreements drafted without industry context often use generic service level language that creates disputes when traffic patterns change or quality degrades.

Third, peering agreements that ignore the data protection overlay. If peering involves handling customer data (common in DDoS mitigation and traffic management), the peering operator may be a processor under UK GDPR Article 28. The agreement must include processor contract terms.

Fourth, dispute resolution that does not reflect the regulatory context. For SMP interconnection, Ofcom retains power under section 185 to resolve disputes, and the agreement cannot exclude that jurisdiction. For non-SMP agreements, standard commercial dispute resolution is appropriate, but the agreement should still contemplate industry-specific escalation through tech working groups before formal proceedings.

Common issue	Better approach
SMP pricing terms that are not cost-oriented	Cost methodology with annual verification built in
Technical specifications lacking measurable service levels	Traffic handling parameters with defined measurement and remediation
No dispute escalation beyond commercial negotiation	Escalation procedures acknowledging Ofcom s.185 jurisdiction
Data protection treated as separate from the agreement	UK GDPR Article 28 processor terms embedded in the contract
Termination without adequate migration provisions	Notice periods and transition obligations reflecting operational dependencies

What good looks like

Bratby Law structures interconnection agreements by starting with the commercial and (where applicable) regulatory context.

We classify the interconnection type (service interconnection, transit, or peering) and identify whether SMP obligations apply. For SMP interconnection, we develop a transparent cost orientation methodology including cost drivers, allocation methodology and return on capital, built into the agreement as an annex with annual verification. For non-SMP agreements, we draft commercial pricing terms with benchmarking and review mechanisms.

We specify traffic handling obligations with technical parameters, measurement methodology, target service levels and remediation processes. For SMP agreements, we build in dispute escalation that acknowledges Ofcom’s section 185 jurisdiction. For non-SMP agreements, we establish practical escalation: technical working group, commercial negotiation, then formal dispute resolution.

For peering agreements, we include UK GDPR processor contract terms where personal data is handled, security obligations and audit rights.

How Bratby Law helps

• Interconnection agreement drafting and negotiation: structuring and drafting interconnection agreements for voice, IP and transit services, including traffic handling specifications, measurement methodology, service levels, pricing mechanisms and remediation processes
• SMP cost orientation analysis: where one party has significant market power, developing a transparent cost orientation methodology under section 87(9) Communications Act 2003, including cost drivers, allocation methodology and return on capital, built into the agreement as an annex with annual verification
• Peering agreements: drafting and negotiating internet exchange peering agreements with appropriate UK GDPR Article 28 processor terms, security obligations and audit rights where the peering operator handles personal data
• Regulatory dispute support: advising on Ofcom dispute resolution under section 185 Communications Act 2003 for SMP interconnection disputes, and on practical escalation mechanisms for non-SMP commercial disputes
• IP migration advice: advising operators transitioning from circuit-switched to IP interconnection on the commercial and regulatory implications, including new pricing models, technical standards and the impact on existing interconnection agreements
• New entrant interconnection strategy: advising new entrants on interconnection requirements, negotiation strategy with established operators, and the regulatory backstop available if commercial negotiations fail

Rob Bratby advises operators on interconnection, peering and access agreements across UK telecoms, bringing experience from Oftel, Ofcom and General Counsel roles at telecoms operators. Bratby Law is ranked in Chambers UK (Band 2) for telecoms and recognised as a Legal 500 Leading Partner.

Frequently asked questions

How has IP migration changed interconnection agreements?

IP migration has fundamentally changed the commercial and technical terms. Circuit-switched interconnection used per-minute pricing and capacity-based traffic commitments. IP interconnection typically uses capacity-based pricing with bandwidth commitments and traffic classes. The agreements need different service level specifications, different measurement methodology and different pricing review mechanisms. Operators transitioning from legacy to IP interconnection should renegotiate rather than amend existing agreements, because the commercial structure has changed.

If we are not an SMP operator, do we have to offer interconnection at cost orientation?

No. Cost orientation obligations under section 87(9) only apply to SMP operators. Non-SMP operators can negotiate commercial prices. However, if pricing is unreasonable or discriminatory, the other party can refer the matter to Ofcom for dispute resolution under section 185.

Can we use a standard commercial contract template for interconnection?

For non-SMP agreements, a good industry template is a reasonable starting point. You should review it for adequate service level specifications with measurement methodology, pricing review mechanisms and appropriate dispute escalation. For SMP agreements, the template must also address cost orientation obligations and Ofcom’s dispute resolution jurisdiction under section 185.

What happens if we have a dispute about interconnection pricing?

For SMP agreements, either party can refer the dispute to Ofcom under section 185. Ofcom investigates the cost base and determines whether pricing is cost-oriented. This typically takes 3-4 months. For non-SMP agreements, disputes are resolved commercially or through standard contractual dispute resolution. In each case, a transparent pricing methodology with periodic reviews reduces the risk of disputes arising.

Are peering agreements at internet exchange points regulated?

Peering at IXPs is less regulated than voice interconnection but is not unregulated. If you handle customer data as part of peering, you are subject to UK GDPR. Ofcom can assess whether an IXP is abusing market power. Treat peering agreements as formal agreements with processor terms and security obligations.

What notice period should we include for termination?

90 days is standard. This allows the receiving party time to notify customers and arrange alternative interconnection. Shorter periods create operational disruption. The agreement can include a break clause for early exit on payment of a specified fee.

Related transactions pages

See also our other transactions pages:

• Mergers and Acquisitions
• Private Equity
• SaaS and Cloud Services
• Subsea Cables
• MVNOs and MVNEs
• Network Sharing and Co-location Agreements
• Digital Infrastructure Projects
• Data Commercialisation and Licensing
• NSIA Clearances

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