Funds for Liabilities
The Electronic Communications Code (Conditions & Restrictions) Regulations 2003 require, amongst other things, code operators to ensure that sufficient funds are available to meet any specified liabilities. These are defined within Regulation 16. Regulation 16(1)(b) requires Code operators to provide Ofcom with a certificate on 1st April each year and this needs to state, amongst other things, that sufficient funds have been put in place and the certificate needs to be accompanied by copies of any insurance policy, bond, guarantee or other instrument which will provide for the funds. Any company benefiting from the electronic communications code that is not listed below have not submitted a certificate to Ofcom.
Introduction
Regulation 16 of the Electronic Communications Code (Conditions and Restrictions) 2003 (S.I. 2553/2003) requires persons benefiting from the electronic communications code ('code operators') to put in place sufficient funds in order to meet liabilities which arise on or before the date on which a relevant event occurs, or may arise at any time during the liability period, from the exercise of rights conferred upon them by paragraph 9 of the electronic communications code (the 'primary duty'). Regulation 16 sets a statutory liability period of three years commencing from the date on which a relevant event occurs. Ofcom is aware that there may have been some confusion amongst code operators about the statutory requirements relating to the liability period and wishes to draw code operators'attention to this aspect of regulation 16 below.
Securing provision of funds
On 15 October 2003, the Director General of Telecommunications (the "Director") published a statement entitled Funds for Liabilities. On 18 December 2003, the Director also published non-binding guidelines on how code operators might assess the cover they require in order to meet their primary duty under regulation 16. Code operators should consult these guidelines for all compliance issues relating to regulation 16. The guidelines are available via the following link http://stakeholders.ofcom.org.uk/binaries/telecoms/cop/funds_liability.pdf. Since taking over and assuming the powers and responsibilities of the Director on 29 December 2003, the statement and guidelines have been adopted by Ofcom.
In Annex C to the statement, the Director set out a specimen bond by way of an example of the type of instrument that code operators could choose to put in place in order to secure provision of funds. The bond was included for illustrative purposes only and, as explained in the statement, all persons obtaining instruments for the purpose of fulfilling their primary duty under regulation 16 are required to seek their own independent advice on the drafting of any such instrument.
Revised specimen bond
In 2009, Ofcom noted that certain improvements could be made to the above-mentioned specimen bond and consulted on this for six weeks over the Christmas period. A revised version was published in 2010. This is available via the following link http://stakeholders.ofcom.org.uk/binaries/telecoms/cop/specimenbond.pdf
We would emphasise that the specimen bond is for illustrative purposes and is just one means by which a Code operator can fulfil its obligations under Regulation 16. Code operators should seek their own independent legal advice on the precise drafting of the bond (or other instrument that they provide to comply with Regulation 16) to ensure that they fulfil their statutory obligations under Regulation 16.
The liability period
Ofcom is aware that there may have been some confusion amongst code operators about the statutory liability period required under regulation 16. The "liability period" is defined to mean "the period commencing on the occurrence of a relevant event and ending on the third anniversary thereof" and is intended to provide any beneficiary with sufficient opporunity following the occurrence of a relevant event to assess whether it needs to make a claim against the relevant instrument. Code operators should be aware of the requirements of regulation 16 and ensure that any instrument they provide makes appropriate provision to discharge this duty.
Regulation 16(1) requires Code operators to ensure that sufficient funds are available to meet the specified liabilities which arise on or before the date on which a relevant event occurs, or may arise at any time during the liability period.
The specified liabilities are defined in Regulation 16(10) as, amongst other things, costs or expenses reasonably incurred by a highways authority in removing redundant electronic communications apparatus or making good any damage caused by the installation or removal of such apparatus.
A relevant event is defined in Regulation 16(10) and in short refers to a Code operator ceasing to trade or being prohibited from providing, or ceasing to provide, the electronic communications network for which it was given Code powers.
The liability period is defined as a period commencing on the occurrence of relevant event and ending on the third anniversary thereof.
Code operators are responsible for assessing their liabilities under Regulation 16 and ensuring that sufficient funds are available to meet the specified liabilities.
Ofcom has adopted non-binding guidelines, published by its predecessor Oftel, on how Code operators might assess the cover they require in order to meet their duty under Regulation 16.
The associated statement provides further details.
In 2010, Ofcom published a statement setting out a specimen performance bond as an example of the type of instrument that code operators could choose to put in place in order to secure provision of funds. On 25 April 2022 , we made a minor revision to the specimen performance bond to reflect an amendment to Regulation 16(1)(a) of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003 (made by the Digital Economy Act 2017 (Consequential Amendments to Secondary Legislation) Regulations 2017). In particular, we replaced “paragraph 9 of the Electronic Communications Code” with “Part 8 of the Electronic Communications Code” in the second paragraph of the specimen bond. We would emphasise that the specimen bond is for illustrative purposes and is just one means by which a code operator can fulfil its obligations under Regulation 16. Code operators should seek their own independent legal advice on the precise drafting of the bond (or other instrument that they provide to comply with Regulation 16) to ensure that they fulfil their statutory obligations.
Regulation 16 requires Code operators to provide Ofcom with a certificate confirming that they have fulfilled their duty to ensure that sufficient funds for specified liabilities are available. The certificate must be provided to Ofcom at least 2 weeks before the Code operator exercises its Code powers for the first time, and annually on 1st April thereafter.
The certificate must be accompanied by copies of any insurance policy, bond, guarantee or other instrument which will provide the funds.
The requirements for the certificate are specified in Regulation 16(2) to (6) inclusive. Our statement on funds for liabilities provides further details. Please refer to our revised specimen certificate rather than the version in the statement.
Certificates and associated documents should be addressed to the ECC Team by email to ECCcodepowers@ofcom.org.uk
Ofcom is aware that there may have been some confusion amongst code operators about the statutory liability period required under regulation 16. The "liability period" is defined to mean "the period commencing on the occurrence of a relevant event and ending on the third anniversary thereof" and is intended to provide any beneficiary with sufficient opportunity following the occurrence of a relevant event to assess whether it needs to make a claim against the relevant instrument. Code operators should be aware of the requirements of regulation 16 and ensure that any instrument they provide makes appropriate provision to discharge this duty.