Virgin Media 2007 Annual Report Download - page 24

• Directive 2002/20 on the authorization of electronic communications networks and services (the
Authorization Directive);
• Directive 2002/19 on access to and interconnection of electronic communications networks and
associated facilities (the Access and Interconnection Directive); and
• Directive 2002/22 on universal service and users rights relating to electronic communications
networks and services (the Universal Service Directive).
This package of Directives was supplemented, subsequently, by the Communications and Privacy
Directive which dealt, among other things, with data protection issues in relation to the provision of
electronic communications services.
The U.K. Government incorporated these Directives into its national laws under the
Communications Act 2003, which came into effect on July 25, 2003, and the Communications Privacy
Regulations, which came into effect on December 11, 2003.
During 2006, the European Commission commenced a review of these Directives (the Regulatory
Framework Review). This review led to the publication of a number of draft amending Directives in
November 2007. It is anticipated that these draft Directives will have their First Reading in the
European Parliament in September 2008. One notable proposal under these draft Directives is for the
creation of a European Electronic Communications Market Authority which would have, as part of its
remit, the duty to contribute towards the harmonization of regulation relating to electronic
communications across the EU. It is not intended, however, that this new Authority would replace
national regulatory authorities such as Ofcom (see below under Regulation in the U.K.). It is not
currently anticipated that the proposals contained in the draft Directives will have any material adverse
impact on our business.
In June 2007, the EU Roaming Regulation (the Roaming Regulation) imposed new retail and
wholesale price controls on international mobile roaming within the EU and required greater levels of
transparency of retail pricing information.
At the retail level, operators such as Virgin Mobile were required to offer a per minute
‘‘Eurotariff’’ and consequently, Virgin Mobile reduced its standard retail prices for roaming calls within
the EU in line with the Eurotariff requirements. Virgin Mobile will be required to further reduce such
retail roaming prices in August 2008 and August 2009, in line with the further reductions in the
Eurotariff mandated in the Roaming Regulation.
At the wholesale level, the average per minute wholesale charge between any pair of network
operators over a 12 month period in respect of outbound roaming calls within the EU may not exceed
the price cap mandated in the Roaming Regulation. Further reductions are required in August 2008
and 2009. We understand Ofcom expects network operators to adjust their bilateral contractual pricing
provisions to meet the wholesale price cap well before the end of the first 12 month calculation period
in August 2008.
The wholesale rate cap should result in a reduction in the wholesale cost per minute incurred by
Virgin Mobile when its customers roam in the EU, although the requirement that the wholesale price
cap be based on a 12 month average charge will delay the flow-through to Virgin Mobile of the benefit
of this reduction. The Roaming Regulation could have a negative impact on profits especially in the
period until Virgin Mobile receives the benefit of the wholesale price reduction.
Regulation in the U.K.
We are subject to regulation under the Communications Act 2003, the Broadcasting Acts 1990 and
1996 and other U.K. statutes and subordinate legislation. The Communications Act 2003 established a
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