Virgin Media 2012 Annual Report Download - page 18

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REGULATION OF TELECOMMUNICATIONS SERVICES
In order to operate in the telecommunications sector, a provider must comply with general conditions imposed by
Ofcom. These general conditions cover a broad range of issues including interconnection standards, number portability,
deployment of telephone numbers, access to emergency services and sales and marketing standards. Any breach
of these general conditions could lead to the imposition of fines by Ofcom and, ultimately, to the suspension or revocation
of a company's right to provide electronic communications networks and services. Ofcom also undertakes triennial
reviews of the various economic markets within the telecommunications sector to establish whether any provider has
SMP warranting the imposition of remedies. The U.K. Government is currently undertaking a review of certain aspects
of the Communications Act. However, it is unclear at this stage what changes will be made or the timing of any changes.
Fixed Line Telephony Services
As a fixed network operator we, like all other fixed network operators, are deemed to have SMP in wholesale call
termination on our own network, and are therefore subject to SMP conditions in this market. However, these conditions
do not have a significant impact on our ability to compete in the wholesale market, and although Ofcom is currently
reviewing this market, it is not anticipated that this will result in any significant regulatory changes.
Ofcom is in the process of undertaking a fundamental review of the regulatory regime applying to non-geographic
calling services. This is likely to result in a significant change to the retail and wholesale charging arrangements to
which such calls are subject. We are working closely with Ofcom in its consideration and development of these reforms
in order to mitigate risks and maximize opportunities.
Broadband Services
Ofcom is in the very first stages of its triennial review of the Wholesale Local Access, or WLA, market (physical or
passive network access via methods such as LLU and duct access) and Wholesale Broadband Access, or WBA,
market (virtual or active network access via methods such as provision of wholesale managed service products). The
outcome of those reviews could have consequences for both Virgin Media's cable and non-cable operations.
We anticipate that BT will again be found to have SMP in the WLA market and certain sub-national areas of the WBA
market and will be required to provide certain products and services on regulated terms, (which may continue to include
providing access to its ducts and poles).
Mobile Telephony Services
As a MVNO, we are subject to EU regulations relating to retail prices for roaming services. The Roaming Regulation
(European Commission Regulation 531/2012) sets limits on certain wholesale and retails tariffs for international mobile
voice roaming, SMS tariffs and data roaming within the EU, provides for greater levels of transparency of retail pricing
information and sets maximum roaming rates within the EU. The new regulation adopted in June 2012 includes
provisions aimed at preventing consumer bill shock relating to data roaming charges both within and outside of the
EU.
Mobile termination charges applied by MNOs are regulated by Ofcom under SMP conditions, one of which requires
MNOs to reduce their mobile termination charges over time. Under our MVNO agreement with EE these changes in
mobile termination charges are passed on to Virgin Mobile U.K. and we have experienced a reduction in revenue from
such charges.
NON-INDUSTRY SPECIFIC REGULATION
Our business activities are subject to certain environmental and health and safety laws and regulations. Failure to
comply with these laws and regulations may result in us incurring fines or other penalties and we may incur expenditure
to account for these fines or penalties, maintain compliance and/or undertake any necessary remediation. In addition,
any breach of the aforementioned laws and/or regulations by our affiliates, vendors and contractors could result in
liability for us.
The proposed merger between Liberty Global and us remains subject to approval by the relevant competition authorities.
For more information on the Merger Agreement see the Recent Developments section of Item 1 of this Form 10-K.
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