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Technology Implications of the Brexit

By Laura Hamilton | June 24, 2016

The U.K. vote to withdraw from the European Union looks like it’ll take at least two years to unfold, and technology analysts are already talking consequences (or non-consequences) for IT investment and the telecommunications regulatory environment for the Brits.

Tim Jennings, chief research officer, enterprise IT management at Ovum says the decision is likely to have a short- and medium-term impact on enterprise IT investment in the U.K.

“Senior executives will want to prepare their core systems for any implications of revised trading and legislative agreements, and may postpone investment in non-mandatory IT projects such as digital transformation until the needs of the business-as-usual environment become clearer,” he says.

Ovum reports its conversations with enterprise IT leaders suggest that few have planned or prepared for the changes that might be required as a consequence of Brexit, Jennings reports.

“This is understandable given the unprecedented situation in which the U.K. now finds itself, but is likely to increase the level of caution that is applied to ongoing investments in business improvement and more speculative innovation projects, and may also play out against a potential downturn in the macroeconomic environment,” Jennings says. “This IT budget uncertainty will persist for at least the two-year EU withdrawal process, but beyond that time frame the level of uncertainty will be dependent on the clarity of the U.K.’s future trading arrangements with Europe and other global partners.”

Luca Schiavoni, senior analyst at Ovum expects that once completed, Brexit will have little impact on the U.K.’s regulatory environment.

“The EU’s regulatory framework is largely inspired by the U.K.’s experience of the previous decades. Brexit is likely to have a minimal effect on the U.K.’s regulatory environment for at least two reasons,” Schiavoni explains. “First, it is highly likely that the U.K. will continue to be part of the European Economic Area (EEA). As other EEA countries do (e.g., Norway), Ofcom will likely follow a regulatory approach very close to the approach stemming from the European Commission’s (EC’s) regulatory framework. Second, the European approach to regulation actually borrows a great deal from the U.K.’s experience of privatization and market liberalization.”

He thinks it is unlikely that the U.K. will adopt a radically different regulatory approach.

“However, one aspect that could change is the frequency of such reviews, which is currently set at three years for all markets warranting regulation. Ofcom could look to be more flexible about the time frames for reviewing markets once it is no longer bound to the EC’s framework,” he adds.

Schiavoni points out that U.K. consumers could lose the benefits of the “roam-like-at-home” regime recently implemented by the EC for international mobile roaming because U.K. operators will no longer be subject to that. However, this is an area that could ultimately depend on the U.K. remaining part of the EEA, he concludes.

 

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Filed Under: Industry regulations + certifications, DIGITAL TRANSFORMATION (DX)

 

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