Regulation and Compliance
Telecommunications companies are subject to a myriad of regulatory reporting requirements to encourage competition and allow access to incumbent operators’ networks. These often have to be met within tight timescales. In addition, operators struggle to understand the cost of delivering products to end customers, which can lead to distorted or uninformed pricing, as well as undetected inefficiencies.
Why is it an issue?
To meet the challenges, a rare blend of skills is required – regulatory knowledge, deep financial understanding, network experience to a component level and expert Information Management capability, as well as the ability and time to communicate across the enterprise. Few clients have resources with such blended skills, and if they do it is unlikely that they would have the bandwidth to undertake the detailed studies required to build costing analytic models.
Deloitte can provide a unique blend of skills to meet regulatory requirement and, in addition, gain an understanding of delivering products in relation to the revenues they generate, helping feed into pricing considerations, highlight loss-making products, expose areas of inefficiency and give an alternative view on customer profitability. These skills include:
- Analysing costs, revenues, assets, products, processes and customers within a telecoms operator
- Interpreting regulatory requirements using a wealth of experience in that field
- Assuring data quality, integration, storage, analytic modelling and reporting
Recent and planned developments in EU data law mean that Communication Service Providers (CSPs) will have new obligations, including:
- The issue of secondary retention notices under the UK Data Retention Regulations (primarily addressed at IP comms)
- The introduction of the Digital Economy Act, under which CSPs are required to fund 25% of the costs of combating online copyright infringement
- The planned introduction of a revised Communication Data (CD) Bill during the current parliamentary session.
Why is it an issue?
To date, HMG have fully reimbursed CSPs for the costs of developing/maintaining data retention and disclosure capabilities; however, pressure to reduce public spending is likely to result in a policy of partial reimbursement being introduced.
Under a partial reimbursement model, Disclosure/Police Liaison team leads will face pressure to reduce operational costs and increase efficiency in the face of increasing disclosure request volumes.
Since 2006 Deloitte has been intrinsically involved in the Home Office’s work to ensure UK compliance with EU legislation. We have provided:
- Security architecture reviews, risk analysis, technical and value for money assessments
- Development of detailed system requirements for IP CD retention systems
- Development of a fairer and more efficient cost-recovery mechanism between CSPs and LEAs.
Prosecutors and regulators across the globe are increasingly active in enforcing anti-bribery and corruption legislation. The number of enforcement actions, the size and nature of the fines and penalties, and the number of jurisdictions within which enforcement actions have been brought have all increased significantly over the last few years. In December 2008 a large multinational organisation agreed a $1.6bn settlement with US and German officials under the Foreign Corrupt Practices Act (FCPA). In the UK, the Bribery Act has introduced new and more easily applied offences which are likely to see this trend continue.
Why is it an issue?
The TMT industry has a number of characteristics which make it susceptible to breaches of both recognised standards of appropriate behaviour and the Bribery Act, these include:
- Culture of entertainment and hospitality
- Joint ventures and use of sales agents
- Government contracts and relationships
- Operations in high risk, politically unstable, countries.
One of the most significant elements of the UK Bribery Act is that it introduces the ‘corporate offence’ which extends the reach of UK enforcement agencies beyond personal liability to enable the prosecution of commercial organisations for failing to prevent a bribe. The TMT industry is especially susceptible to this regulation and the only defence available under the Act is to demonstrate that they have ‘adequate procedures’ in place to prevent bribery both by their own employees and others acting on their behalf (agents, 3rd parties etc).
We are uniquely positioned to help clients navigate this challenging area and can support organisations by helping them consider and/or implement:
- An assessment of the nature and extent of the organisation’s risks relating to bribery
- Support and/or advice upon the implementation of a compliance programme that addresses the main principles of the Bribery Act and other relevant legislation
- An independent assessment of an organisation’s compliance programme if already established.