The Electronic Communications (Networks and Services) (Designated Vendor Directions) (Penalties) Order 2025

Published: Thu 3rd Apr 25

The Electronic Communications (Networks and Services) (Designated Vendor Directions) (Penalties) Order 2025 clarifies the calculation of penalties for non-compliance with designated vendor directions under the Communications Act 2003.

It specifies the relevant business activities to be included in turnover calculations for penalty purposes and amends the Electronic Communications (Networks and Services) (Penalties) (Rules for Calculation of Turnover) Order 2003 to replace references to "notified provider" with "person." This ensures consistency with the Telecommunications (Security) Act 2021 and provides a clearer framework for penalty enforcement.

Arguments For

Improved clarity and consistency in penalty calculations: The order clarifies the calculation of penalties for non-compliance with designated vendor directions, ensuring a fairer and more transparent system.
Alignment with updated legislation: The amendments to the 2003 Order reflect changes introduced by the Telecommunications (Security) Act 2021, ensuring legal consistency and preventing ambiguity.
Strengthened national security: By clarifying penalties for non-compliance with designated vendor directions, the order aims to enhance the effectiveness of measures designed to protect national security in the telecommunications sector.
Enhanced enforcement: The order provides a clearer framework for enforcing compliance with designated vendor directions, potentially deterring non-compliance and protecting the public interest.

Arguments Against

Potential for disproportionate penalties: The 10% turnover penalty could disproportionately impact smaller businesses, potentially hindering innovation and competition.
Implementation challenges: The practical application of the order's provisions may present challenges, requiring significant administrative adjustments for affected businesses.
Alternative approaches: It might be argued that alternative mechanisms, such as tiered penalties based on the severity of non-compliance, could achieve the same objectives with less potential for harsh impacts on companies.
Unintended consequences: The amendments and clarifications, while intended to improve the legal framework, could inadvertently lead to unintended consequences or loopholes that require further legislative action.

Citation, commencement and extent (1) This Order may be cited as the Electronic Communications (Networks and Services) (Designated Vendor Directions) (Penalties) Order 2025. (2) This Order comes into force on the day after the day on which it is made. (3) This Order extends to England and Wales, Scotland and Northern Ireland.

This section provides the order's official title, effective date (the day after it's made), and geographical scope: England, Wales, Scotland, and Northern Ireland.

Network, service, facility or business by reference to which calculation of turnover falls to be made for the purposes of section 105Z19 of the Communications Act 2003 For the purposes of section 105Z19 of the Communications Act 2003 (amount of penalty), in the case of a contravention of a requirement imposed by a designated vendor direction the relevant business is so much of each business carried on by the person in respect of whose contravention the penalty is imposed as consists in— (a) the provision of public electronic communications networks (if any), (b) the provision of public electronic communications services (if any), and (c) the making available of facilities that are associated facilities by reference to those networks or services (if any).

This section defines the scope of business activities considered when calculating penalties under section 105Z19 of the Communications Act 2003.

Penalties are based on the businesses' provision of public electronic communications networks and services, and associated facilities.

This ensures all relevant revenue streams are factored into the penalty.

Amendment of the Electronic Communications (Networks and Services) (Penalties) (Rules for Calculation of Turnover) Order 2003 (1) The Electronic Communications (Networks and Services) (Penalties) (Rules for Calculation of Turnover) Order 2003 is amended as follows. (2) In article 2 (interpretation)— (a) omit “and” at the end of the definition of “the Act”; (b) omit the definition of “notified provider”. (3) In article 3 (rules for calculation of turnover for the purposes of section 97) for “notified provider’s” substitute “person’s”. (4) In the Schedule (rules for calculation of turnover for purposes of section 97)— (a) in paragraph 1, for “The turnover of a notified provider” substitute “A person’s turnover”; (b) in paragraph 2— (i) for “The turnover of a notified provider” substitute “A person’s turnover”; (ii) for “that provider” substitute “that person”; (c) in paragraph 3, for “notified provider’s” substitute “person’s”; (d) in the heading to paragraph 4, omit “to a notified provider”; (e) in paragraph 4(1)— (i) for “notified provider”, in both places it occurs, substitute “person”; (ii) for “that provider’s” substitute “that person’s”; (iii) for “that provider” substitute “that person”.

This section details amendments to the Electronic Communications (Networks and Services) (Penalties) (Rules for Calculation of Turnover) Order 2003.

Specifically, it removes the definition of "notified provider" and replaces all instances of "notified provider" or "provider" with "person." This simplifies terminology and broadens the applicability of the regulations.

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