British Telecommunications plc & Anor v The Information Commissioner

This section addresses only the first limb of the Functional Basis under regulation 2(2)(c) EIR: whether the Appellants have been “entrusted” under national law with the performance of services of public interest. 
The Tribunal deals separately with the remaining elements of the composite Functional Basis test, including whether the relevant services are of public interest, whether they relate to the environment in the sense required by the authorities, and whether the Appellants have been vested with special powers for the purpose of performing those services.

It is for the Commissioner to satisfy the Tribunal that regulation 2(2)(c) is met on the composite test. The entrustment limb performs a threshold function within a cumulative composite test: a finding that entrustment is satisfied does not decide whether an entity is a “public authority”; it addresses only the “under national law” connection, leaving for separate determination the further requirements of public interest, environmental nexus and special powers. 

On the Commissioner’s substituted case, entrustment is said to arise:

The Appellants contend that this approach is overly broad because it wrongly equates regulation with entrustment and would capture all regulated entities. 
They emphasise that the Communications Act 2003 adopts a “general authorisation” model rather than individual licensing, that the General Conditions are set by Ofcom (not enacted as legislation), and that Ofcom’s discretion prevents the regime from being treated as an “entrustment through legislation”. 

The parties agree that the inquiry under this limb is one of entrustment “under national law” though they differ as to the legal structure capable of satisfying that requirement. The Appellants submit, by reference to the authorities, that entrustment requires a legal basis achieved by legislation; the Commissioner, while also relying upon a domestic legal basis, contends that a statutory framework operating through conditions imposed by Ofcom is capable of satisfying that requirement.

The Tribunal therefore identifies the legal question under this limb as whether, looking at the statutory scheme relied upon and its operation, the Appellants’ activities are carried on pursuant to an authorising/empowering legal regime “under national law” of the relevant kind, rather than merely within a generally regulated market. This is a scheme specific inquiry directed to “context and effect”. The existence or absence of prior licensing and the characterisation of the regime as one of general authorisation, are not by themselves determinative; the inquiry is into the context and legal effect of the scheme relied upon.

In applying that approach, “entrustment” must remain a distinct requirement and must not be collapsed into other limbs (including special powers). Equally, the Tribunal does not accept that there is a categorical rule that a regulatory scheme can never constitute entrustment: the correct approach is scheme specific, by reference to the legal regime applicable to the entity and its legal consequences. 

Because Ground 1(a) concerns only one element of a cumulative composite test, and because the parties’ submissions risk talking past each other unless the Tribunal’s approach is stated with precision, we identify at this stage the propositions of law that govern the entrustment limb. They are set out to make clear the Tribunal’s method, to prevent conflation of “entrustment” with other limbs (in particular special powers), and to provide an explicit framework against which the parties’ competing submissions are evaluated in the application section below.

Against that background, the Tribunal applies four propositions of law to resolve Ground 1(a):

The Tribunal begins by identifying the correct basis on which the entrustment issue arises in the appeal. The Appellants emphasise, and the Commissioner accepts, that aspects of the original reasoning in the Decision Notices required substitution, including the reliance in the Decision Notices on section 33 Communications Act 2003. The Commissioner’s pleaded Response and skeleton therefore advance a substituted case resting instead on the general authorisation regime under sections 45 et seq and the general conditions made under that framework. 

The Tribunal therefore determines the entrustment issue on the substituted case advanced in the Commissioner’s pleaded Response and skeleton argument. The Tribunal’s task on this appeal is to determine the legality of the Decision Notices on the basis of the parties’ pleaded cases and the evidence before it; it is not confined to reasoning which the Commissioner no longer maintains. The entrustment issue is therefore determined by reference to the substituted statutory basis relied upon by the Commissioner, and not by reference to the abandoned section 33 analysis.

The Commissioner’s submission is, in substance, that the provision of electronic communications networks and services takes place within a statutory regime established by sections 45 et seq of the Communications Act 2003. Under that regime Ofcom imposes General Conditions with which providers must comply, and failure to comply may lead to enforcement action, including penalties and suspension. On that basis, the Commissioner contends that providers are only able lawfully to provide the relevant networks or services because they operate within, and in accordance with, that statutory framework. 

The Appellants dispute that analysis. They emphasise that no prior licence or permission is required in order to operate a telecommunications business, that providers do not require a licence to operate in the UK, and that the sector is properly characterised as a regulated, competitive market. In their submission, compliance with regulatory conditions imposed by Ofcom does not of itself amount to entrustment under national law. 

The Tribunal accepts that the issue cannot be resolved merely by describing the regime at a high level. The question is whether the particular statutory scheme relied upon, assessed by reference to its context and legal effect, provides the requisite authorisation or empowerment “under national law” for the purposes of entrustment, or whether it is properly characterised as the regulation of otherwise independent commercial activity.

The authorities sometimes describe the “under national law” link using the language of “authorised” or “empowered”. In Fish Legal CJEU, however, that language does not collapse the entrustment requirement. Paragraph 48 identifies that the relevant connection must arise from a legal basis in national legislation; paragraph 52 then sets out the structured functional test, in which the entity must be “entrusted” (under the legal regime applicable to it) with services of public interest and, for that purpose, vested with special powers. The Tribunal therefore treats “authorised/empowered” language as describing the source of the legal basis, not as a substitute for the distinct entrustment requirement in the structured formulation.

The Tribunal agrees that “being allowed to” do something is not always, or automatically, the same as being “entrusted” with a function of public administration. That is why the authorities frame the functional concept in a limiting way: it is concerned with “administrative authorities defined in functional terms”, and it is not a mechanism for extending the definition to all persons whose activities are regulated. The Tribunal therefore approaches “authorised/empowered” language with caution. It is necessary to identify what, in legal terms, the national law scheme does beyond regulating conduct: whether it merely imposes standards on private activity, or whether it supplies an “under national law” framework which, in context and effect, amounts to entrustment of the relevant services within the meaning of the authorities.

The Tribunal has therefore approached the entrustment limb by asking whether the applicable statutory scheme provides the domestic legal basis for the relevant authorisation/empowerment connection, even if, as the Appellants emphasise, the statute delegates to a specialist regulator the task of setting detailed conditions within that framework. Delegation of detail does not sever the “national law” link where the statute itself creates the framework and the legal consequences that give the regulator’s conditions their operative force. The critical question is whether the statute creates a permission structure with legal consequences such that compliance with enforceable conditions made under the statute is legally material to lawful operation within the scheme.

The Tribunal’s conclusion on this aspect does not treat Ofcom as a legislator. Rather, it treats the Communications Act 2003 as the relevant “national law” creating the authorisation structure and legal consequences, and treats the General Conditions as instruments made within, and given operative legal effect by, that statutory framework. In Fish Legal terms, the question is whether the activity is carried on “under the legal regime which is applicable” to the entity in the relevant statutory sense, such that the regime supplies the requisite “under national law” legal basis for the entrustment inquiry. That is a question of statutory structure and legal effect, not of whether Parliament itself sets out every operational condition in primary legislation.

The Tribunal therefore rejects the Appellant’s submission that Ofcom’s discretion, including under sections 45 and 51 necessarily defeats “entrustment through legislation”. Discretion is a common feature of statutory regulatory schemes. It does not strip the scheme of its legislative character where Parliament has enacted the framework, conferred the power to set enforceable conditions within that framework, and attached legal consequences to breach. The existence of discretion may be relevant to the ultimate “context and effect” assessment on the facts, but it does not, as a matter of principle, prevent the statutory scheme relied upon from satisfying the “under national law” component of the entrustment limb.

For the avoidance of doubt, the Tribunal uses the phrase “permission to operate” only as a descriptive shorthand for the statutory framework relied upon in this appeal. It does not purport to substitute any different test for the statutory language of “entrusted … under national law” or for the structured formulation in the binding authorities, which the Tribunal applies on a scheme-specific “context and effect” analysis.

The Tribunal rejects the proposition that liberalisation or competition is, of itself, determinative against entrustment. The Functional Basis is not confined, as a matter of principle, to monopolists or to entities that are non-commercial in form. If it were, the scope of regulation 2(2)(c) would depend upon economic market structure rather than the legal character of the functions and the national law regime by which they are performed. That would be an unstable and conceptually misplaced criterion. Market structure may change over time, including by privatisation, liberalisation, or regulatory reform, without altering the underlying question posed by the Directive and the EIR, namely whether an entity is performing “functions of public administration” under national law in the relevant sense. The Tribunal therefore treats competition as potentially relevant factual context, but not as a legal rule capable of resolving the entrustment limb.

That said, the Tribunal agrees that competition is relevant context in this case. It matters because it sharpens, and in a competitive market makes more acute, the need to identify what, precisely, the State has done “under national law”. In a liberalised market, it is common for the State to regulate private market participation by imposing baseline standards of conduct, whether through general conditions, codes, or other regulatory instruments. The existence of such standards, even if stringent and backed by enforcement, does not of itself answer the entrustment question, because the Functional Basis is directed at entities which are, in substance, performing functions of public administration, not simply operating a business subject to regulatory constraints.

In that context, the Tribunal must therefore be careful to distinguish between, on the one hand, regulation of market participants, including measures designed to protect consumers, facilitate switching, or promote competition, and, on the other, a statutory permission to operate or designation-and-obligation structure by which national law authorises and conditions the provision of the relevant services as part of a State-created framework with legal consequences for lawful operation. That is the “context and effect” question the Tribunal must answer, rather than treating the presence or absence of competition as a proxy for it.

The Tribunal therefore treats liberalisation as a contextual factor which increases the need for careful, scheme-specific reasoning, but not as a dispositive rule against entrustment. In practical terms, the effect of competition is to require the Tribunal to articulate with particular clarity why the statutory scheme relied upon does, or does not, go beyond ordinary sectoral regulation and amount to, or not amount to, an “under national law” entrustment in the relevant sense. That is also why the Tribunal avoids reasoning backwards from the importance or social utility of telecommunications services. In competitive markets many socially important services are provided commercially, and “public interest” in the availability of a service is not the same thing as “entrustment” of that service as a function of public administration. The Tribunal’s analysis under Ground 1(a) therefore proceeds by identifying the legal mechanism and its consequences within the statutory scheme relied upon, rather than by treating either competition or social importance as determinative.

The Tribunal has considered the Appellants’ submission that historic government involvement is of limited relevance and that the State’s role in a sector can fluctuate over time. The Tribunal agrees with that general caution. In particular, the entrustment limb is directed to the legal regime “under national law” applicable to the entity in the period relevant to the requests and the Decision Notices. It is not a historical inquiry into whether the State once owned, operated, or might in some counterfactual world operate the relevant services.

To place determinative weight on historic involvement would risk importing speculation, for example about future nationalisation or alternative policy choices, into a test which, in the authorities relied upon by the parties, is intended to be applied by reference to the legal basis and effect of the regime actually in force. The Tribunal therefore treats history, at most, as background context capable of illuminating the nature of the current scheme, but not as a substitute for analysing the present statutory architecture and its legal consequences.

In the present appeal, this point has particular significance because the Commissioner’s substituted entrustment case does not turn on historic public ownership or on an argument that telecommunications are “public” because the State used to provide them. The substituted case is put on the basis of the current statutory regime relied upon, namely general authorisation and enforceable conditions under the Communications Act 2003, and, separately for BT, universal service designation and conditions. The Tribunal therefore approaches the entrustment question as one of statutory structure and legal effect: what the current regime requires, permits, and enforces as a matter of national law, and whether that constitutes an “under national law” authorisation/empowerment connection in the relevant sense. That is consistent with the Appellants’ own emphasis, including by analogy with the Heathrow reasoning they cite as instructive, that historic ownership and privatisation narratives do not, of themselves, answer the functional question, which must be addressed by reference to the present legal and market framework.

For present purposes, therefore, the Tribunal’s findings on entrustment rest on the current statutory framework and its operation as national law, rather than on historic public ownership. This is not to treat history as irrelevant in all respects: it may help explain why a regime has its present shape. But it is the current “context and effect” of the statutory scheme that matters to the entrustment limb. The Tribunal’s approach also avoids reasoning backwards from broad propositions such as “the State might otherwise have done this itself”, which are both evidentially contentious and conceptually distinct from the question posed by regulation 2(2)(c). The Tribunal therefore confines itself, at this stage, to the present statutory architecture relied upon and its legal consequences, leaving other limbs of the composite test to be considered separately.

The Tribunal has considered the Appellants’ analogy that compliance with baseline standards, for example Building Regulations or professional regulatory standards, does not, without more, entail that the duty bearer has been “entrusted” with a function of public administration, and that the Commissioner’s approach would, if correct, capture a wide range of regulated actors. The Appellants illustrate the point by reference to a construction company required to comply with Building Regulations and a barrister required to comply with professional regulatory standards.

The Tribunal accepts the force of that cautionary point. Many activities, including regulated professions, are carried on lawfully only if the person is authorised and complies with regulator-made rules. The mere existence of a permission-and-standards regime, even one backed by enforcement and capable of making continued practice unlawful in the event of breach, cannot, without more, be sufficient to constitute “entrustment” for regulation 2(2)(c). If it were sufficient, a wide range of regulated market participants and professionals would fall within the Functional Basis simply because they operate under a regulatory regime. That would deprive the concept of “entrustment” of any meaningful limiting function and would risk converting regulation 2(2)(c) into a general category of “regulated persons”, which is not what the language of the Directive and the EIR contemplates.

The Tribunal therefore treats the Appellants’ analogy as identifying a genuine risk in the Commissioner’s substituted case if it were expressed in the simple form “unlawful unless compliant, therefore entrusted”. The Tribunal’s task is more specific. The entrustment limb is concerned with whether the relevant services are performed pursuant to an “under national law” legal regime of the kind relied upon by the parties, and whether that regime amounts to entrustment in the sense contemplated by the Functional Basis, rather than merely the regulation of an otherwise private activity. That is why the Tribunal does not decide the entrustment limb by asking only whether the Appellants must comply with standards or whether they are subject to enforcement. Those features are common to many regulatory regimes, including the examples given by the Appellants.

What follows from this is not that the Commissioner’s substituted case must fail, but that it must be analysed with particular care and by reference to the specific statutory architecture relied upon. In this appeal, the Commissioner’s substituted case is expressly that the Communications Act 2003 establishes a general authorisation regime under which the provision of an electronic communications network or service is structured through enforceable General Conditions made under the statute, backed by statutory enforcement consequences, including penalties, suspension powers, criminal liability for continued provision after suspension, and a statutory damages scheme.

Those features may, depending on the Tribunal’s findings on “context and effect”, be said to go beyond the mere existence of baseline standards of conduct. But the Tribunal emphasises that they do so only because they form part of the specific statutory permission structure relied upon by the Commissioner, not because “regulation” or “permission to operate” is, in itself, equivalent to entrustment.

The Appellants’ focused submission is that entrustment must be “through legislation”, that the General Conditions are not legislation, and that Ofcom has discretion whether to set conditions and what conditions to impose, relying in particular on sections 45 and 51. They further submit that this is the paradigm of baseline regulatory standards in a competitive market, and that treating such conditions as “entrustment” would be an impermissible expansion of the functional category.

The Tribunal accepts that the General Conditions are not primary legislation and that Ofcom is not Parliament. But the Tribunal does not accept that this defeats the “under national law” requirement. The statutory question is not whether Parliament itself specifies every operational condition. It is whether Parliament has enacted a statutory framework which creates the legal basis under which the relevant activity is carried on and makes compliance with enforceable conditions made under that framework legally significant for lawful operation. In other words, the question is one of statutory structure and effect: does national legislation itself establish the authorising framework and attach legal consequences to the regulator’s conditions made within it? The Tribunal’s task is therefore to identify the statutory mechanism by which the regime operates, and to explain why, on its context and effect, it does or does not go beyond ordinary sectoral regulation.

The Tribunal emphasises that these observations are made only as part of the scheme-specific “context and effect” assessment required by the authorities. They are not advanced as a substitute for the statutory language of “entrusted … under national law”, still less as a free-standing shortcut to functional “public authority” status. They explain the route by which the Tribunal determines whether the national law scheme relied upon is capable, in principle, of satisfying the “under national law” component of the entrustment limb.

Properly analysed, the Commissioner’s substituted case does not necessarily commit the fallacy alleged by the Appellants. It is not that “regulation equals entrustment”. It is that the Communications Act 2003 creates a statutory framework applicable to persons providing electronic communications networks and services, under which lawful provision is structured through enforceable conditions made under the Act, backed by statutory enforcement consequences; and that this “context and effect” is capable of supplying the “under national law” connection contemplated by the authorities. Whether that is correct is not answered by labels such as “regulated market” or “permission”, but by examining the statutory architecture and its legal consequences, which the Tribunal does below.

The Tribunal accepts the seriousness of the Appellants’ overbreadth concern. It is not merely rhetorical. If the entrustment limb were satisfied whenever a person carries on an activity in a regulated market, regulation 2(2)(c) would cease to operate as a definition of “administrative authorities” in functional terms and would become a general category of “regulated persons”. That would be inconsistent with the structured way in which the Fish Legal formulation defines the functional category, namely entities entrusted with services of public interest, “inter alia in the environmental field”, and, for that purpose, vested with special powers beyond the normal rules of private law; and it would also be inconsistent with the Appellants’ submission that the Commissioner’s approach would unrealistically capture large numbers of commercial operators.

First, the Tribunal addresses overbreadth at the level of legal structure. Entrustment is only one element of a cumulative composite test. A finding on entrustment does not determine “public authority” status. Even if an entity is “entrusted … under the legal regime which is applicable to it”, regulation 2(2)(c) requires further limiting conditions to be satisfied, including that the entrusted services are of public interest “inter alia in the environmental field” and that the entity is vested, for that purpose, with special powers beyond those arising under ordinary private law. Those additional limbs are not formalities. They are part of the definition’s built-in limiting function.

Secondly, the Tribunal addresses overbreadth at the level of method. The “context and effect” approach operates as a constraint because it requires the Tribunal to identify what the particular national law scheme does, in legal terms, rather than reasoning from the existence of regulation in the abstract. It therefore resists an automatic syllogism—regulated, therefore entrusted—and obliges the Tribunal to distinguish, on the facts and by reference to the statutory architecture, between baseline sectoral regulation of private activity and a statutory regime said to supply the specific “under national law” connection contemplated by the functional definition. That scheme-specific discipline is itself a protection against over-expansive outcomes.

Thirdly, the Tribunal addresses overbreadth at the level of outcome. Any conclusion on entrustment in this appeal is tied to the specific statutory architecture relied upon by the Commissioner, namely the Communications Act 2003 general authorisation regime and the enforceable General Conditions made pursuant to it, considered by reference to their statutory structure and legal consequences. The Tribunal’s reasoning is therefore confined to that scheme-specific analysis. It does not entail that regulation in other markets, or regulation in general, will satisfy the entrustment limb; still less does it establish any general principle that regulated professions or regulated commercial activities are “entrusted”.

Finally, the Tribunal records that this analysis also answers the Appellants’ concern about overbreadth. The Tribunal is not adopting a general proposition that regulated activities are “entrusted”. It is undertaking a scheme-specific inquiry into the particular national law framework relied upon in this appeal. Further, even if the entrustment limb is satisfied on that scheme-specific analysis, that conclusion does not determine “public authority” status. The Tribunal must still consider, separately and cumulatively, whether the relevant services are of public interest, whether they are in the environmental field in the required sense, and whether special powers are vested for the purpose of performing those services.

The Appellants’ objections therefore identify genuine analytical risks, and the Tribunal has accepted a number of the cautions which underlie them. Competition does not answer entrustment; history is not determinative; regulation alone is not enough; and overbreadth must be avoided. But those propositions do not, either individually or cumulatively, defeat the Commissioner’s substituted case in principle. They instead reinforce the need for a careful, scheme-specific inquiry into the statutory architecture relied upon and its legal consequences. It is to that inquiry that the Tribunal now turns.

The Tribunal now applies the above principles to the substituted entrustment case.

The Commissioner’s pleaded case is explicit. Entrustment is said to arise from the general authorisation regime under sections 45 et seq of the Communications Act 2003 and the General Conditions made under that statutory framework.

The Tribunal is satisfied that the substituted case is not merely that the Appellants operate in a regulated sector. Rather, it is that the Communications Act 2003 establishes a statutory framework under which the provision of an electronic communications network or service is permitted only on condition of compliance with General Conditions made under the Act, sections 45 to 46. The context and effect of that framework includes the statutory consequences relied upon by the Commissioner: enforcement by Ofcom, including penalties under sections 96A to 96B and power to direct suspension under sections 96A and 100; criminal liability for continuing to provide a network or service after a suspension direction under section 103, with exposure on indictment to an unlimited fine under section 103(3)(b); and a statutory scheme for civil damages claims by parties affected by breach of a general condition under section 104.

Those features explain why the Tribunal is satisfied that the statutory regime supplies the requisite “under national law” authorisation or empowerment connection as a precondition to considering, separately, whether the entrustment limb is satisfied, without collapsing entrustment into regulation in the abstract.

The Tribunal emphasises that these features go to the existence and character of the national law regime relied upon. They do not, without more, answer the distinct question whether that regime “entrusts” the Appellants with services of public interest, still less whether the further limbs of the functional definition are satisfied.

The Tribunal has considered the Appellants’ submission that the General Conditions are “not legislation” and that Ofcom has discretion under sections 45 and 51. For the reasons given at paragraphs 66 to 70 above, the Tribunal does not accept that those points defeat entrustment. The relevant “national law” is the Communications Act 2003 itself, which establishes the authorisation structure and empowers Ofcom to set enforceable General Conditions of general application.

The Tribunal also notes the Appellants’ emphasis that the Communications Act 2003 does not operate as a “licensing” regime in form, and that communications providers do not require a licence to operate. The Tribunal accepts that point as one of statutory form. However, the authorities require the Tribunal to examine the legal regime applicable in substance and effect. The absence of a formal “licence” label does not preclude Parliament from having structured lawful operation through enforceable conditions made under the Act, with statutory consequences for breach. The Tribunal therefore analyses the regime by its legal operation rather than by nomenclature.

The Tribunal also notes that this conclusion is consistent with the scheme-specific approach required by the authorities relied upon. It does not treat “stringency” as determinative but identifies the legal structure by which lawful operation is conditioned by enforceable obligations made under the statute.

The Tribunal is careful to avoid an overbroad proposition. It does not find that any regulatory scheme constitutes entrustment. It finds only that this statutory framework for electronic communications networks and services, structured through enforceable General Conditions made pursuant to the Communications Act 2003 and considered on its context and effect, is capable of constituting entrustment within the meaning of regulation 2(2)(c), and on the Tribunal’s scheme-specific analysis, does so in the present case.

The Tribunal makes clear that this conclusion is not confined to any particular provider. The general authorisation regime applies, as a matter of national law, to all persons providing electronic communications networks and services within its scope. The Appellants are such providers.

The general authorisation regime is not entity-specific but activity-specific. It applies, as a matter of national law, to the provision of electronic communications networks and services as such. Both Appellants carry on such activities within that statutory framework. On the Tribunal’s scheme-specific analysis, that framework constitutes an “under national law” basis capable of amounting to entrustment within the meaning of regulation 2(2)(c). It follows that, on that basis, the entrustment limb is satisfied in respect of both Appellants, subject to the remaining elements of the composite test.

The Tribunal turns to the Commissioner’s alternative and independent basis of entrustment: BT’s designation as a universal service provider and the imposition of universal service conditions. This limb is analytically distinct from the sector-wide general authorisation regime because it concerns a statutory mechanism for identifying particular provider or providers on whom universal service conditions are imposed, rather than conditions of general application imposed across the sector.

The Commissioner’s pleaded case identifies this as a separate basis. BT is designated as a universal service provider for broadband and telephony services pursuant to sections 45(2)(b)(i), 66 and 67 of the Communications Act 2003. The content of the minimum universal service is set out in the legislative instruments relied upon, identified in the pleaded case as the Electronic Communications (Universal Service) Order 2003 and the Electronic Communications (Universal Service) (Broadband) Order 2018, and is described in evidence as providing “a safety net” ensuring access to a minimum set of communications services.

The Tribunal is satisfied that, as a matter of statutory structure, universal service designation is capable of providing a more concrete instance of “entrustment … under national law” than the general authorisation regime. The reason is that national law here does not merely prescribe standards for any provider who chooses to enter the market. It provides for the designation of “the persons to whom universal service conditions are to be applicable” (section 66), and it empowers Ofcom to set “universal service conditions … for securing compliance with the obligations set out in the universal service order” (section 67). In consequence, once a person is designated, it is placed under a specific set of enforceable conditions directed to securing compliance with defined statutory obligations, rather than merely being required to comply with baseline standards of general application.

This also explains why the mechanism is materially different from the sector-wide general authorisation regime. Under the general authorisation model, multiple providers may participate subject to conditions of general application. Under the universal service model, the statutory scheme identifies a limited class of designated provider or providers to whom universal service conditions apply. The evidence before the Tribunal records that two entities are designated universal service providers, namely KCOM for Hull and BT for the rest of the United Kingdom, and that universal service conditions apply to those designated providers, operating as a backstop entitlement to broadband and telephony provision.

The Tribunal has considered the Appellants’ submission that the USO and universal service conditions are “merely another aspect of regulation” and not additional entrustment, and their point that BT obtained designation through a selection process. The Tribunal accepts that the designation may follow a competitive or consultative selection mechanism and that the sector is otherwise liberalised. However, those points do not answer the legal question on this limb. The relevant question is whether, once designated under the statutory scheme, BT is placed under universal service conditions set within the Communications Act 2003 framework for securing compliance with the obligations set out in the universal service order. The existence of a selection mechanism explains how the designated provider is chosen. It does not alter the statutory character or legal effect of the designation and the conditions that flow from it.

The Tribunal also considers the related submission that designation and universal service conditions are not “through legislation” because Ofcom’s act of designation is not itself primary legislation. The Tribunal accepts that Ofcom’s designation is an act taken pursuant to statutory powers. But for the reasons set out earlier in this decision, that does not defeat the “under national law” element. The relevant national law is the statutory framework itself, including sections 66 and 67, together with the legislative instruments defining the minimum service obligations, namely the universal service orders. It is that statutory architecture — designation provided for by statute and conditions set to secure compliance with the universal service order — which provides the relevant legal basis for the entrustment analysis.

On that footing, the Appellants’ characterisation of the USO and universal service conditions as “merely regulation” does not meet the point. The universal service scheme is not simply a set of general market standards. It is a statutory backstop mechanism securing minimum provision through identified provider or providers placed under scheme-specific, enforceable obligations to meet the requirements defined by the universal service orders and secured through conditions under section 67.

The Tribunal has also noted the evidence as to the apparent extent to which the universal service obligation has been relied upon in practice. That evidence may be capable of informing the Tribunal’s assessment, if it becomes necessary, of the practical consequences of alternative constructions of the EIR and the Directive, including any argument as to whether BT’s status, if established by reference to the universal service regime, is hybrid and, if so, the appropriate delineation of the activities and information falling within that regime. However, whatever its practical incidence, the point does not detract from the structural position. Universal service designation is a statutory mechanism by which national law identifies a provider and subjects it to enforceable universal service conditions designed to secure minimum provision as a backstop entitlement.

The Tribunal therefore finds that, in any event, BT is entrusted under national law by virtue of the universal service designation and the universal service conditions imposed within that statutory scheme. The Tribunal emphasises that this conclusion is confined to the entrustment limb and does not determine the further limbs of the functional definition, including the “environmental field” requirement and special powers, which are addressed separately.

For the avoidance of doubt, the Tribunal’s reasoning is scheme-specific. It does not proceed on a general proposition that any “designation” regime in any context necessarily constitutes entrustment. It rests on the particular statutory architecture of sections 66 to 67 of the Communications Act 2003 and the universal service orders relied upon in this appeal.

The Commissioner’s pleaded Response includes a reservation of position, for any further appeal, on whether section 106 could also comprise entrustment, but accepts that the Tribunal should not decide this case by treating Code powers as themselves constituting entrustment.

The Tribunal proceeds on the same basis. Its findings on entrustment do not depend upon treating the vesting of Code powers as itself constituting entrustment, which is consistent with the parties’ shared approach that entrustment and special powers remain distinct requirements.

The Tribunal notes that the Appellants advance extensive submissions that, even if entrustment were established, the relevant services do not relate to the environment “in the environmental field” and that the Commissioner’s “environmental impact” approach is incorrect.

Those submissions go to a different limb of the composite Functional Basis test and are addressed later in the decision. The Tribunal records here that it has not overlooked them. They are analytically distinct from the entrustment limb.

For the reasons above, the Tribunal concludes that the Commissioner has established the entrustment limb of regulation 2(2)(c):

Ground 1(a) of the appeal therefore fails

This section addresses the second and third elements of the Functional Basis under regulation 2(2)(c) EIR: whether the relevant activities constitute the performance of services of public interest, and whether (to the extent required by a Directive conforming interpretation) those services are “in relation to the environment” / in the environmental field. The parties’ dispute on the latter issue is a real one. The Appellants submit that it is not enough that an activity has some environmental impact, because that would risk bringing within the regime almost any human activity, including as they submit, but effectively importing the breadth of the definition of environmental information into the threshold question of status; they contend that the services must be in the environmental field in a more substantive sense. 

The Tribunal is not, in this section, determining the remaining component of the composite test—whether the Appellants have been vested with special powers for the purpose of carrying out any entrusted services. That issue is addressed separately under Ground 2. 

The Tribunal addresses ground 1(b) and ground 1(c) in turn. In doing so it keeps distinct (i) the evaluative question whether the services are of public interest in the relevant sense and (ii) the question whether there is a sufficient nexus between the performance of those services and the environment. For the avoidance of doubt, contrary to any suggestion that the services must themselves have an environmental purpose the Tribunal does not accept that an environmental purpose is required; equally it does not proceed on the basis that any de minimis or remote “impact” would suffice.

The Commissioner asserts in his skeleton that any dispute on “public interest” is “hopeless”, relying on the pleaded position in Response §§44–48. 

The Commissioner also noted in that it was not entirely clear whether the Appellants contested public interest but treated it as in dispute because the Grounds/Reply state that BT/Openreach have not been “entrusted with anything (still less services of public interest)” and describe telecommunications as “important” but not “life’s basic necessities”.

The Appellants’ case (as developed in their written submissions) is that the Commissioner’s approach collapses “public interest” into mere “social usefulness”: most commercial services are useful, but that does not make them public administrative functions, and the provision of telecommunications services in a competitive market is not a function of public administration of the kind contemplated by the authorities. 

The Tribunal therefore proceeds on the basis that the “public interest” element requires determination and addresses it explicitly. 

The Tribunal accepts the Appellants’ central caution that “public interest” cannot mean merely “useful to the public”; if that were the test, it would be incapable of meaningful application. 

However, the Tribunal rejects any attempt to confine “public interest” to services provided by the State itself or delivered only through monopoly. The pleaded Response treats telecommunications as integral to modern society and identifies statutory indicators that Parliament and Government treat continuity and availability of communications as essential to public welfare. 

The Tribunal therefore applies the approach reflected in the pleaded materials: whether, in context, the service is treated by the statutory framework as sufficiently essential that (a) continuity and resilience are matters of public welfare and public administration and (b) the State uses statutory mechanisms (including universal service instruments and resilience planning duties) to secure baseline availability for the public at large. That approach is consistent with the Functional Basis as articulated in Fish legal.

The Tribunal makes clear that this conclusion is not confined to any particular level of supply within the telecommunications sector. The evidence and statutory indicators relied upon concern the provision and operation of telecommunications networks and services as a whole.  BT provides services to end users; Openreach operates and maintains the physical network infrastructure through which those services are delivered. Both therefore participate in the same underlying system of nationwide communications provision. On that basis, the Tribunal is satisfied that the activities of each Appellant are properly characterised as services of public interest for the purposes of this limb.

The Commissioner’s Response characterises telecommunications services as nationally significant infrastructure essential to the everyday operation of Government, the economy and communities, and contends that modern society would “grind to a halt” without access to telephone and internet services. 

The Tribunal accepts that this goes materially beyond “mere usefulness”. The pleaded case does not rely simply on the proposition that telecommunications are “important” or “useful” in a general commercial sense; rather, it points to a set of statutory and policy indicators said to show that Parliament and Government treat the continuity and availability of communications as a matter of public welfare and national resilience, and therefore as a service whose provision is closely bound up with the public interest. In particular, the pleaded case relies on statutory emergency planning concepts and placement of providers within the relevant resilience architecture (including the Civil Contingencies Act 2004 framework); it relies also on the classification of communications as critical national infrastructure (reflecting the Government’s assessment of the consequences of loss or compromise); and it relies on the statutory universal service scheme (under the Communications Act 2003 and the universal service instruments/orders), as a mechanism directed to securing minimum nationwide availability of specified baseline services for end users through designated universal service providers. Taken together, these features support the conclusion that the public interest in continuity is of a different order from the ordinary public interest in any successful commercial sense.

Oral evidence reinforces this conclusion. In oral evidence, Mr Ward described the breadth and ubiquity of the national infrastructure involved in providing telecommunications services: a network and associated infrastructure running “right across the country”, used continuously, maintained on a regular basis, and currently being replaced on a large scale through the transition to fibre optic infrastructure. The Tribunal treats that evidence as supporting its assessment that telecommunications networks/services are integral to the functioning of modern society and thus properly characterised as services of public interest for the purposes of this limb. 

The Tribunal has considered the Appellants’ response that similar statutory references exist for other sectors (money, food, transport, finance) and that this would imply an unworkable expansion. The Tribunal agrees that such references cannot be treated as a mechanical “tickbox”. It does not rely on any single indicator as determinative. Rather, it treats the pleaded indicators cumulatively as demonstrating that communications networks/services are treated as essential to public welfare and state functioning, and that Parliament has adopted statutory mechanisms directed to continuity, resilience and baseline availability. 

The Tribunal also notes the Appellants’ contention that telecommunications services are not functions performed by the State and their reliance on authority (Poplar UT) distinguishing entities bound by legislation to perform state functions. The Tribunal does not read “public interest” as requiring proof that the State presently performs the service itself. The Functional Basis analysis proceeds on a broader footing (as reflected in the Commissioner’s pleaded case): the question at this stage is whether the service performed is of public interest within the scheme and context; it is not a requirement that the State itself must be the service provider. 

Finally, the Tribunal records that the Appellants’ reliance on Heathrow’s discussion of airports (public interest in availability; regulation is the public administrative function) is noted. The Tribunal accepts that the existence of regulation alone will often support the proposition that it is the regulator’s function that is public. But the present case includes a statutory universal service mechanism and network resilience duties directed to nationwide continuity and minimum provision for the public. That is sufficient for the Tribunal to conclude that the relevant services are “of public interest” for present purposes. 

The Tribunal’s conclusion on Ground 1(b) is that  the activities carried on by both BT and Openreach constitute services of public interest in the sense required by the pleaded framework. 

The Commissioner’s pleaded position is that the functions/services relate to the environment because provision of telecommunications networks and associated infrastructure necessarily entails an impact on the environment, and it is not necessary that the activities pursue an environmental purpose (Response §§49–54). 

The Appellants’ pleaded response is that the Commissioner’s “environmental impact” approach is overbroad and would make almost all human activity environmental (the Reply gives the example of “emission of noise”), and that the entrusted service must relate (at least in part) to the environment / be “in the environmental field”, which telecommunications services are not. The Appellants also contend that the EIR must be read in conformity with the Directive and that the Commissioner’s approach is a misconceived attempt to rewrite the legislation. 

The Tribunal therefore addresses (i) the correct meaning of “relating to the environment” in this context, (ii) the limiting principle required to avoid overbreadth, and (iii) the “environmental field” / Directive conformity argument. 

The Commissioner’s Response relies on the definition of “environmental information” in regulation 2(1) as an interpretive guide to what “environmental” means (Response §51), citing authority treating regulation 2(1) as informative of the concept. 

The Tribunal accepts that this is a legitimate interpretive tool but also accepts the Appellants’ caution that an unbounded reliance on regulation 2(1)(b) factors (noise, radiation, etc.) could risk collapsing the test into universality as the Appellants submit by reliance on factors such as noise within regulation 2(1). The Tribunal therefore adopts a limiting principle to keep the concept workable and consistent with the pleaded “environmental field” requirement. 

The Tribunal accepts the force of the Appellants’ criticism that an unqualified “environmental impact” formulation is capable of becoming overinclusive (the Reply’s “emission of noise” example). 

The Tribunal therefore makes clear that “impact on the environment” is not being used as a freestanding or universal label. The impact must be nontrivial and sufficiently proximate to the performance of the service in question. In particular, the Tribunal is concerned with the ordinary incidents of providing and maintaining telecommunications networks and associated infrastructure which, as the Decision Notices illustrate, commonly entail physical works such as laying cables underground (disturbing soil) or installing overhead connections (altering landscape and requiring associated works), affecting elements of the environment such as soil and landscape in a concrete and non de minimis way. 

The Tribunal’s conclusion on nontriviality and proximity is reinforced by the oral evidence. In oral evidence, Mr Ward described the installation, maintenance and ongoing use of infrastructure running across the country and explained that the current replacement and upgrade programme involves widespread works associated with rolling out fibre optics. The Tribunal treats that evidence as supporting its conclusion that the relevant environmental effects are not remote or de minimis, but inherent in the ordinary performance of the service. 

The Tribunal does not proceed on the basis that any incidental interaction with the physical world suffices. Rather, the impact must be of a kind inherent in (or at least a regular and foreseeable incident of) the performance of the service, and not merely remote, trivial, or common to human activity generally. This addresses the Appellants’ concern that an unqualified ‘impact’ approach would be over-inclusive, while remaining anchored to the concrete examples relied upon by the Commissioner.

The Tribunal also makes explicit that this conclusion applies to each Appellant. The environmental effects identified above arise directly from the installation, maintenance and operation of telecommunications infrastructure, including the laying of cables and installation of overhead connections. Those activities are carried out in practice through the operation of the national network infrastructure, which Openreach maintains and develops, and through the ongoing provision of services over that infrastructure by BT. The Tribunal is therefore satisfied that the requisite environmental nexus attaches to the activities of both Appellants.

The Tribunal rejects the Appellants’ submission that “relating to the environment” requires the activity to be intended to benefit the environment. The Commissioner’s pleaded position is that an environmental purpose is not required (Response §53), and the Tribunal accepts that proposition as correct: the regime concerns access to information about measures/activities affecting environmental elements and factors, not solely activities pursued for an environmental purpose. 

The Tribunal also observes that a purpose only test would be difficult to reconcile with the definition of “environmental information” in regulation 2(1), which expressly encompasses measures and activities affecting elements and factors, as well as measures designed to protect them; it is not confined to the latter category. 

The Tribunal accepts that regulation 2(2)(c) must be interpreted consistently with the Directive and the authorities and therefore addresses directly the Appellants’ argument that the entrusted service must be “in the environmental field” and that mere impact is insufficient. 

The Tribunal does not accept the Appellants’ implication that “environmental field” is limited to services whose subject matter is environmental management or environmental protection. Rather, the Tribunal understands “environmental field” (in this context) as requiring a sufficient nexus between the performance of the service and measures/activities affecting environmental elements/factors in a way that is not trivial or purely incidental. 

Applying the nontriviality and proximity principle set out above, the Tribunal is satisfied that the nexus exists here. The provision and maintenance of a nationwide telecommunications network and associated infrastructure involves recurrent measures and activities affecting land/soil/landscape (and relevant factors), not as a marginal byproduct but as a regular incident of delivering the service. That is capable of bringing the activity within the “environmental field” requirement without collapsing the concept into universality. 

The Tribunal’s reliance on nontrivial, inherent effects is not to substitute “impact” for the “environmental field” requirement, but to explain why the provision and maintenance of a national communications network is, in ordinary operation, carried out through measures and activities affecting the elements and factors in regulation 2(1), and therefore has the requisite nexus with the environmental field. 

The Tribunal therefore rejects the Appellants’ submission that the Commissioner is “rewriting the legislation” by relying on impact. The Tribunal’s approach is not “impact equals environmental” in the abstract; it is that nontrivial, proximate impacts inherent in performance of the service establish the requisite nexus to the environmental field. 

The Tribunal records expressly that it proceeds on the basis of a Directive conforming interpretation: nothing in the Tribunal’s reasoning depends on treating regulation 2(2)(c) as if it omitted the “environmental field” nexus. The Tribunal therefore rejects the Appellants’ submission that the Commissioner’s approach improperly imports the breadth of the definition of environmental information into the threshold test, and does not accept any proposed narrowing of “environmental field” to a requirement of purpose to benefit the environment.

The Tribunal’s rejection of the Appellants’ “everything becomes environmental” objection is reinforced by the oral evidence. Mr Ward’s description was not of incidental or ubiquitous side effects (such as trivial noise), but of a nationwide physical infrastructure whose installation, maintenance and replacement necessarily involves recurring physical works across the built and natural environment. That is why, applying the Tribunal’s nontriviality and proximity limitation, the Tribunal is satisfied that there is a sufficient nexus between performance of the service and measures/activities affecting environmental elements and factors to meet the “environmental field” requirement on a principled basis. 

For the reasons set out above, the Tribunal concludes that the activities of both Appellants constitute services of public interest and relate to the environment (without requiring an environmental purpose, and subject to the nontriviality limitation set out above). 

It follows that, where the Tribunal has already concluded that the entrustment limb is satisfied, the Commissioner is correct to say (in substance) that the Appellants meet the first part of the Functional Basis analysis under regulation 2(2)(c), subject to the remaining separate question of “special powers.” 

This section addresses the “special powers” requirement under the Functional Basis analysis under regulation 2(2)(c)EIR. The question is whether the relevant entity (BT and/or Openreach) has been vested, under national law, with powers which go beyond those resulting from the normal rules applicable in relations between persons governed by private law, and which confer a practical advantage in the performance of the services in question.

The Tribunal records that “special powers” is a distinct, additional requirement and is not to be collapsed into (or treated as a proxy) for entrustment. The Tribunal therefore determines Ground 2 only after addressing (elsewhere) the separate elements of the composite test under regulation 2(2)(c), including entrustment, services of public interest and the environmental nexus. 

The Commissioner’s pleaded position (Response §§55–64) is that “special powers” are powers going beyond those which result from the normal rules applicable between private persons, and that Fish Legal UT requires a practical inquiry: substance not form; what practical benefit the power gives; the power need not be unique; and the power may be “special” even if subject to conditions or constraints.  As developed in the Commissioner’s skeleton argument, this requires a comparison with the normal rules applicable between persons governed by private law, focusing on the powers which result from those rules rather than what might be obtained through their exercise (for example by securing contractual rights or easements). The emphasis is on whether the statutory powers confer a practical advantage or value, including by enabling the body to secure access, rights or outcomes — and the means by which they are secured — which go beyond the position under private law. The characterisation of a power as “special” does not import any additional requirement beyond this contrast. Nor is it necessary to establish that the powers have recently been exercised: the question is whether they have practical value in the performance of the relevant services. The inquiry may include whether the powers entail a capacity to compel, or effectively compel, and whether they operate outside any existing private law relationship or without the practical limitations inherent in such relationships.

The Appellants accept that the relevant test is whether the powers confer a practical advantage relative to private law, but contend that:

The Tribunal applies the Fish Legal UT: the focus is on practical benefits and leverage, and the comparison is with the “normal rules” of private law — i.e. powers that result from private law, not merely rights that might in some circumstances be obtained through other statutory routes by litigation.

The Commissioner relies on Code powers (Schedule 3A to the Communications Act 2003) as the principal “special powers”. His skeleton summarises a broad suite of rights to install, keep, inspect, maintain, repair and upgrade apparatus; to carry out works; to enter land; to lop/cut vegetation; and — importantly for practical advantage — to exercise “street works rights” and other rights in controlled environments such as railways/canals/tramways and tidal waters.

The Tribunal was taken through these categories during the oral hearing by reference to distinct parts of the Code: “transport rights” (Part 7), “street work rights” (Part 8), and “tidal water rights” (Part 9) etc. The Tribunal accepts that the breadth of these rights is relevant when assessing practical advantage and the absence of private law analogues at scale.

As to BT specifically, the Tribunal also notes the statutory route by which BT is treated as having Code status (Schedule 18 transitional provisions), which is relevant to the question whether the powers are vested “under national law”.

The Tribunal accepts the Commissioner’s core submission that the Code powers confer a practical advantage relative to the normal rules of private law. The advantage is not merely that BT may attempt to negotiate with landowners (which any private party can do). The advantage is that BT operates within a statutory framework designed to enable nationwide network deployment and maintenance, including the ability to obtain and implement rights necessary to install and keep apparatus in places and in ways that an ordinary private party cannot replicate through the normal incidents of private law. 

The point is leverage and real world capability. In particular, the Tribunal accepts that “nobody else could just dig a hole in the road” as a matter of ordinary private law; the Code regime (and associated statutory street works framework) enables works in roads/streets and other controlled environments in a way that materially changes the position compared to private persons. 

The Tribunal also notes the close similarity (raised in oral submissions) between the language of the Code rights to install/maintain apparatus and the kinds of statutory infrastructure rights treated as special in Fish Legal UT (where analogous statutory powers to lay and maintain infrastructure were considered). The Tribunal accepts that similarity as supporting the conclusion that Code rights are of a type capable of being “special powers” within the Fish Legal framework. 

The Tribunal has considered the Appellants’ submission that Code rights are not “special” because they are commonly exercised by agreement and (where consent is absent) require a court order; and that this is equivalent to private law because private parties can also seek court orders. 

The Tribunal rejects that submission. First, Fish Legal UT makes clear that the question is the practical benefit and leverage conferred by the statutory power, and that a power can be “special” even if subject to constraints or approvals. The existence of a statutory backstop and specialist process can itself confer leverage and practical advantage. 

Secondly, Mr Ward’s evidence indicates that most wayleaves are agreed consensually and court proceedings are a last resort. The Tribunal treats that not as undermining “specialness” but as demonstrating how statutory leverage operates in practice: the power’s value lies in its existence and negotiating impact, not in routine litigation. 

The Tribunal has considered the Appellants’ specific comparator: they argue that BT’s distinctive feature is merely the ability to ask a court to impose an agreement, but private parties can also obtain court ordered rights (e.g. under the Access to Neighbouring Land Act 1992), so the Code powers do not go beyond private law in substance.

The Tribunal does not accept that this defeats the “special powers” analysis. Fish Legal UT draws a distinction between (a) powers that result from the normal rules of private law and (b) powers that might be obtained only by invoking other statutory schemes or exceptional procedures. The existence of other narrow statutory routes for access in different contexts does not render the Code’s rights “normal private law powers”. Those regimes are narrowly circumscribed, case specific and contingent upon judicial discretion in individual disputes, whereas the Code establishes a standing, sector-wide entitlement structure designed to facilitate systematic infrastructure deployment.

Further, the Code regime is a comprehensive, sector specific statutory framework designed for communications infrastructure deployment at scale, including in streets/roads, transport corridors and tidal waters. That is not comparable in purpose or effect to limited, context specific access regimes. The Tribunal accepts that the breadth and operational character of the Code regime is itself part of why it confers a practical advantage beyond ordinary private law relations.

The Tribunal has considered the Appellants’ submission that Code powers are held by hundreds of providers and therefore are not “special”. This is not accepted. Fish Legal UT makes clear that a power need not be unique to be “special”; the question is whether it confers an advantage over ordinary private law. 

The Appellants rely on Fish Legal EU and submit that special powers must be vested “for the purpose” of the services of public interest in the environmental field; they further say that the Code was not applied for the purposes of the USO and that any hypothetical (“would have been conferred”) is irrelevant speculation. 

The Tribunal does not base its conclusion on a speculative hypothetical. The Tribunal’s reasoning proceeds on the basis of the powers that are vested and the purposes for which they are in fact used within the relevant statutory scheme.

The requirement is satisfied where the statutory powers are functionally and operationally directed to, and used in, the performance of the relevant services. On the Tribunal’s findings, the relevant services include the provision and maintenance of telecommunications networks/services at nationwide scale, and the Code powers are used to install, maintain, upgrade and operate that network infrastructure. That establishes the necessary purposive link. 

Secondly, to the extent a narrower “USO only” hypothesis is advanced, the Tribunal accepts that the Code may have existed prior to USO designation; but the question is whether the Code powers are used to facilitate the network works necessary to provide and maintain the communications services (including any universal service obligations requiring connection and maintenance). On the evidence, Openreach (as BT’s agent) negotiates and implements the vast majority of Code agreements for deployment/upgrading of apparatus, and therefore the Code regime is operationally central to delivering the service. 

The Appellants’ case on Openreach is that it is “a very short one”: Openreach is not a Code operator and has no Code powers. They submit that the Commissioner’s attempt to treat that as “not relevant” misunderstands agency. They rely on the orthodox agency principle that acts of an agent within authority are acts of the principal, and they argue that if an agent were treated as vested with the principal’s statutory powers, then any person acting on behalf of a public authority (including employees) would themselves be vested with those powers. They further rely on the Agency and Services Agreement to show Openreach acts on BT’s account and is prohibited from contracting on its own account (including clause 3.5).

The Commissioner’s pleaded and oral position is the opposite. In his Decision Notice / analysis he proceeds on the basis that Openreach is “entitled to exercise Code Powers” by virtue of BT’s (deemed) status and he treats this as sufficient to satisfy “special powers” because, if consent is not forthcoming. “Openreach Ltd…can apply for a court order” and landowners will understand that consent cannot be withheld unreasonably, giving Openreach a stronger negotiating position on compensation. In his skeleton argument he submits that it is “not relevant that Openreach exercises its powers under the Code as BT’s agent, rather than in its own right”, because the test is practical and looks to substance not form, and in practice Openreach derives a practical benefit from the Code even if it does so as agent.

The Tribunal accepts that Fish Legal UT requires a practical enquiry focused on the practical advantage conferred by statutory powers as against the normal rules of private law. The Tribunal also accepts (as the Commissioner stresses) that a power need not be unique, and that the existence of constraints or the need for approvals does not of itself prevent a power being “special”.

However, those propositions do not answer the anterior question posted by regulation 2(2)(c) as interpreted in the authorities: namely whether the relevant entity is “vested” under national law” with powers going beyond the normal rules of private law. The requirement of “vesting under national law” is expressed in the statutory language of regulation 2(2)(c) and is not displaced by the functional or practical enquiry identified in Fish Legal; rather the two operate cumulatively. The “practical” lens in Fish Legal UT is directed to the character and real-world advantage of the statutory power being relied upon; it is not a licence to ignore the legal allocation of that power as between distinct legal persons, nor to elide the statutory requirement of vesting into a broader inquiry about who, operationally, carries out the day-to-day work.

The Tribunal therefore makes the following findings and clarifications.

The Tribunal accepts these submissions insofar as they describe orthodox agency law and the contractual structure: Mr Ward’s evidence supports that Openreach negotiates the vast majority of Code agreements as agent for BT; Code agreements are entered into in BT’s name; Openreach does not have a direction under s.106 and uses BT’s status as operator.

The Tribunal does not accept that its conclusion requires it to commit the “imputation” fallacy identified by the Appellants. The Tribunal makes three points of clarification.

First, the Tribunal does not find that Openreach is “vested” with Code powers in the sense that it becomes a Code operator as a matter of statutory title. The Tribunal accepts the Appellants’ point that Code status and Code rights are vested in BT, and that Openreach operates as BT’s authorised agent in exercising those rights.

The Tribunal’s finding on this point is grounded in the structure of the parties’ cases and in the distinction between (a) a statutory power held by a Code operator as a matter of law and (b) the practical reality that the operator may act through employees or agents. The Commissioner’s own skeleton acknowledges the latter by describing Openreach as exercising Code powers “acting as BT’s agent”. The Appellants’ case, by contrast, is that Openreach “is not an operator under the Code at all” and that this is fatal to any conclusion that Openreach itself has “special powers” under regulation 2(2)(c).

In the Tribunal’s view, the correct starting point is the statutory language and the way the “special powers” limb is framed in the authorities relied upon by both parties: the relevant body must be “vested” with the power “under national law”, and that power must go beyond the normal incidents of private law. The inquiry into “practical advantage” (Fish Legal UT) is directed to identifying the real-world leverage and capability conferred by the statutory power; it does not displace the anterior requirement that the power be vested in the entity whose status is being assessed.

That distinction is not merely formal. It is a necessary consequence of Openreach being a separate legal person. If a statutory scheme confers an entitlement on an “operator” (here, the party with Code status), then, as a matter of legal analysis, it is that operator who can invoke the statutory machinery — including, where applicable, the ability to seek a court order under the Code conditions — and who bears the correlative statutory burdens and restrictions. The Commissioner’s Decision Notice illustrates the problem in this case: it repeatedly treats Openreach as the party that can apply to the court and as the party whose negotiating position is thereby enhanced. However, whether Openreach can do those things in its own name is precisely what is in dispute; and the Tribunal does not accept that it can be assumed away by describing Openreach as “entitled to exercise Code Powers” by virtue of its relationship with BT. 

The Tribunal considers that the agency evidence points the other way. The Appellants rely on orthodox agency: acts of an agent within authority are acts of the principal; and they submit that Openreach is contractually prohibited from contracting on its own account (including clause 3.5) and acts for BT’s account. In that framework, when Openreach negotiates and implements Code agreements, it does so for BT and in BT’s name/capacity, not as the holder of a statutory entitlement in its own right. That analysis is consistent with the Commissioner’s own characterisation that Openreach exercises Code powers “as BT’s agent”.

The Tribunal therefore rejects the Commissioner’s submission that it is “not relevant” that Openreach acts as agent because the test is “practical” and looks to “substance not form”. Properly understood, “substance not form” addresses the practical content and effects of the statutory power relied upon (what leverage it confers and whether there is a private-law analogue), not the separate question of who is the legal bearer of that power. If “practical benefit” alone were sufficient to satisfy “vesting”, then the special powers limb would cease to perform its distinct gatekeeping function and would collapse into a broad inquiry about who, operationally, is involved in works that are facilitated by another entity’s statutory regime. That is not how regulation 2(2)(c) is framed, and it is not a principled application of Fish Legal UT.

Finally, the Tribunal accepts that this conclusion is supported by the principled limit identified by the Appellants. If a separate legal person could be treated as “vested” with special powers simply because it carries out operational tasks through which the principal’s statutory powers are exercised, the same reasoning would potentially apply to any contractor, subcontractor, consultant, or employee through whom the principal acts. The Tribunal does not consider that the law supports such an expansion of the “vesting” requirement. The correct analysis is that Openreach may (on the evidence) be the operational vehicle through which BT’s Code powers are exercised, but it does not follow that Openreach is itself vested with those powers under national law.

Secondly, the Tribunal considers it important to keep distinct (a) the existence of Code rights as statutory powers vested in an operator, and (b) the fact that, in practice, negotiations and works may be carried out by employees or agents acting for that operator. The Code scheme (as summarised in the Appellants’ case) is structured around the conferral of Code rights on an operator by agreement, with only limited circumstances in which a court may impose an agreement; that structure is consistent with orthodox agency: an agent may negotiate and implement for the principal, but the statutory entitlement to seek (and obtain) the court’s imposition of rights is an entitlement of the operator/principal, not of the agent in its own name. 

Thirdly, the Tribunal rejects the Commissioner’s formulation (in the Decision Notice) that “Paragraphs 20 and 21 … allow Openreach Ltd … to apply for a court order” as the determinative basis for Openreach’s special powers. Properly analysed, the leverage point which the Commissioner identifies (that an occupier knows consent cannot be withheld unreasonably, and that this affects the negotiating position on compensation) is leverage generated by the existence of the statutory backstop available to the Code operator — i.e. the principal who can invoke the Code and, if necessary, seek the court’s order. That may be a powerful feature of BT’s position. But it does not follow that Openreach itself has been vested with that statutory backstop as a matter of national law.

Fourthly, the Tribunal accepts the Appellants’ “employee reductio” point as identifying the principled limit which the Commissioner’s agency argument lacks. If the “special powers” limb could be satisfied whenever a separate legal person performs work that, in practice, makes use of another entity’s statutory powers, the concept of being “vested” with special powers would expand well beyond its mooring in the statutory test and would potentially capture any contractor, agent, or employee through which an operator chooses to act. The Tribunal does not consider that to be a legitimate application of regulation 2(2)(c). 

Fifthly, the Tribunal does not accept that this approach is inconsistent with Fish Legal UT’s insistence on substance over form. The substance which Fish Legal UT directs the Tribunal to examine is (i) whether the statutory powers in question confer a practical advantage over private law, and (ii) what that advantage consists of in the real world. That inquiry remains fully available (and has been undertaken) in relation to BT. But Fish Legal UT does not require (and the Tribunal does not read it as permitting) the further step of treating the agent as the bearer of the principal’s statutory powers for the purposes of the “vesting” requirement, merely because the agent is the operational vehicle through which the principal chooses to act.

For those reasons, the Tribunal concludes that, even if (contrary to the Appellants’ submissions) the Code powers amount to “special powers” within the Fish Legal UT framework, they are special powers vested in BT as operator. Openreach’s role as BT’s agent in negotiating and implementing Code agreements does not mean that Openreach itself is vested with those powers under national law. The “special powers” requirement is therefore not satisfied in relation to Openreach for the purposes of the Functional Basis analysis under regulation 2(2)(c). 

For the reasons above, the Tribunal concludes that the “special powers” requirement is satisfied for the purposes of the Functional Basis analysis in relation to BT.

In relation to BT, the Code rights and associated statutory machinery confer a practical advantage beyond private law and therefore constitute “special powers” within the meaning of Fish Legal and the domestic authorities.

In relation to Openreach, the Tribunal accepts the orthodox agency and contractual position and finds that Openreach is not vested, under national law, with Code powers (or other statutory powers going beyond the normal rules of private law). The fact that Openreach may, in practice, act as BT’s agent in negotiations and operational activity does not satisfy the distinct statutory requirement that the entity itself be vested with special powers. 

The Tribunal concludes that the “special powers” requirement is satisfied in relation to BT, but not in relation to Openreach. It follows that BT satisfies regulation 2(2)(c) EIR and is a public authority on the functional basis. By contrast Openreach does not satisfy regulation 2(2)(c), because the “special powers” limb is not met and is therefore not a public authority on that basis. Accordingly Ground 2 of the appeal fails in relation to BT, but succeeds in relation to Openreach.

The Commissioner’s alternative case is that, if BT is a public authority under Regulation 2(2)(c), Openreach is a public authority under Regulation 2(2)(d) because it is “under the control” of BT. The Appellants dispute this, submitting that the control test sets a high hurdle and is not satisfied on the facts, particularly given the voluntary Commitments given to Ofcom and the associated monitoring arrangements intended to secure Openreach’s independence within the BT group.

The parties are agreed that the correct approach derives from Fish Legal. In summary, the question is whether BT is in a position to exert decisive influence on Openreach’s action, such that Openreach does not determine in a genuinely autonomous manner the way in which it performs the relevant functions. The enquiry is evaluative and fact sensitive and requires an overall view of the evidence. In this context, “decisive influence” denotes influence which is capable of determining, in a meaningful and outcome-relevant sense, how the relevant functions are performed; it is not sufficient that a parent company retains ultimate legal powers or that influence could be exerted in hypothetical circumstances.

We accept the Appellants’ submission (reflecting their reliance on Fish Legal UT) that this is a demanding test and that it is not enough to identify the mere existence of powers or a theoretical capacity to influence. The focus is on how the relationship operates in practice: whether the evidence shows influence (overt or subtle) operating in fact to such an extent that genuine autonomy is absent in the relevant sense.

It follows that the control test is not satisfied merely by identifying ultimate corporate possibilities that may exist by virtue of share ownership (for example, dissolution rights or the ability in theory to constrain funding). Such matters may demonstrate capacity at a high level, but they do not resolve whether there is decisive influence in fact on a practical assessment of how Openreach operates.

The Appellants submit (in their Reply) that the Commissioner’s analysis has shifted from an earlier “theoretical” approach and that the Tribunal must instead address the practical/real position, taking account of the Commitments regime and Ofcom’s role; they further emphasise that the question is not whether Openreach is free from BT’s influence in every aspect of day to day decision making. We agree that the correct approach is a practical, evidence-based assessment of how the arrangements operate in reality, and we do not approach the test on the basis that any residual influence in marginal matters would be sufficient (or that Openreach must be free from all influence in every aspect). The question remains whether, assessed overall and on the evidence, BT is in a position to exert decisive influence in fact such that Openreach does not determine in a genuinely autonomous manner the way it performs the relevant functions. The existence of some degree of parental influence – whether structural, financial or strategic – is not, without more, inconsistent with genuine autonomy on this test; the question is whether that influence crosses the threshold into outcome-determinative control over the manner in which the functions are performed.

This is not a typical Regulation 2(2)(d) case involving a public body directing an arm’s length external entity. Openreach is a wholly owned subsidiary within the BT group. However, its separation arrangements exist against the backdrop of Ofcom’s competition concerns and are underpinned by the voluntary Commitments and associated monitoring structures.

We accept that the Commitments were designed to meet competition concerns and that Ofcom’s view is not determinative of the EIR control test. Nonetheless, Ofcom’s role and the monitoring framework are relevant to the factual matrix because they bear on whether BT’s formal powers can, in practice, be deployed so as to shape outcomes, and whether the practical risk of regulatory consequence constrains parent involvement in a way that supports genuine autonomy in fact. We do not accept the Commissioner’s submission that the existence of such regulatory constraint indicates an underlying lack of autonomy; the relevant question is how the relationship operates in fact within that framework and the evidence does not show decisive influence operating notwithstanding it.

In adopting a “real world” approach, we focus on the practical operation of the model rather than deciding the issue solely by reference to the existence of governance provisions on paper or by abstract theorising about what a parent company could do in the extreme. This requires us to examine who in fact makes relevant decisions; how financial governance constraints operate in practice; how conflicts of interest are addressed; what regulatory oversight applies; and whether the evidence demonstrates influence operating with outcome-relevant effect on the discharge of the relevant functions.

We heard oral evidence from Mr Ward (for BT) and Mr Furmston (for Openreach). We also addressed confidentiality issues relating to the confidential annex to Mr Furmston’s statement, including a Rule 14 direction and a closed session, which formed part of the evidential matrix.

The oral evidence was important because it enabled us to test the practical operation of the separation model: how Openreach works within the “financial envelope” concept; how governance and authorisation mechanisms operate in practice; what the monitoring arrangements mean in practical terms; and whether there was evidence of BT exercising influence (overtly or subtly) to an extent inconsistent with genuine autonomy.

Having considered the oral evidence together with the documentary framework, we accept (for the purposes of this Ground) the following points emerging from the evidence and consistent with the wider material.

First, the evidence supported the proposition that Openreach operates within a group set financial envelope but makes decisions and delivers services within that envelope without day-to-day parental interference in the ordinary course.

Secondly, whilst the governance documents contain mechanisms by which BT can authorise, veto, or intervene in defined circumstances, the evidence we accept did not demonstrate those mechanisms being used in practice in a way that removed Openreach’s genuine autonomy of action on the relevant test.

Thirdly, the evidence supported that key governance levers operate with transparency to the regulator within a monitored Commitments framework. We treat that as relevant not because it answers the EIR question by itself (it does not), but because it informs the real world assessment of whether BT can in practice deploy its formal rights to shape outcomes without attracting regulatory concern.

Fourthly, the oral evidence (including the closed session in relation to the confidential annex) was relied upon as illustrating that Openreach can proceed with decisions notwithstanding objections from BT’s downstream businesses. We treat individual examples with caution; however, in the context of this case, the example was consistent with the proposition that Openreach decision making is not simply dictated by the immediate commercial preferences of BT’s downstream divisions, and that the governance model can operate to prioritise Openreach’s role and objectives within the Commitments regime.

Taking those matters together, the oral evidence did not provide a sufficient basis for concluding that BT’s ultimate corporate capacity translated into decisive influence in fact. In particular, the absence of evidence of exercised or operative intervention in decision-making; the functioning of the monitored Commitments regime; and the demonstrated ability of Openreach to proceed with decisions notwithstanding contrary group interests, all point away from any influence operating in an outcome-determinative manner.

We were taken to the Commissioner’s list of matters relied upon as demonstrating control, including (amongst other things) BT’s ownership of assets and economic risk and reward; capital allocation and consolidation within group accounts; shareholder and governance rights (including dissolution rights and appointment/oversight mechanisms); group wide policies and risk controls; the handling of regulatory investigations and appeals; input into regulatory strategy; consultation/approval requirements in certain areas; the provision of support services; and Openreach’s position as agent when exercising Code powers. We have taken those matters into account in the round. They demonstrate that BT has capacity to exert influence as parent, but for the reasons given above (including our findings on the practical operation of the Commitments framework and the oral evidence) they do not satisfy us that BT in fact exerts decisive influence such that Openreach does not determine in a genuinely autonomous manner the way it performs the relevant functions. Considered cumulatively, those features do not displace our conclusion because they remain at the level of structural capacity and do not determine influence operating in fact so as to determine how the relevant functions are carried out. Economic integration and capital control did not in the evidence operate so as to determine or constrain operational decision-making in an outcome-determinative manner.

We have also considered the Appellants’ submission that the Commissioner’s “primary” case is, in substance, that BT controls Openreach simply because it is its wholly owned subsidiary, and that the “secondary” case rests on various shareholder and governance rights. We accept that those features establish capacity in principle, and we have taken them into account when assessing the relationship in the round. However, the demanding Regulation 2(2)(d) test requires the Tribunal to be satisfied that such capacity translates into decisive influence in practice such that Openreach lacks genuine autonomy on the relevant test. For the reasons set out above (including our evaluation of the Commitments framework and the oral evidence, and the handling of the confidential annex), we are not satisfied that the Commissioner has shown that these rights operated (overtly or subtly) to produce outcome determinative influence in fact sufficient to negate genuine autonomy in the performance of the relevant functions on the demanding Regulation 2(2)(d) test. There is no presumption that a wholly owned subsidiary is “under the control” of its parent for the purposes of Regulation 2(2)(d); the question remains one of fact and degree applying the Fish Legal test.

We accept that BT’s status as sole shareholder gives it an ultimate capacity to influence Openreach and that the governance framework reflects a degree of oversight and constraint. We also accept the Commissioner’s submission that powers may have value even where not exercised and that influence may be subtle; however, on the evidence we accept, we are not satisfied that the existence of those powers translated into outcome determinative influence in practice sufficient to negate genuine autonomy on the demanding test.

Accordingly, we do not find that Openreach is a public authority under Regulation 2(2)(d) EIR. Accordingly, Openreach is not a public authority under regulation 2(2)(d) and for the reasons under Ground 2, is also not a public authority under regulation 2(2)(c).

Because we do not find the “control” limb satisfied, it is unnecessary to determine whether Openreach also meets the further requirement in Regulation 2(2)(d)(i)–(iii) (public responsibilities/functions/services relating to the environment).

Finally, we record the practical point noted in our analysis: Openreach operates as BT’s agent in relevant respects, and where information is held by Openreach on behalf of BT as principal, BT would have to obtain it from its agent if BT’s EIR obligations apply. This does not alter our conclusion on Ground 3, but it addresses the practical concern about corporate custody of information.

Ground 4 is framed by the parties as arising only if BT were to be found to be a public authority under Regulation 2(2)(c) solely by virtue of the USO/USCs (i.e. not also by virtue of the general authorisation regime). On that hypothesis, the question would be whether BT’s obligations under the EIR extend to all environmental information it holds or are limited to environmental information held in connection with the performance of the USO (a “hybrid” approach). 

In light of our findings on Ground 1(a) (entrustment), it is not necessary to determine Ground 4. We have found that the entrustment limb under Regulation 2(2)(c) is satisfied on the basis of the general authorisation regime / enforceable General Conditions under the Communications Act 2003, and in any event and additionally by virtue of BT’s designation as a universal service provider. 

Accordingly, this is not a case in which BT would (if it is a Regulation 2(2)(c) public authority) fall within Regulation 2(2)(c) only by virtue of the USO/USCs. On our findings, the condition precedent for Ground 4 does not arise, and it is therefore unnecessary to determine whether a “hybrid” limitation would apply on that hypothesis. 

For completeness, we record that BT’s skeleton argument notes that, on the evidence of Mr Ward, the relevant request to BT did not concern USO material (Ward §42(b) [C/159]). If Ground 4 had arisen and if (contrary to the Commissioner’s position) BT’s obligations were limited to environmental information held pursuant to the USO, that factual matter would be relevant to the scope of any obligation in respect of the request in issue.

The Tribunal records, for completeness, the effect of its conclusions in relation to each of the three Decision Notices under appeal. Although the principal issue in these appeals has been the status of the Appellants under regulation 2(2) EIR, the Decision Notices themselves arose from distinct information requests, and it is therefore necessary to identify the disposal of each notice in light of the Tribunal’s findings.

First, in relation to Decision Notice IC-340468-B4B0 (Openreach), the Tribunal has concluded that Openreach is not a public authority within regulation 2(2) EIR, whether on the functional basis (regulation 2(2)(c)) or the control basis (regulation 2(2)(d)). It follows that the Commissioner’s Decision Notice, which proceeded on the basis that Openreach was a public authority, is not in accordance with the law. The Decision Notice is therefore set aside and substituted on that basis, and no further steps arise in relation to that request.

Secondly, in relation to Decision Notice IC-356981-P7S8 (BT), the Tribunal has concluded that BT is a public authority within regulation 2(2)(c) EIR. The appeal in respect of that Decision Notice is therefore dismissed. The Tribunal does not disturb the Commissioner’s conclusion on the question of status, and no further issue arises in relation to that notice.

Thirdly, in relation to Decision Notice IC-312790-D4D3 (the “Third DN”), the Tribunal notes that this notice arose from a request made to BT and included both a finding as to whether the request constituted environmental information and a requirement for BT to issue a response in accordance with the EIR. In light of the Tribunal’s conclusion that BT is a public authority within regulation 2(2)(c), and in the absence of any successful challenge to the Commissioner’s conclusion on the environmental character of the request, the appeal in respect of this Decision Notice is also dismissed.

In particular, the Tribunal does not disturb the Commissioner’s finding that part of the request constituted environmental information, nor the associated requirement that BT issue a response in accordance with the EIR. The Decision Notice therefore stands, including the step identified in it.

For the reasons set out above, the Tribunal concludes that BT is a “public authority” for the purposes of the Environmental Information Regulations 2004 by virtue of regulation 2(2)(c): BT is entrusted under the applicable national law regime with the performance of services of public interest which have the requisite nontrivial nexus with the environment, and for that purpose is vested with special powers going beyond the normal rules applicable between private persons.

By contrast, Openreach is not a “public authority” under regulation 2(2)(c), because it is not itself vested under national law with the relevant special powers, and the operational fact that it acts as BT’s agent does not satisfy the distinct “vesting” requirement. Nor is Openreach a public authority under regulation 2(2)(d), because the Commissioner has not shown, on the evidence taken as a whole, that BT is in a position to exert decisive influence such that Openreach does not determine in a genuinely autonomous manner the way it performs the relevant functions. It follows that the appeal is allowed only to the extent that the Decision Notice relating to Openreach must be substituted and is otherwise dismissed.