LEGAL & REGULATORY MATTERS
CULTURE OF REGULATORY GOOD STANDING By Andrés Fígoli
I
t is imperative that a company has efficient processes and regular checks in place to comply with the changing regulatory framework in each country where a submarine cable is installed. This creates a culture of awareness throughout the organization, which indirectly ensures the proper operation and maintenance of these subsea assets throughout their lifetime. An “all hands-on deck” compliance culture minimizes the risk of delays in the payment of regulatory fees when different parts of the company have to rush through a payment process with government deadlines that cannot be changed. It also avoids the late submission of periodic regulatory reports with updated cross-information from multiple departments, and finally puts an end to the easy idea of starting service provision before a required telecoms license has been granted. There are always arguments in favor of shortcuts or even workarounds: low risk of detection of a breach, incomplete information in a filing, or even underpayment of regulatory fees just to meet the deadlines without further action. However, this ‘sweeping it under the carpet’ behavior poses a risk in the long run. These urgent measures are usually aimed at resolving a burning situation, but they fail to take into account that the cable owner may have its license, permit or authorization revoked or be struck off the register for repeated or even gross breaches of the national telecom’s regulatory framework. If the cable owner always tries to observe and maintain a culture of regulatory good standing, the benefits will far outweigh the continuous effort, as the issue may come up in the least expected
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circumstances, and they always do:
1. DUE DILIGENCE PROCESS FOR M&A INVESTMENTS.
A regulatory due diligence process is carried out before a company is acquired, so that the buyer does not inherit regulatory issues with the acquisition. Generally, there are new regulatory advisors who would conduct this review and they are not the same current regulatory lawyers that a cable owner relies on for day-to-day compliance. As a result, there may be different interpretations of the regulatory framework between the two teams of lawyers. This is a good opportunity to take advantage of this double-checking of compliance within a company and remove any unnecessary risk.
2. PERMITTING PROCESS FOR A NEW CABLE PROJECT.
The need to be always in good standing also brings a great strategic advantage in the early stages of future cable projects. Regulators and public authorities in general are more sympathetic to operators who share this culture, leading to the establishment of friendly channels such as informal meetings for technical consultation before a project is launched. From a regulator’s perspective, it is important to reassure them that they are not dealing with speculators, abusive dominant operators, or even insolvent telcos. The guiding principle for any in-house counsel practice should be consistent with a marketing campaign that effectively convey the message that the operator is in a country as a long-term stakeholder to continue to invest there and to comply with local laws accordingly. Furthermore, at a later stage, even