Ofcom to review digital communications
March 12, 2015
UK comms regulator Ofcom has announced an overarching review of the nation’s digital communications markets, to ensure that communications providers and services continue to meet the needs of consumers and businesses.
Ofcom’s Strategic Review of Digital Communications will examine competition, investment, innovation and the availability of products in the broadband, mobile and landline markets. By assessing these areas as a whole, Ofcom will consider wider questions complementary to those addressed by its regular, three-yearly reviews of individual telecoms markets.
In May 2014, Ofcom said that 2015 would provide a timely opportunity to take stock of the effectiveness of the rules arising from the last major review, 10 years after they were introduced.
The new review will consider a range of issues in the sector. Ofcom anticipates that it will focus on three aspects in particular:
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ensuring the right incentives for private-sector investment, which can help to deliver availability and quality of service;
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maintaining strong competition and tackling obstacles or bottlenecks that might be holding the sector back; and
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identifying whether there is scope for deregulation in some areas.
Timing and scope
This review will be Ofcom’s second major assessment of the wider telecommunications sector. The first began in December 2003 and concluded in September 2005. It led to new rules which allowed competing providers to access BT’s network, on equal terms, in order to offer phone and broadband services to consumers.
The market has transformed over the last decade. The Strategic Review of Digital Communications will consider the implications of current and future developments for regulation, including: plans from major operators for significant network investment; telecoms services increasingly operating over the internet; and various potential mergers, acquisitions, joint ventures and partnerships in the sector.
Achieving value for consumers
Since its last major review, Ofcom has adapted its regulatory approach to reflect the evolving telecoms market.
In 2006, it removed retail price controls on competitive telecoms services. In 2010, it brought in new rules to promote competition in superfast broadband. In 2011, it placed a cap on wholesale mobile rates, leading to cheaper calls to mobile phones.
In 2013, Ofcom awarded spectrum for 4G mobile services, with a rule to ensure at least 98 per cent of premises would benefit from the new technology.
Over the last 10 years, Ofcom says that telecoms users across the UK have seen real benefits in the form of innovative products, wider choice and lower prices. For example, since 2005 average broadband speeds have risen more than twenty-fold, while prices have fallen by around 50 per cent; and the cost of a monthly mobile bundle has halved from around £32 to £16.
Ofcom’s recent European Broadband Scorecard shows that the UK also leads the EU’s five biggest economies on most measures of coverage, take-up, usage and choice for different kinds of broadband, and performs well on price.
Promoting investment
Major operators continue to invest in the UK’s telecoms networks. For example, dominant telco BT said in January 2015 that it is testing technology for delivering ‘ultrafast’ broadband speeds, with a plan to roll out to most of the UK within a decade. The following month, cable MSO Virgin Media announced plans to extend its network to around four million new premises over the next five years.
Ofcom wishes to continue to support the development of the market by providing a clear and strategic regulatory framework. This will be designed both to promote competition and to support continued investment and innovation that can benefit consumers and businesses in the form of coverage, choice, price and quality of service.
Steve Unger, Ofcom Acting Chief Executive, said: “We have seen huge changes in the phone and broadband markets since our last major review a decade ago. Only five years ago, hardly any of us had used a tablet computer, high-definition streaming or 4G mobile broadband. The boundaries between landline, mobile and broadband services continue to blur, and people are enjoying faster services on a growing range of devices. Our new review will mean Ofcom’s rules continue to meet the needs of consumers and businesses by supporting competition and investment for years to come,” he stated.
Next steps
The first phase of the review will examine current and future market factors that may affect digital communications services, and current regulatory approaches. To inform this work, Ofcom intends to engage over the coming months with a wide range of stakeholders – including industry, consumer groups, the UK Government and devolved administrations – through meetings and workshops. This phase of the review is expected to conclude with a discussion document in summer 2015.
Ofcom then expects to conclude the review’s second phase by outlining initial conclusions around the end of the year.
Similarly, Antony Walker, deputy CEO of techUK, said the trade body welcomed the review. “The UK has a world class communications network, which is vital to supporting the growth of our digital economy. To maintain our leadership position, a supportive policy and regulatory environment is needed to encourage ongoing investment and innovation. That’s why we’re particularly pleased to see that Ofcom’s review will include ensuring the right incentives for investment,” he stated.
“In our Manifesto we highlighted the importance of ensuring ubiquitous world class communications infrastructure for the UK to sustain growth and maintain its position as a world leading internet economy and developer of digital content. We’re delighted this has been recognised by Ofcom and we look forward to engaging with the review,” he concluded.