Home > About Ofcom > Accountability > Annual Reports and Plans > Ofcom Annual Report 2004 - 05 > Chairman's Message

The communications sector is integral to the UK's effectiveness; if it fails to thrive, our ability to compete in a global economy declines with it.

Effectively functioning markets, rather than regulation, are the most effective means of delivering innovation and expansion for the sector, and quality and choice for consumers and citizens. Ofcom's interest is therefore to support the growth of healthy and dynamic communications industries, to assist markets to work effectively through competition and by ensuring consumers are appropriately informed; also to protect consumers from demonstrable abuses of the market.

Ofcom operates with a bias against intervention. We are fully aware that regulatory intercession comes with a price tag attached; the resulting cost to industry invariably yields added cost to the consumer. As such, we firmly believe that targeted deregulation is in the public interest and will seek to pursue this wherever possible.

Our intention therefore is to strip away unnecessary rules, to simplify where existing rules must be maintained and to impose high thresholds which challenge - and, if appropriate, block - demands that we should impose new regulation on markets. However, in some areas it is clear that the market, unaided, will not fulfil the legitimate needs of consumers and citizens. Public service broadcasting is identified in statute as one such area, where Ofcom's role is to protect the wider interests of the viewer.

In 2004/5 the communications sector continued to expand choice and provide new services for the consumer and citizen.

In fixed-line communications, consumers and businesses are taking advantage of vigorous competition in services. More than six million households have now taken up broadband, attracted to a market where retail prices are falling yet connection speeds are rising, and a similar number have switched to alternative telecoms providers for their voice calls. However, the fixed-line market overall remains fragmented, with many operators facing investment constraints and tough trading conditions. In part this reflects shortcomings in the structure of that market; an issue which Ofcom has addressed through its strategic review of telecommunications.

In mobile and wireless communications, the transition to 3G offers consumers access to new multimedia services, further extending the ubiquity of mobile in daily life. Growing interest in emerging wireless services such as Fixed Wireless Broadband Access, Wi-Max and Ultra Wideband demonstrates the importance of taking the right approach to spectrum liberalisation in supporting innovation and market flexibility in the future.

In broadcasting, more than 60 per cent of homes now have digital television and the take-up of digital radio has accelerated rapidly. New sources of revenues, such as those from enhanced and interactive television services which actively engage viewers, are also funding a healthy and growing broadcasting market.

One of Ofcom's core statutory duties is to ensure that society benefits from sufficient quality and range in television programming. The statutory review of public service broadcasting undertaken during the year, and the proposals which flow from it, will, we hope, provide a secure long-term basis for high quality public service broadcasting across a range of genres and with plurality in its provision. Some of Ofcom's proposals are recommendations to Government and Parliament; others are for Ofcom itself and will be implemented over the year ahead.

Another area where the market alone may not sufficiently address a wider social need is in access to communications services by elderly and disabled people and by people living in more remote and rural communities. Over the past year Ofcom has sought to address these needs through its review of the Universal Service Obligation in telecommunications and through work to develop new Access Codes in both broadcasting and telecommunications. Taken together, we hope that our approach will increase the ability of groups - who would otherwise be neglected - to experience more of the benefits offered by the communications sector.

In undertaking its work, the Ofcom Board is advised by a number of sub-committees and advisory bodies. Richard Hooper's message, later in this Annual Report, gives an overview of the valuable work which the Content Board (itself a committee of the main Board, with delegated powers) has undertaken this year.

The independent Ofcom Consumer Panel has provided thoughtful and constructive advice on a range of issues of importance to the residential and small business consumer. The Advisory Committee for Older and Disabled People, the Advisory Committees for the Nations and Regions and the Ofcom Spectrum Advisory Board have all provided good counsel and influenced Ofcom's policy-making. I would like to express the Ofcom Board's appreciation to the Chairs and Members of these bodies for their time and advice.

In February 2005 David Edmonds stood down from the Ofcom Board to pursue a range of other interests. I know I speak for the whole Board when I say that we have greatly appreciated the experience he brought to Ofcom, and thank him for all his work.

Much of the focus of the period under review has been on issues which are particular to the UK market. However, in 2005/6 Ofcom will increase its focus on European and international matters which will, in part, shape the future direction of the sector in the UK. These include the review of the EU Television Without Frontiers Directive, further development of the EU Telecommunications Framework and work to prepare for the Regional Radio Conference in 2006, which will determine the international issues associated with the allocation and framework for use of much of the spectrum in the future.

It was therefore a welcome gesture of confidence in Ofcom by our international colleagues that my Board colleague, Kip Meek, was elected President of the European Regulators Group for 2006. The timing of Kip's appointment is also apposite as it will take effect after the UK takes up the Presidency of the EU in the second half of this year. Ofcom will seek to use its experience and resources to help deliver better decisions and outcomes in these important European markets. We will also strive to ensure that the interests of the UK citizen, consumer and communications industries are properly represented and taken into account in such decisions.

The communications sector plays a vital role in our society, underpinning our economic prosperity and our political democracy. Effective regulation plays a key role in underpinning the dynamism of the sector. I trust that this Report gives reassurance that Ofcom is properly discharging the responsibilities placed upon it by Parliament in the interests of citizens and consumers.

David Currie, Chairman

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