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Home > About Ofcom > Accountability > Annual Reports and Plans > Ofcom Annual Report 2006 - 07 > Operating and financial review


Operating and financial review

Performance and evaluation

In this section we explain how we evaluate our performance and then focus on three key areas: the extent to which we have met our objectives and applied our regulatory principles; our financial performance; and our effectiveness in service delivery and enforcement.

Key operating and financial highlights

Evaluating Ofcom’s performance

We are committed to reviewing and evaluating our performance, and then applying what we have learnt. We discuss below the various ways in which we currently measure our effectiveness and, as we become a more established organisation, we will be exploring new ways of doing so.

Unlike a private company that seeks to maximise profits on behalf of its shareholders, Ofcom does not have a single objective that lends itself to easy measurement. There are three main reasons for this. First, although our primary duty is to further the interests of citizens and consumers, including businesses, we have a wide range of specific duties and a diverse range of stakeholders. Secondly, it is often hard to differentiate between our impact on market developments and the impact of a wide range of other factors. And thirdly, deciding whether we are fulfilling our duties and applying our regulatory principles is often subjective, meaning that assessing our performance in a measurable way is not straightforward.

Nevertheless, there are a number of ways in which we do review our effectiveness. These are divided into four areas, which are illustrated in Figure 1.

Figure 1: Ofcom’s framework for evaluation

Ofcom’s framework for evaluation

In the rest of this section we focus on the top half of the framework, namely on the extent to which we are achieving our objectives and applying our regulatory principles, and on our internal efficiency and effectiveness, including service delivery and enforcement.

Ultimately, however, we believe that our performance should be judged by reference to market developments and the outcomes that are delivered for citizens and consumers. We measure these outcomes in a number of ways and publish the results during the course of the year.

Every year we publish our Communications Market Report, which provides a comprehensive picture of developments in the communications sector. This is supplemented by a range of reports on specific issues, such as the take-up of digital TV and broadband, and an extensive programme of market research. In particular, we published a report called The Consumer Experience (November 2006), which presented a positive picture of the benefits that competition has delivered for consumers. For example, the cost of a basket of residential communications services fell from £113.40 per month in 2001 to £76.20 per month four years later. Overall, customers’ satisfaction with their suppliers remains high – between 88 per cent and 93 per cent – and this is in line with banking and energy markets.

We are also starting to examine the impact of particular policy initiatives. We published a report Evaluating the impact of the Telecoms Review (October 2006) that sought to assess the effectiveness of the action we took to stimulate competition in the telecoms sector and thereby deliver increased benefits for consumers.

We also measure stakeholders’ perceptions of our performance, seeking their views on a wide range of issues, including the quality of our outputs and how well we have consulted. In addition, we conduct regular surveys of those stakeholders for whom we provide a service, such as spectrum users and individuals who contact the Ofcom Contact Centre. The main findings are presented below alongside our key performance indicators (KPIs).

Achieving objectives and applying regulatory principles

Ofcom’s approach to regulation reflects the fast-moving nature of the communications sector. The speed with which the communications sector is changing makes it especially important for us to have clear guiding principles. We are required by the Communications Act to have regard to the principles of better regulation developed by the Better Regulation Task Force (now the Better Regulation Commission), namely that regulation should be transparent, proportionate, consistent, accountable and targeted. When Ofcom was established, we built on these principles by developing a more specific set of principles to inform our day-to-day work. These are set out in Figure 2.

Figure 2: Ofcom’s regulatory principles

When we regulate

How we regulate

How we support regulation

In line with these principles, we have focused on evaluating Ofcom’s performance in five key areas:

2006/7 Annual Plan outputs

If Ofcom is to be able to respond to the key issues facing citizens and consumers, including businesses, it is essential that we have a transparent approach to developing our policy priorities and planning our work, and that we engage with our stakeholders to obtain their views.

Each year, therefore, we run a consultation process to help us develop our Annual Plan. This includes a number of public meetings held throughout the UK.

Every quarter we update the table on our website that shows the outputs, such as consultation documents or statements, that we are intending to produce. This enables stakeholders to keep track of when the documents that are of interest to them will be published.

Our Annual Plan for 2006/7 listed 193 outputs that we expected to publish during 2006/7. The number of outputs that we actually delivered was 195. This shows a high level of delivery and means that the number of outputs that we planned to deliver was accurate.

However, not all of the planned outputs were delivered. A number of outputs were cancelled or put on hold because, for example, an initial assessment revealed that it was not the right time to carry out a market review. And some outputs were deferred to 2007/8. There were also some outputs that we had not planned, largely because of the need for us to respond to external events that could not have been anticipated.

The outputs set out in our Annual Plan relate predominantly to policy issues, but we also provide a range of important services to stakeholders, such as licensing access to the radio spectrum and providing advice via our Contact Centre. These activities are detailed later in this section.

We have a number of projects that will enable us to deliver these services more efficiently, including integrating and updating our information systems. More details are given in our Annual Plan 2007/8.

Reducing regulation

A key element of better regulation is ensuring that regulation is properly targeted and does not impose undue burdens on our stakeholders. In December 2006, we published an Updated Simplification Plan, which sets out all the initiatives we are taking to remove or reduce regulation. The need to fulfil our wide-ranging statutory duties, however, means that in some areas we have introduced new regulation. Therefore, the question of whether the overall level of regulation has reduced is not a straightforward one.

Figure 3 summarises Ofcom’s policy statements published during 2006/7. In this figure:

Assessing the impact of a decision inevitably involves an element of subjectivity, but we believe that the figure provides a useful overview of Ofcom’s regulatory decisions. From it we conclude that:

Figure 3 also shows that we are reducing regulation in a range of areas, including:

Figure 3 also demonstrates that Ofcom is prepared to take firm action to protect citizens and consumers where necessary. For example:

Consultation periods and responses

Consultations are one of the key ways in which we engage with stakeholders and enable them to influence our policy decisions. It is essential that we achieve a balance between allowing stakeholders sufficient time to contribute, making decisions in a timely manner and being transparent in our reasoning.

Ofcom’s consultation guidelines state that we will generally allow ten weeks for consultation on complex policy issues. This is shorter than the Cabinet Office guidelines on consultation that govern Government departments, but we believe that this is appropriate given the speed with which the communications sector changes.

Sometimes, however, we will consult for less than ten weeks. When we decide to do this, our guidelines say that we will explain why. Where formal consultations need to be shorter than ten weeks, we will usually aim to allow at least five weeks, although this may not always be possible.

There are a number of reasons why we may decide to consult for less than ten weeks. For example:

Figure 4 sets out an analysis of policy consultations by sector and shows a high level of adherence to our guidelines. In relation to five consultations, we consulted for less than ten weeks and did not give a clear explanation of why this was the case. Although there are a variety of reasons why in some cases we do not consult for ten weeks (as set out above), it is important to ensure that stakeholders understand why this is the case. We will therefore renew our efforts to ensure that, in future, our guidelines are followed properly in all cases.

Ofcom also collects statistics on the number of responses to consultations. This is shown in Figure 5. The chart illustrates the large number of responses we have had over the year, based on the 62 consultations where we subsequently published a statement. Two consultations had an unusually high level of responses (of approximately 1,100 and 1,300). The total number of responses to the remaining 60 consultations was 1,730. A small number of consultations have attracted a very wide range of responses, while most of the issues we consulted on were narrower in scope and of interest to a smaller constituency of stakeholders.

Figure 3: Ofcom’s key decisions – direction of regulatory change

Figure 3: Ofcom’s key decisions – direction of regulatory change

Figure 4: Analysis of consultation duration
  Consultation period at least 10 weeks Consultation period less than 10 weeks and explanation given Consultation period less than 10 weeks and no explanation given
Telecoms
8
17
2
Broadcasting
5
5
2
Spectrum
13
9
0
Other
1
0
1
Total
27
(43%)
31
(49%)
5
(8%)

Figure 5: Responses to consultations

Figure 5: Responses to consultations

Figure 6: Analysis of the time taken to publish an Ofcom policy decision from the close of the consultation period

Figure 6: Analysis of the time taken to publish an Ofcom policy decision from the close of the consultation period

Figure 7: Analysis of impact assessments carried out
Number of consultation documents
Total
IA explicit in published document
Telecoms
27
17
Broadcasting
10
5
Spectrum
24
24
Other
2
0
Total
63
46 ( = 73%)

Timeliness of decision making

We have also analysed the time that we take to publish a policy statement following the close of a consultation period.

There are a number of factors that affect the length of the period from the close of the consultation period until publication of the subsequent statement, including:

An analysis of our decision-making time is shown in figure 6, with the average time between a consultation period ending and the final decision being 14.6 weeks.

Ofcom now intends to track more closely the time we take to reach policy decisions, with a view to shortening it wherever possible, particularly in those cases where the factors are under our control. In doing so, we will continue to ensure that all responses to our consultation documents are considered properly.

Impact Assessments

Impact Assessments are an important part of the policy-making process. They ensure that in relation to our policy decisions:

Ofcom has a statutory duty to publish a list of the impact assessments carried out during the year. This can be found in Section D.

In July 2005, we published guidelines, Better Policy-making: Ofcom’s Approach to Impact Assessment, that emphasised Ofcom’s commitment to conducting assessments as an integral part of the policy-making process and stated that we expected to carry out impact assessments in the great majority of our policy decisions. Figure 7 sets out an analysis of the extent to which Ofcom’s consultation documents contained a clearly-labelled impact assessment, i.e. an impact assessment that was set out in a specific section or annex of the consultation document.

The table shows that 73 per cent of consultation documents contained a clearly-labelled impact assessment. We have analysed the cases where there was not an identifiable impact assessment and there were a number of reasons for this, such as:

This analysis shows that we are meeting the commitment that we made in our guidelines, and we will continue to ensure that impact assessments are carried out and properly presented in all relevant cases.

Financial performance

Ofcom’s statutory framework

Ofcom’s duties and powers are derived principally from the Communications Act 2003, which received Royal Assent on 17 July 2003.(-1-)

Ofcom is an independent statutory corporation accountable to Parliament. Its specific duties under the Communications Act 2003 fall into six areas:

  1. ensuring the optimal use of the electro-magnetic spectrum;
  2. ensuring that a wide range of electronic communications services – including high-speed data services – are available throughout the UK;
  3. ensuring a wide range of television and radio services of high quality and wide appeal;
  4. maintaining plurality in the provision of broadcasting;
  5. applying adequate protection for audiences against offensive or harmful material; and
  6. applying adequate protection for audiences against unfairness or the infringement of privacy.

The Communications Act also incorporated principles relating to how we should undertake our duties, requiring us to act in a way which is transparent, accountable, proportionate, consistent and targeted.

Financial framework

Under Paragraph 8(1) of the Schedule to the Office of Communications Act 2002, Ofcom is required to balance its expenditure with its income in each financial year. Sections 38 and 347 of the Communications Act 2003 also require Ofcom to raise income from each of the sectors it regulates such that it covers the costs to be incurred by Ofcom in regulating that sector. Ofcom must also apportion its common operating costs – those which do not relate directly to any one sector – in a proportionate manner across each of those sectors.

Ofcom raises its funds from a number of sources including:

Grant-in-aid covers the costs of regulating and managing the UK radio spectrum. It also covers those statutory functions and duties which Ofcom must discharge under the Communications Act but for which the Act provided no matching revenue stream. Examples include the statutory public interest test for media mergers and ex post Competition Act investigations in relation to networks and services.

HM Treasury Spending Caps

During 2007 Ofcom agreed its funding settlement with HM Treasury covering the years 2007/8 to 2010/11. The settlement ensures that Ofcom has the appropriate resources to continue to fulfill its role efficiently and effectively. As part of the negotiations there was a minor change to Ofcom’s funding arrangements.. In the past, certain technology research was funded directly by HM Treasury under the Spectrum Efficiency Scheme. In the future this research, which is expected to cost £3.5m in 2007/8, will be included in Ofcom’s budget and overall spending cap.

In addition to the Ofcom cap, a separate spending cap and budget covers activity in spectrum awards and clearance reflecting the expected activity in this area. In line with the Communications Act, spending on spectrum clearance will require the specific consent of HM Treasury and will be funded by grant-in-aid from the DTI.

Ofcom collects fees from Wireless Telegraphy Act (WT Act) licensees. Ofcom then passes the monies collected to the DTI which remits a proportion back to Ofcom in the form of grant-in-aid to fund Ofcom’s spectrum management activities and remits the remaining amount to the UK Exchequer. Ofcom’s Section 400 accounts, published on the Ofcom website, details the monies collected and grant payments received.

After the reporting period, Ofcom agreed, under Section 401 of the Communications Act, to examine an alternative approach where Ofcom would collect the WT Act fees, deduct the costs of its spectrum management activities, and remit the remaining monies directly to the UK Exchequer.

Operating results

Ofcom’s actual operating out-turn, the annual fees that Ofcom charges its stakeholders, on an adjusted cash basis was £129.4m in 2006/7 (2005/6: £129.0m), £0.1m lower than budget.

Ofcom continued to demonstrate value for money by delivering the key policy outputs planned in the 2006/7 Annual Plan, within its financial budget. Ofcom’s underspend against its financial budget reflects a number of items including staff costs and professional fees in the policy areas.

Ofcom’s total operating expenditure in the income and expenditure account increased by less than one per cent in 2006/7. Increases in staff costs were funded through savings in operational costs.

The increased staff costs (Note 4) reflect the increase in average staff numbers by 27 during the year and an average pay settlement in line with RPI. In 2005/6 pension costs included a one-off curtailment gain due to individuals transferring their deferred pension provision from the former ITC plan to the Ofcom scheme. There was no similar gain in 2006/7.

Other Operating costs (Note 6) show savings of £5.1m, a significant amont of this results from insourcing the desk-top IT infrastructure support which was completed in the latter part of the previous financial year. There has been some reallocation of expenditure this year particularly to outsourced services and professional fees from IT costs.(Note 6) Professional fees, excluding IT-related expenditure of £1.9m that has been reclassified in the year, have reduced as a result of the transfer of pension fund costs to the pension charge in staff costs, and a reduction in actuarial advice. Additional temporary resources in 2006/7 cover increasing workloads in consumer enforcement and assistance to implement the new IT systems.

The increase in administration expenditure includes Ofcom’s share of the marketing expenditure relating to the removal of retail Price Controls on BT (see page 25 for details), expenditure on the Regional Radiocommunication Conference (page 41) and training for project directors. The organisation continues to take opportunities to rationalise its property portfolio and implement both energy and cost saving initiatives across its operating properties.

In addition to Ofcom’s own expenditure, the income and expenditure account also includes £6.4m for spectrum efficiency projects (2005/6: £6.7m) which are funded by grant-in-aid from the Treasury and £1.7m (2005/6: £1.1m) of expenditure for the programme of spectrum awards. Spectrum efficiency projects are recorded within technological research in Note 6 of the financial statements and the initial work on the programme of spectrum awards is represented under professional fees. The reduction of £1.8m in technology research (Note 6) largely reflects savings made through efficient outsourcing of spectrum research and testing activities.

A reconciliation below highlights the differences between the total operating expenditure as presented in the income and expenditure account and Ofcom’s actual operating out-turn of £129.4m.

Reconciliation from the income and expenditure account to Ofcom budget out-turn As at 31 March 2007 £’000 As at 31 March 2006 £’000
Operating expenditure- income and expenditure account 125,175 124,406
Spectrum Efficiency Scheme grant-in-aid (6,364) (6,675)
Grant-in-aid expenditure in respect of the programme of spectrum awards (1,710) (1,117)
Capital expenditure less depreciation 2,135 547
Vacant property costs 7,645 4,855
Pension contributions versus service costs 1,640 8,958
Actual rent payments less expenditure 2,795 2,784
Non-operating income less non-cash provisions (1820) (1,280)
Proceeds from fixed assets (75) (3,492)
Total Actual Operating Costs Out-turn 129,421 128,986

Surplus for Financial Year

Ofcom calculates its required operating revenue based on its statement of charging principles, taking into account the actual funds that it needs to collect to discharge its cash liabilities during the year. This results in an accounting surplus only. Ofcom returns any surplus funds to stakeholders through a reduction in the annual tariffs raised in the following two financial years.

The surplus for the year under review was recorded as £22.1m (2005/6: £32.6m) The surplus is required to cover expenditure not reflected in the Income and Expenditure Account including DTI loan repayments, capital expenditure, property-related expenditure in respect of vacant properties and contributions to the two defined benefit pension plans. The reduction in the surplus is due to the declining payments on the DTI loan which reduced from £17.8m to £5.2m in 2006/7. The final loan instalment is repayable in 2007/8.

2007/8 Tariffs

On 30 March 2007, Ofcom published the Tariff Tables for 2007/8, which were based on an estimated operating out-turn for 2006/7 of £128.5m.

A total of £1m – the difference between the original budget of £129.5m and the estimated operating out-turn – is already being passed back to stakeholders in 2007/8 as part of the current regulatory tariffs or reimbursement of grant-in-aid claims.

The sum of £0.9m, which represents the difference between the final operating out-turn and the estimated operating out-turn, will be charged to stakeholders in accordance with the provisions of the Communications Act 2003. Specifically, Ofcom will recover £0.5m from the DTI in the second quarter of 2007/8 and the balance of £0.4m will be charged to stakeholders in 2008/9 through 2008/9 licence and administration fees. These sums have been included in Ofcom’s balance sheet at 31 March 2007.

Ofcom’s operating budget for 2007/8 is five per cent lower in real terms than the 2006/7 operating budget. However in 2007/8 as a result of our discussions with HM Treasury research expenditure (which was formerly funded by HM Treasury directly under the Spectrum Efficiency Scheme) will be included in Ofcom’s budget. In 2007/8 this research is expected to cost £3.5m and therefore Ofcom’s budget has been increased from £126.7m, on a like-for-like basis, to £130.2m.

Despite these adjustments regulatory fees for 2007/8 will still rise by less than the RPI, which was 4.5 per cent in summer 2007. Specifically they will increase by:

People

At 31 March 2007, Ofcom had 800 (2006: 776) employees and three (2006: two) secondees. During the year Ofcom recruited additional staff for its consumer policy, competition and consumer enforcement teams.

Pensions

Ofcom’s primary means of providing pension benefits is through a pension allowance that is provided to all new recruits and to those colleagues from the legacy regulators who have chosen this option. This allowance may be used to make contributions to the Ofcom defined contribution stakeholder pension plan. Other colleagues from the legacy regulators are provided with membership of the defined benefit pension schemes.

Ofcom has reduced its exposure to the greater financial risk associated with defined benefit pension schemes by introducing the pension allowance and limiting the potential growth of pensionable salary under defined benefit commitments.

Ofcom’s approach has proved to be successful in minimising liability while also ensuring colleagues are able to set aside funds for retirement. In total, 79 per cent of Ofcom colleagues are employed on terms with access to a stakeholder pension plan; 18 per cent are on Ofcom terms with a defined benefit pension with restricted pensionable salary growth; and three per cent remain on the existing terms inherited from legacy organisations.

For those colleagues who joined Ofcom from the legacy regulators and who elected to retain membership of a defined benefit pension scheme, Ofcom operates two such schemes, which are closed to new entrants:

The accounting treatment of these defined benefit schemes is set out in Notes 12 and 25 of the notes to the financial statements and has been updated by an independent qualified actuary. These show that Ofcom has a pension asset as at 31 March 2007 of £6.2m as measured by Financial Reporting Standard 17 (FRS 17).

Both plans contribute to the pension fund asset. The value of the asset recognised in 2006/7 is much smaller than in previous years following the transfer of active members from the former ITC Plan to the Ofcom Plan. The former ITC Plan is a closed plan with a small number of active members and the circumstances under which there would be a refund of contributions to the employer are limited. Therefore in accordance with the asset limits of FRS17 the value of the asset has now been restricted. By contrast the last actuarial valuation of the plan showed a net deficit at 1 January 2004 of £6.0m.

The results calculated by the actuaries for the Ofcom plan indicate an accounting surplus at 31 March 2007 made up of advance contributions paid in March 2007 of £1m and some beneficial performance within the plan in the year.

Ofcom made (and continues to make) cash contributions to the Ofcom Plan and the former ITC Plan on the basis of the actuarial valuation. This included a £1m payment in advance. These cash contributions, rather than the amount charged to operating surplus (as calculated under FRS 17), are included in operating expenditure used to calculate the tariffs charged to stakeholders each year.

During the year, Ofcom made defined benefit contributions of £4.6m to the two defined benefit pension plans. The contributions to the defined benefit schemes included £2m paid in advance of the schedule of contributions. Separately, Ofcom colleagues in receipt of the pension allowance elected to pay a total of £3.1m into the Ofcom defined contribution stakeholder pension scheme.

Additional funds collected on behalf of HM Treasury

In 2006/7, in accordance with Section 400 of the Communications Act, Ofcom invoiced and collected £229.9m (2006: £228.9m) from wireless communications and broadcasting companies in spectrum revenues and licence receipts.

At 31 March 2007, £40.7m (2006: £39.8m) of spectrum fees were uncollected. Most of these debts were not due for payment and will be recovered in the normal course of business. No significant debts may be written off without the written authorisation of HM Treasury. At the balance sheet date, an amount of £1.3m was outstanding for more than 12 months from Inquam Telecom (Holdings) Limited. Inquam has agreed a future repayment plan under a legal agreement with Ofcom.

Investments in fixed assets

During the full-year period under review, Ofcom invested a total of £3.9m (2006: £6.6m) in tangible fixed assets and £5.3m (2006: £0.9m) in intangible fixed assets. Ofcom’s investment in information systems and equipment, which relates primarily to Project Unify – a multi-year programme to replace 45 different IS systems – accounted for £3.8m of assets under construction and the majority of the remaining investment.

Payments of suppliers

Ofcom’s target is to make all payments not in dispute within 30 days or less of acceptance of the relevant goods and services, or the receipt of a legitimate invoice if that is later. For 2006/7 we achieved a performance of 98.8 per cent against this target (2005/6: 99.8 per cent). The slight reduction in our performance against target is as a result of migrating to a new accounting system in November 2006.

DTI loan

To cover the cost of establishing the organisation Ofcom received a £52.3m loan from the DTI. The set-up costs were incurred during the period March 2003 to January 2004. The repayment period of the loan is between March 2004 and March 2008.The repayment of the loan capital and interest is funded from the main sources of income for Ofcom. The phasing of repayments is determined under the loan agreement with the DTI. Ofcom has allocated the launch costs for the complete repayment period until March 2008 on a proportionate basis, using the amount of expenditure incurred by the legacy organisations in each sector as the basis for allocation.

During the year under review, Ofcom repaid £5.2m of the loan and at 31 March 2007, the loan balance outstanding was £5.2m.

Property management

During the year ending 31 March 2007, £6.8m of the vacant property provision was utilised following the assignment of the lease relating to the former headquarters of one of the legacy regulators. The remaining provision at 31 March 2007 was £0.4m (2006: £10.7m).

Statistical data

Service delivery and enforcement

As well as developing policy, Ofcom provides services to stakeholders and undertakes enforcement activity. Ofcom has a range of Key Performance Indicators (KPIs) to measure how we are delivering these services. Together with financial performance, they provide a measure of our internal efficiency and effectiveness.

The data in this section relates to the following areas:

In most areas Ofcom is operating on – or close to – the targets we believe are required in order to meet stakeholder needs.

Numbering

Ofcom is responsible for managing telephone numbers in the UK. As part of this, we process applications for blocks of telephone numbers from Communication Providers.

Ofcom is required to make a determination on applications for telephone numbers within three weeks of receipt of all relevant information. During the period under review, Ofcom achieved 100 per cent allocation in all but two months which were June (98 per cent) and July (99 per cent).

Spectrum licensing

Ofcom issues around 30 different kinds of non-discretionary Wireless Telegraphy Act (WT Act) licence. These are generally referred to by the name of the equipment they licence, such as Ships’ Radio Licence and Satellite Network Licence.

The non-discretionary licence types are divided into three larger categories: A, B and C.

Ofcom is required to report on its spectrum management activity in detail; the tables which follow set out the non-discretionary and discretionary WT Act licensing activity undertaken during the period under review.

Spectrum licences

Category A
Licences that involve no frequency assignment, site clearance or international co-ordination Licences issued April 06 - March 07 Licences issued April 05 - March 06 Total on issue as at 31 March 07
BR UK General 1,085 957 4,757
Fixed Wireless Access (5.8 GHz) formerly 5.8 Ghz 77 62 185
Business Radio (Self-Select) formerly Self-Select (One-way Paging) 1,148 641 6,800
Business Radio (Suppliers) formerly PBR Suppliers 41 33 422
Police and Fire 0 11 123
Subtotal for Business Radio products 2,351 1,704 12,287
Radar Level Gauge 13 21 422
Total for Category A 2,364 1,725 12,709

 

Category B
Licences that involve frequency assignment, but no site clearance or international co-ordination Licences issued April 06 - March 07 Licences issued April 05 - March 05 Total on issue as at 31 March 07
Automatic Identification System 20 34 52
Coastal Station Radio (International) 35 29 484
Coastal Station Radio (UK) 36 31 448
Coastal Station Radio (Marina) 17 24 427
Coastal Station Radio (Search & Rescue) 0 1 1
Coastal Station Radio (Training School) 78 60 189
Maritime Radio (Suppliers & Demonstration) 6 6 90
Maritime Navaids and Radar 9 28 110
Differential Global Positioning System 3 0 17
Subtotal for Deregulation & Contracting-Out products 204 213 1,818

Business Radio (Standard) formerly PMR Standard - (UK General) only

 0 0 146
Business Radio (IR 2008 Data) formerly Interface Requirement 2008 7 4 17
Business Radio (Speech and Data) formerly On-site PBR (Speech and Data) 2,981 2,680 23,487
Business Radio (On-Site Local Communications Systems) formerly On-site PBR (Local Communications) 51 70 1,201
Business Radio (On-Site Hospital Paging & Emergency Systems) formerly On-site PBR (Hospital Paging and Emergency Speech) 9 7 447
Business Radio (On-Site One-Way Paging & Speech Systems) formerly On-site PBR (One-way Paging and Speech) 151 146 1,734
Business Radio (Wide-Area Speech & Data Systems) formerly Wide-Area PBR (Speech and Data) 1,464 1,531 10,236
Business Radio (Wide-Area One-Way Paging and Speech Systems) formerly Wide-Area PBR (One-way Paging and Speech) 11 22 297
Business Radio (Wide-Area Distress Alarm Systems) formerly Wide-Area PBR (Distress Alarms) 6 40 58
Business Radio (National and Regional) formerly National & Regional PBR 7 4 69
Business Radio (GSM-R Railway Use) 1 0 1
Business Radio (Common Base Station) formerly Common Base Station Operator 17 28 563
Business Radio (CBS - (Band I and Sub Band I of Band III)) formerly (Band I) and (Sub Band I of Band III) CBS 2 3 14
Business Radio (Public Mobile Data, Non-voice) formerly Public Mobile Data (non-voice) 0 0 4
Business Radio (Public Access Mobile Radio) formerly Public Access Mobile Radio 0 0 4
Business Radio (Public Wide-Area Paging) formerly Public Mobile Operator (for public wide-area paging) 0 0 3
Public Safety Radio 0 5 4
Remote Meter Reading 0 0 2
Scanning Telemetry 0 1 28
Subtotal for Business Radio products 4,707 4,541 38,315
Total for Category B 4,911 4,754 40,133

 

Category C
Licences that require frequency assignment and site clearance and/or international co-ordination Licences issued April 06 - March 07 Licences issued April 05 - March 06 Total on issue as at 31 March 07
Fixed Links 27 31 365
Satellite (Permanent Earth Station) 13 16 109
Satellite (Transportable Earth Station) 30 43 142
Satellite (Earth Station Network) formerly Very Small Aperture Terminal 5 8 40
Total for Category C 75 98 656

 

Test and development licences
  Licences issued April 06 - March 07 Licences issued April 05 - March 06 Total on issue as at 31 March 07
Non operational Development Licence 258 247 264
Non-operational Temporary Licence 27 31 27
Total for test and development 285 278 291

 

Mobile and broadband licences
Licences issued through spectrum auction or awards Licences issued April 06 - March 07 Licences issued April 05 - March 06 Total on issue as at 31 March 07
2G Cellular Telephones 0 0 4
3G Cellular Telephones 0 0 5
2G Channel Islands and Isle of Man Cellular Telephones 5 3 12
3G Channel Islands and Isle of Man Cellular Telephones 6 4 12
Fixed Wireless Access & Broadband Fixed Wireless Access 28 GHz, 3.6 Ghz and 3.4 Ghz 6 0 16
Fixed Wireless Access & Broadband Fixed Wireless Access Channel Islands and Isle of Man 28 GHz, 3.6 GHz and 3.4 GHz 3 2 10
Total for Mobile and Broadband Wireless 20 9 59

Ofcom took over the licensing of CB, Amateur and Maritime from the Radio Licensing Centre (RLC) from December 2006. This function is now carried out by the Ofcom Licensing Centre (OLC). The figures for OLC include 130,000 lifetime licences that were issued to Amateur and Maritime radio users. The Civil Aviation Authority (CAA) issues aircraft licences and the Joint Frequency Management Group (JFMG) issues licences and authorisations for outside broadcasts and programme-making and special events.

Non-discretionary spectrum licences
Partners' Activity Licences issued April 06 - Mar 07 Licences issued April 05 - March 06 Total on issue as at 31 March 07
Radio Licencing Centre (RLC) issues licences for CB, Amateur & Maritime (up to December 2006 after which this function in sourced back to Ofcom) 59,102 157,256 0
JFMG issues licences for Programme-Making & Special Events 2,472 2,417 3,020
CAA issues licences for Aeronautical 10,064 14,417 13,487
Total 71,638 174,090 16,507

Ofcom Licensing Centre (OLC) Licences issued Dec 06 - Mar 07 Licences issued April 05 - March 06 Total on issue as at 31 March 07
CB, Amateur & Maritime (from December 2006 onwards) 142,473 n/a 140,181
Total 142,473 n/a 140,181

Ofcom Licensing Centre (OLC) Licences issued Dec 06 - Mar 07 Licences issued April 05 - March 06 Total on issue as at 31 March 07
Total number of licences – all categories 221,766 180,954 210,536

Spectrum licensing performance indicators

Key performance indicators (KPIs) are currently in place for each category of licence. These measure the time taken by Ofcom to issue the licence and vary according to the licence type. For Category A licences the KPI is for 100 per cent of valid licence applications for new or varied services to be awarded or rejected (with explanation) within seven days of receipt by Ofcom. The KPI for Category B licences is 90 per cent of valid licence applications for new or varied services to be awarded, or rejected with explanation, within 21 days; the remainder to be awarded or rejected within 42 days of receipt by Ofcom. The Category C KPI is for 100 per cent of valid licence applications for new or varied services to be awarded or rejected (with explanation) within 42 days of receipt by Ofcom; except, where international clearance is involved, applications to be awarded or rejected within 60 days or an explanation of the delay to be given. Overall customer service satisfaction levels are at 90 per cent, with 91 per cent satisfied with the speed of receipt of licences. (Source: Ofcom survey.)

Key performance indicators
  KPI Target KPIs achieved April 06 - March 07 KPIs achieved April 05 - March 06
Category A Licence 100% in 7 days 97%

94%
Category B Licence 90% in 21 days 98% 96%
  100% in 42 days 100% 100%
Category C Licence 90% in 42 days (100% excluding where international clearance is involved) 96% 94%
  100% in 60 days (including where international clearance is involved) 99% 95%

Test and development key performance indicators
  KPI Target KPIs achieved April 06 - March 07 KPIs achieved April 05 - March 06
Category A Licence 100% in 7 days 100% 92%
Category B Licence 90% in 42 days None issued 100%
Category C Licence 100% in 60 days 100% 100%
Partners’ performance
  KPI target for time to issue licence KPIs achieved April 06 - March 07 KPIs achieved April 05 - March 06
RLC 100% in 7 days 100% 100%
JFMG 100% in 7 days 100% 100%
CAA 100% in 7 days 94.2% 100%

Spectrum operations – field operations activity

Ofcom’s Field Operations team is permanently on call to take action against illegal transmissions, to resolve interference and to undertake compliance audits of radiocommunications installations in every part of the UK. The following table lists our main activities.

Work Programme Activity/Incident Period 2006/7 Reporting Year Period 2005/6 Reporting Year
Interference investigation requests received 3,050 2,946
Baldock: Spectrum Activities (See Note 1 below) 2,749 2,858
Interference investigation cases closed 3,155 2,307
Spectrum assignments completed N/A (See Note 2 below) 5,656
Enforcement operations against unlicensed and criminal activity 1,704 1,588
Radio system compliance inspections completed 712 1,277
Successful prosecutions for criminal spectrum activity 67 65
Unsuccessful prosecutions for criminal spectrum activity 0 0

Note 1: The work of the Baldock Monitoring Station is now recorded as “Baldock: Spectrum Activities”. This figure includes reports of interference, and spectrum monitoring and measurement operations.

Note 2: The large majority of Spectrum Assignments are now undertaken by Ofcom Central Licensing Team and not by Field Operations. This is therefore no longer a reportable part of the Field Operations Work Programme.

Spectrum operations – field operations performance indicators

The Ofcom Field Operations team seeks to meet the terms of a number of key performance indicators (KPIs), details of which are set out below. Customer satisfaction levels are at 79 per cent for investigations, 93 per cent for inspections and 86 per cent for enforcement. (Source: Ofcom survey.)

Table 1 below shows the targets and the achievement in relation to the KPIs which applied for the first six months of the business year.

Table 1
  Quality of Service Targets Achievement 1 April 2006 - 30 Sep 2006 Achievement 2005/6 Reporting Year
QST 1 100% of reports of interference to safety-of-life radio systems to be investigated within 24 hours 100% (54 out of 54) 99.26% (134 out of 135)
QST 2 a) 98% of reports of interference to commercial/professional radio systems to be investigated within five working days 99.24% (393 out of 396) 98.53% (735 out of 746)
QST 2 b) 100% of such reports to be investigated within ten working days 100% (396 out of 396) 99.46% (742 out of 746)
QST 3 a) 98% of reports of interference to domestic broadcast reception to be investigated within one month 99.40% (1,152 out of 1,159) 99.33% (1,919 out of 1,932)
QST 3 b) 100% of such reports to be investigated within two months 99.57% (1,154 out of 1,159) 99.90% (1,930 out of 1,932)
QST 4 a) 90% of customers requesting interference investigation to be provided with case progress report within ten working days of start of investigation. 98.41% (1,049 out of 1,066) 99.25% (2,127 out of 2,143)
QST 4 b) 100% of such customers to be provided with case progress report within 20 working days of start of investigation 99.44% (1,060 out of 1,066) 99.67% (2,136 out of 2,143)

In October 2006 Ofcom introduced a new case management IT application, and the specific key performance indicators relating to interference case response and handling times were redefined at the same time in order to better reflect our performance not only in responding to interference reports (which is what the previous KPIs focused on) but also in resolving them as quickly as possible. The new KPI definitions and targets are shown in Table 2 below.

Unfortunately, at the time of publication the specific reporting tools required to provide the KPI performance report have not yet been fully tested and implemented. Figures for the second part of the year will be published at the earliest opportunity.

Table 2
Case category (see Note 1 below)   Case Stage (see Note 2 below) Quality of Service Target
Safety of Life Services QST 1a Customer Liaison/Validation 100% within 2 hours
QST 1b Investigation 100% within 20 hours
QST 1c Closure (Overall case duration) 100% within 2 working days
Critical Service (Category 2) QST 2a Customer Liaison/Validation 100% within 12 hours
QST 2b Investigation 100% within 24 hours
QST 2c Closure (Overall case duration) 100% within 3 working days
Critical Service (Category 3) QST 3a Customer Liaison/Validation 90% within 1 working day
QST 3b 100% within 3 working days
QST 3c Investigation 90% within 3 working days
QST 3d 100% within 5 working days
QST 3e Closure (Overall case duration) 80% within 5 working days
QST 3f 100% within 10 working days
Business/Professional Radio Services QST 4a Customer Liaison/Validation 90% within 1 working day
QST 4b 100% within 3 working days
QST 4c Investigation 90% within 3 working days
QST 4d 100% within 5 working days
QST 4e Closure (Overall case duration) 80% within 5 working days
QST 4f 100% within 10 working days
Other Radio Services (inc Domestic Broadcast Reception) QST 5a Customer Liaison/Validation 90% within 2 working days
QST 5b 100% within 5 working days
QST 5c Investigation 90% within 17 working days
QST 5d 100% within 30 working days
QST 5e Closure (Overall case duration) 80% within 20 working days
QST 5f 100% within 40 working days

Note 1: Case Category descriptions:

Note 2: There are two interim stages in the interference case management process:

Broadcasting – programme complaints

Ofcom has a statutory duty to consider and adjudicate on complaints from listeners and viewers about television and radio programmes transmitted by UK broadcast licensees, S4C and the BBC.

A total of 1,483 cases were closed in the period under review. A case represents an investigation opened into a specific programme and which can consist of one or more complaints about that programme.

Ofcom’s Content and Standards Group reached decisions on a total of 5,575 programme complaints(-1-), of which 5,405 were complaints about programme standards (including issues relating to political advertising and the amount and distribution of advertising) and 170 were complaints about alleged unfairness and/or infringements of privacy.

Of the 5,405 programme standards cases closed:

  • Four broadcasters were subject to statutory sanctions (single or multiple programmes) (15 complaints about 24 issues(-2-))
  • 58 programmes were found to be partially in breach/in breach (94 complaints)
  • 75 programmes were resolved/partially resolved (159 complaints)
  • 3,315 programmes were not in breach (5,137 complaints)

Number completed within target:(-3-)

  • Straightforward cases – 97.2% closed within target4 of 40 days (target: 80%)
  • Complex cases – 96.3% closed within target of 60 days (target: 80%)

Broadcasting – fairness and privacy

The Fairness Committee is Ofcom’s most senior decision-making body with respect to fairness and privacy cases. It is a committee of Ofcom (with delegated powers from the Ofcom Main Board) and consists of a minimum of three Members, all of whom are drawn from the Content Board. It considers cases referred to it by the Executive (for example, due to their complexity). It also reviews decisions made by the Executive where either one or both of the parties have made a case for that decision to be reviewed.

Number of cases closed: 184

Of the fairness and privacy cases closed 29 were considered by the Fairness Committee (five of which involved a Hearing).

Of these:

  • 14 were upheld (of which 13 were upheld in part); and
  • 15 were not upheld

Decisions in relation to the remaining 155 closed fairness and privacy cases were reached by the Executive.

Of these:

  • 13 were upheld (of which eight were upheld in part);
  • 38 were not upheld;
  • 7 were resolved (following appropriate action taken by the broadcaster); and
  • 97 were not entertained or discontinued after entertainment.

79 per cent of cases were completed within the target of 125 days. Ofcom’s target is 80 per cent.

Broadcasting – Content Sanctions Committee

Cases which the Executive believe may warrant the consideration of a statutory sanction are referred to the Content Sanctions Committee, comprising five Members drawn from the Ofcom Board and the Content Board. Cases may also be referred from the ASA with the request that the Content Sanctions Committee consider the imposition of a statutory sanction. The Content Sanctions Committee is quorate with three Content Board Members. The Content Sanctions Committee is chaired by the Chairman of the Content Board. The Deputy Chairman of the Content Sanctions Committee is an executive member of the Content Board.

During the period under review, the Content Sanctions Committee applied sanctions in four cases.

The Content Sanctions Committee decided to fine and revoke the licence of:

  • Television Concepts Limited in respect of the service, Look4Love - £175,000.

The Content Sanctions Committee decided to fine:

  • Kiss 100 FM - £75,000 (for an upheld Fairness & Privacy complaint) and £100,000 (for Standards breaches).
  • Digital Television Production Company Limited in respect of the service, Xplicit XXX - £35,000.
  • Gamecast UK Limited in respect of its service You TV2 and also in respect of material broadcast as You TV3 - £100,000 (non-payment of which led to revocation of the licence).

All monies received in fines are passed to the UK Exchequer.

Investigations programme – performance indicators

Ofcom has an investigations programme to deal with complaints about anti-competitive behaviour, breaches of certain ex ante conditions and disputes. The following table examines Ofcom’s activities in handling enquiries and full investigations during 2006/7, including performance against published targets (including statutory targets).

Category and target Achievement level (for all closed cases during the reporting period irrespective of when opened) Achievement level (for closed cases opened during the reporting period)
Decision to reject or accept enquiry within 15 working days 65% (of 46 closed, 16 exceeded target with agreement; 100% with agreement for complex cases) 65% (of 45 opened, 43 closed, 15 exceeded target with agreement; 100% with agreement for complex cases)
Resolution of disputes (four months, except in exceptional circumstances) 88% (eight cases closed, one exceeded target). Note: exceptional circumstances applied in one of the seven cases recorded as completed on time. 67% (of six opened, three closed of which one exceeded target). Note: two dispute cases that were opened prior to the reporting period remain open - exceptional circumstances applied to these
Competition Act investigations (six months where ‘no grounds for action’ decision made; 12 months for an infringement decision) 0% (one case closed which exceeded target) N/A (no cases opened). Note: three cases that were opened prior to the reporting period remain open and have exceeded target
Part 8 of the Enterprise Act investigations (six months to obtain undertakings) N/A (no cases closed) N/A (no cases opened)
Investigations into breaches of ex ante conditions and unfair terms in consumer contracts (four months for a closure statement or notification that a condition has been breached) 100% (seven cases closed, none exceeded target) 100% (of three cases opened, all are closed). Note: one case that was opened prior to the reporting period remains open and has exceeded target
Own-initiative investigations (six months) 91% (11 cases closed, one exceeded target) 100% (of 13 cases opened, eight closed) Note: one case that was opened as an Enforcement Programme has been extended for a further six-month period
Total investigations 89% (27 cases closed, three exceeded target) 93% (of 22 cases opened, 14 closed of which one exceeded target). No ongoing case opened during the reporting period had exceeded its target as at 31 March 2007

Central Operations

The Ofcom Central Operations function deals with questions and complaints from a broad range of viewers, listeners, customers of telecoms companies and users of wireless communications services. Performance against targets for handling queries and complaints is shown here.

Answering calls

81% customers satisfied or very satisfied with ease of contacting the Ofcom Contact Centre (part of Central Operations) over the telephone and 80% of those who contacted Ofcom by telephone were satisfied with how quickly they got through to someone who could help them. (Source: Ofcom survey - May to November 2006).

Responding to correspondence (Target: 80% in 10 working days)

Issuing Licences

(Targets vary between seven and 42 days depending on complexity of licence type) 98% of licences issued within target

Footnotes:

1.- Other statutes also form part of Ofcom’s rulebook. They are the unamended parts of:

1.-Around 45,000 complaints in relation to Celebrity Big Brother were received but had not been adjudicated upon by the end of the period under review.

2.-“issues” relate to Code breaches.

3.-In October 2006, Ofcom introduced a new case management computer system. Due to technical issues surrounding its implementation, the target data shown here relate to the complaints handled by the previous computer system between April and October 2006. Initial estimates show that between October 2006 and April 2007, complaints were handled at a rate close to the target.3

4.-As from 1 April 2007, Ofcom will change the way it monitors how quickly it deals with complaints about programmes. New performance indicators will be used as from the next Annual Report. The aim of the changes is to set tighter targets which are easier for the public to understand.


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