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Britain’s citizens and consumers have taken to the current generation of digital communications services in ever greater numbers. Nine in ten households in the nations and regions of the UK now have digital television. A majority of households have broadband connections with increasing speeds, falling prices and more widespread availability than any other major developed economy. The deployment of Edge, Wi-Fi and 3G mobile have fuelled the explosive growth of mobile broadband. Over the past year Ofcom has continued to oversee and support the competitive marketplace that brings these benefits.

But we have also begun to look ahead to the next generation of digital services: very high speed broadband for residential and business consumers, high definition digital television and new wireless services.

Next generation broadband

Ofcom has been addressing the issues involved in regulating to assist competitive investment in next generation broadband. The commercial decision to invest will be determined by many factors. We are therefore working closely with the Government’s review led by Francesco Caio to address all the supply-side issues in the round.

High Definition TV

High definition television via satellite and more recently via cable is the product purely of commercial investment and innovation. Digital terrestrial television (DTT), however, is constrained by the amount of spectrum available. And, well into the year just passed, many experts were still arguing that high definition television could not be accommodated within the spectrum currently available. However, the solution which Ofcom put forward has now received widespread acceptance and will allow three slots suitable for high definition channels from next year and a fourth in 2012. The BBC Trust will be overseeing the launch of the BBC’s high definition service on DTT and Ofcom will conduct the selection process for the other slots. When this process is concluded viewers will have a wider choice, without having to wait on the possibility of new nation-wide spectrum becoming available after digital television switchover.

Public service broadcasting

An area where Government and Parliament will play a pivotal role is in the follow-up to Ofcom’s second statutory review of public service broadcasting The accelerating pace of change in household viewing and the economics of broadcasting means that the current model of public service broadcasting, combining the BBC with commercial broadcasters to give viewers plurality, will not survive the full transition to digital and that a new model will be needed; one that also takes advantage of the opportunities offered by convergence to meet public purposes in new ways. The traditional regulatory levers have decreasing purchase. Ofcom’s role will therefore primarily be to lay out detailed evidence, the options and their consequences. It will then be for the Government and Parliament to determine the model that will best serve citizens’ interests.

Radio spectrum

In spectrum there is already much in the civil sphere that can be liberalised and brought into wider market use. Over the last year Ofcom has made a start on what will be the greatest set of spectrum releases in the UK’s history, creating scope for many new wireless services and bringing social and economic benefit. But traditionally about half of the available and readily usable spectrum has been reserved for military and other public sector uses. The review of this spectrum last year has created greater opportunities for more of it to be brought into wider use and sharper incentives to do so. The Ministry of Defence now plans to release a significant proportion of its spectrum holdings and to consult on how.

International

International developments play an increasing role in the way we regulate. During 2007/8 agreement was reached within the European Union on the Audio-Visual Media Services Directive, which sets the framework for cross-European content regulation; a framework that, with its emphasis on empowering viewers, media literacy and accredited self-regulation, meets the objectives with which Ofcom and the Government entered the European negotiations.

We are now similarly engaged with the revision of the framework set of directives on communications networks and services. I am pleased that the Commission has taken up, as one possible remedy available to national regulators, functional separation of the enduring monopoly parts of an incumbent’s business from the rest, where greater deregulation is then possible.

We live in an increasingly interdependent age and some decisions can only practicably be taken at European level. International roaming charges for mobile phones is one such issue. I welcome the part that the European Regulators’ Group, of which Ofcom is a leading member, played in developing the Commission’s original proposal to produce regulation which is both workable across Europe and brings real benefits for consumers in lower prices for international voice calls.

In carrying out its wide-ranging work, Ofcom receives invaluable assistance and advice from a number of Boards and committees. First and foremost, of course, is the Content Board which, in addition to the advice they have given to the Ofcom Board, has taken a number of significant decisions on Broadcasting Code issues and has overseen the development of robust viewer protection measures over the use of premium rate telephone services in broadcast programmes. In addition to the Content Board, the Ofcom Spectrum Advisory Board, the National Advisory Committees and the Advisory Committee on Older and Disabled People have all given generously of their time and advice; and I and my colleagues on the Ofcom Board are very grateful for that.

The independent Ofcom Consumer Panel acts as a strategic conscience for Ofcom to ensure that the consumer interest remains front and centre to Ofcom’s thinking. It has done so very effectively under the chairmanship of Colette Bowe who, during 2007/8, came across to join the main Ofcom Board. Her successor, Anna Bradley, is an equally determined and thoughtful champion of the consumer interest.

Alongside the arrival of Colette Bowe, there have been a number of other changes this year to the composition of the Ofcom Board. Sara Nathan, a founder member of the Board and former deputy chairman of the Content Board retired from the Board on 31 December 2007. Stephanie Liston stood down from the Board at the end of March 2008. And shortly after the end of this reporting year Ian Hargreaves, who has been on the Board since 2002, first as a non-executive director and latterly in an executive capacity, departed to join the Foreign and Commonwealth Office as its Director of Strategic Communications. Mike McTighe, Chairman of Pace, Colette Bowe and Tim Gardam all joined the Board during the year, bringing a high level of experience and expertise in commercial, technical, consumer and broadcasting issues to the Board. To them and to my other colleagues on the Board my thanks for their help and wisdom over the past year.

David Currie
Chairman

• Ofcom Annual Report 2007/08 - Section A [pdf]
• Adroddiad Blynyddol 2007-08 Ofcom - Adran A [pdf]

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