Oftel’s Draft Work Programme for 1998/99 and beyond: Summary Guide March 1998

Contents

Introduction

What is Oftel for?

Oftel’s operating environment

Oftel’s Work Programme

Annex A Consumer protection

Annex B Getting the Policy Framework Right

Annex C Rule Changes

Annex D Rule Enforcement

Contacts for Oftel’s projects

Introduction

A telecommunications market which meets customers’ needs is a vital part of a modern economy. As regulator of the telecommunications market, Oftel is committed to open and transparent regulatory policies. The publication of Oftel’s work programme is a key part of this openness. This draft plan has already benefitted from the constructive input of both consumers and companies channeled through a public meeting in February 1998.

This brochure is a summary of Oftel’s work programme outlining key areas. For those requiring full details of Oftel’s work programme there is a publication entitled Oftel’s Draft Work Programme for 1998/1999 and beyond. The work programme is likely to change over the coming year reflecting the dynamic environment in which Oftel works and likely different emphasis of the new Director General to be appointed in April. Any significant changes to the draft work programme will be detailed on the web site and in Oftel News (available free from Annopack on 01737 842089).

What is Oftel for?

Oftel’s goal is to provide the best possible deal for the customer in terms of quality, choice and value for money. Oftel believes that, wherever possible, the best way of securing lasting benefits for consumers is through effective competition. Oftel has five high-level objectives aimed at promoting competition in the telecommunications industry, whilst also protecting consumers (particularly those who are vulnerable or disadvantaged) where competition has yet to develop. These objectives are:

• promoting fair, efficient and sustainable network competition;
• promoting fair, efficient and sustainable services competition;
• securing licence enforcement and fair trading;
• securing a fair distribution of the benefits of competition between different groups of customers; and
• protecting consumer interests, especially where effective competition is not yet fully developed.

Oftel’s operating environment

The environment in which Oftel operates is constantly changing. Technology is advancing rapidly and new services are continually being developed. It is likely that technological change will accelerate with new products and services coming to the market at an unprecedented rate. These changes are bringing about both technical and market convergence of the broadcasting, telecommunications and IT sectors, as it becomes possible to deliver similar services over what were previously distinct networks. The European Commission has recently published a Green Paper on convergence and the UK Government is committed to looking at the regulatory structure of these sectors. Oftel’s direct experience of regulating an increasingly-converging marketplace will be relevant to those developing a policy framework for the new digital information age.

The telecommunications market is becoming increasingly competitive, a process that is well developed in the UK but only just starting in most of Europe. The UK now has over 200 licensed operators – which includes five national carriers, four mobile operators and over 60 companies licensed to operate international facilities. There is also increasing competition in provision of the local loop with cable and radio fixed access providing alternatives to BT. Customers have benefitted from this competition with prices falling as quality and choice is increasing. Customers are empowered as they now have a choice of provider should the service they receive prove unsatisfactory.

Oftel’s framework for dealing with competition issues will be strengthened by the welcome reform of UK competition law. The Competition Bill, currently before Parliament, proposes that Oftel will have concurrent powers with the Office of Fair Trading to enforce new prohibitions on anti-competitive behavior in the telecommunications sector. European telecommunications liberalization is another strong external influence on Oftel. The new Directives give Oftel significant implementation responsibilities. In 1999 the EU will review the overall regulatory framework and an increasing amount of Oftel’s work is likely to be related to European regulations.

This is an exciting time in the telecommunications industry. Technology is advancing at a fast pace, competition is increasing and the regulatory environment is changing. To realise the significant benefits available to customers, it is crucial that Oftel uses its limited resources to best effect.

Oftels work programme

In order to achieve Oftels main aim of delivering the best deal for customers and to meet the five objectives, four broad categories of work have been identified. These four categories are: Consumer Protection, Getting the Policy Framework Right, Rule Changes, Rule Enforcement. Much of Oftels work does not fit neatly into an annual cycle and thus, although some of the detail has changed since the 1997/98 Management Plan, much of the underlying work is similar. Within each of the broad work areas individual projects and programmes have been identified. This document only discusses a selection of Oftel’s work, and a full list is given in Section 5 but for more detail please refer to Oftel’s Draft Work Programme for 1998/1999 and beyond.

Whilst all Oftels activities are designed to promote the interests of consumers, Consumer Protection groups together work which relates directly to this objective such as dealing with customer complaints and enquiries. Work under Getting the Policy Framework Right develops the correct policy which Rule Changes then implements through appropriate measures such as licence changes. Rule Enforcement ensures that once the rules have been set they are adhered to by all parties.

The work programme for 1998 to 1999 does not reflect all the work that could be undertaken. If Oftel had more resources available it could bring forward the implementation of certain projects such as future interconnection issues or pricing issues. In addition Oftel could increase its work in other areas such as measuring the quality of telecoms services more widely or, perhaps, taking up more invitations from overseas regulators to provide briefing or advice.

Annex A

Consumer protection

All the work Oftel does is ultimately aimed at protecting the consumer by delivering the best deal for customers in terms of quality, choice and value for money. This enables consumers to protect their own interests by exercising choice wherever possible and by preventing abuses of market power where effective competition is not yet available. The measure of success, is whether consumers are satisfied with the range of products and services.

A key project in this area, is Use of Customer Information (A1) which will examine customer protection and competition issues in the use of customer information including the publication of a statement on the new regulatory arrangements for the provision of directory information services and products. One area of recent concerns for consumers is the receipt of unsolicitated faxes and telemarketing calls. As part of this project Oftel will seek to ensure that these concerns are alleviated through the implementation of the EU Telecoms Data Protection initiative.

Oftel aims to ensure the delivery of affordable basic telecoms services to all consumers through its project Universal Access (A2). A particular focus this year will be on telecoms services for people with disabilities beginning with a workshop on the recent consultative document. Affordable access for everyone will continue to be important and Oftel will monitor BT's 'In Contact' service along with all companies' disconnection policies. An increasing amount of work in this area will concern the availability of affordable modern communication technology and services for schools and colleges.

In the mobile market, Oftel want to ensure the best deal for mobile consumers and the project entitled Competition in the Mobile Market (A7) has been set up for this purpose. In the first half of the year Oftel will have to make significant input into the MMC investigation into calls to mobile. However, Oftel’s interest is wider than this and will review competition in the whole mobile market, identifying any changes to the regulatory regime that are needed.
 

Annex B

Getting the policy framework right

These projects and programmes are all aimed at getting the policy framework right so that there is continued development of the UK telecommunications market and an increasing level of competitiveness both in the UK and across the world, and as a result UK consumers get maximum benefit from the information society. The success of these objectives will be measured in the choice and availability of new and converged services in the UK in comparison with other countries.

An example of how technology shapes Oftel’s work is the development of a third generation mobile technology (UMTS). In Access to the Radio Spectrum (B1), Oftel will be working with the Radiocommunications Agency on the approach to third generation mobile spectrum. In addition this project will consider policy towards cordless applications, the auction of broadband access to the spectrum and radio fixed links. The objective of all this work is to encourage competition through ensuring that spectrum-allocation policy and spectrum-pricing implementation encourages economically efficient use of the radio spectrum.

The internet continues to grow rapidly in terms of both users and its importance for telecommunications and thus a review of how the internet fits within the existing regulatory structures is vital. Competition in Broadcasting and Interactive Services Market (B6) will do this and will put forward proposals for regulatory change if they are required. Oftel also has responsibility in the digital TV area and will push forward its work on digital TV receiving equipment subsidy recovery and EPGs.

One of Oftel’s five key objectives is promoting fair, efficient and sustainable network services competition. The Regulatory Framework for Service Providers (B9), project is important in meeting this objective. There will be consultation on Oftel’s approach to the pricing of any new retail services BT may develop for service providers. Oftel will also identify non-price barriers to fair competition between network operators and independent service providers and will take appropriate remedies.

Annex C

Rule changes

Oftel believes that the promotion of competition at all levels in the supply chain of telecommunications services will ultimately give the customer the best deal. As competition develops it is necessary to adjust the level and detail of regulation to match it. Where effective competition exists Oftel intends to pull back from prescriptive rule making. Projects and programmes in this area ensure that the regulatory regime reflects the extent of competition and will provide the right climate to encourage further investment in the industry.

The success of these programmes and projects will be reflected in the continued entry and investment in UK telecoms market and the delivery of a wide range of innovative prices and packaged services effectively marketed to, and taken up by, UK consumers.

Oftel needs to understand the new interconnect opportunities arising from technical advances and market development and to develop the appropriate response. Future Interconnection Issues (C1) will do this and will consult with the Interconnect Policy Forum and the Industry Interconnection Advisory groups as appropriate.

A statement will be published in the spring on network and customer interfaces as part of the Network Interoperability (C3) project. The project will also seek to stimulate continuous improvement in the Network Interoperability Consultative Committee (NICC). Another area of work is to progress policy developments in the use of Calling Line Identity (CLI) and to liaise with industry, emergency organisations and the Home Office on telephone based public warning systems.

A key aspect of reducing regulatory intrusiveness is licence modification. Licensing Policy Changes (C4) seeks to make all licences more comprehensible while bringing them into line with existing and proposed European legislation and, where possible, removing over prescriptive regulatory conditions. Oftel will develop the industry's understanding of this important exercise through regular OLO meetings.

Access Issues (C7) will review UK policies on access to local networks in the light of technological and market developments and emerging EU policies. A key aspect of this is to establish the way in which carrier pre-selection is to be implemented in the UK in accordance with the EU Numbering Directive. In addition there will be a review of policy on direct access to the copper loop and, more broadly, use of broadband infrastructure.

Annex D

Rule enforcement

During the transition to a competitive market, there may be some anti-competitive behaviour by firms whose position in some, or all, aspects of that market makes such activity possible. Oftel is committed to taking quick and effective action against such behaviour to allow competition to flourish in a fair market. The effectiveness of this work is demonstrated through the increasingly widespread recognition and use of the guidelines by all parties, leading over time to less anti-competitive behaviour and a reduction in the number of competition cases.

In Competition Casework (Domestic and International) (D1) Oftel seeks to ensure competition cases are dealt with effectively and with speed and that emerging policy issues are identified and responded to. The whole process should be transparent and Oftel will maintain pro-active discussions with consumers, industry and other competition authorities to ensure that this is the case.

Accurate financial information is crucial for dealing with competition cases and the objective of Financial Information Systems (D2) is to improve the quality and speed of access to critical financial information.