|
|
|
|
 |
|
|
|
|
|
|
|
 |
 |
 |
|
||||
| COMMUNICATIONS REGULATION IN THE UK | |
||||||
 |
 |
 |
|
||||
 |
|
|
|
 |
|
||
|
|
|
|||||
|
A paper by the Director General of Telecommunications July 2000 The need for sectoral regulation Promoting effective competition through network access Universal access and consumer protection 1. This paper sets out the views of the Director General of Telecommunications on an optimal approach to regulation in a world where technological change is removing many of the distinctions between telecommunications, broadcasting, and IT. It is written as a contribution to the debate that the government has stimulated on the directions to be taken in its proposed White Paper. The paper concentrates on the principles that should underpin a regulatory regime. It sets out a possible organisational solution, based on these principles. 2. The essential purpose of regulation is the promotion and protection of the interests of the consumer. With convergence, different types of network can carry essentially the same kind of services. For example, consumers can watch television programmes and films on a computer, and send e-mails and access the internet from a television set. Digital technology is removing many underlying capacity constraints. The markets for services are expanding rapidly and unpredictably. 3. In the past, the telecommunications consumer in the UK has benefited considerably from regulatory action to underpin competition. This approach, now reinforced by the Competition Act, is an effective start point for creating the right model for the converged world. 4. The structure for regulation of the communications industries should meet the tests of:
5. The UK regime will need to be consistent with new EC Directives, probably from 2002. The draft Directives, however, follow broadly the approach adopted in the UK: to promote and maintain effective competition using sectoral regulation and general competition law. 6. This paper is directed at all the markets defined in the EC’s proposal to "establish a harmonised framework for regulation of ‘electronic communication networks and services; i.e. covering all satellite and terrestrial networks, including both fixed and wireless (i.e. the public switched telephone network, networks using internet protocol (IP), cable TV, mobile and terrestrial broadcast networks". (Broadcasting content is excluded.) For each of these markets, the Oftel proposal is for sectoral regulation based on rules:
7. Because direct access routes into the home or workplace will remain limited, companies with market power in access to networks (and/or gateways) have the ability (and may have the incentive) to foreclose markets for services. Regulatory action is the most rapid, proportionate and effective public policy lever to prevent this. 8. Ex ante sectoral regulation, to complement the Competition Act is essential to safeguard effective competition in the provision of communications services, at least for the foreseeable future. The abandonment of ex ante rules would fundamentally weaken the ability to promote and sustain competition in the UK. 9. Sectoral regulation of the communications markets should be administered with an understanding of its impact upon investment, innovation and enterprise. Regulatory rules and actions need to be focussed, proportionate and objectively justifiable. Co-regulation and self-regulation should be developed. When effective competition exists, rules should be reviewed and removed. 10, Oftel’s practical experience as a sectoral regulator working to promote effective competition by the application of consistent economic analysis underpins this approach. The development of competition in unmetered access to the internet and the unbundling of the local loop illustrate how ex ante sectoral intervention should stimulate competition. 11. Sectoral regulation also exists to protect access for consumers to specified communication services. This has underpinned widespread and cheap telephony. 96% of households now have a fixed line. Targeted initiatives are likely to be necessary in the future - for example, to increase high-speed access to the internet, to assist in the switch to digital television services and to guarantee the future of public service broadcasting. These initiatives can be part of a broader structure of economic regulation aimed at achieving effective competition – the best guarantor of universal access to high quality services in the long run. 12. The economic analysis of markets is a major component of sectoral regulation. There are other major areas that will need to be brought within a new framework. There will continue to be a need for public service broadcasting obligations for television and radio, and universal services in telecommunications. Obligations set by government need to be monitored and maintained. Issues of content need to be dealt with effectively, including safeguards for internet users. Co-regulation and self-regulation can be developed, perhaps with statutory backing, to secure adequate protection for consumers. 13. The key goal for the Bill is for regulatory arrangements which are:
14. Organisational design follows the analysis of what the regulatory agency needs to do. The proposals are:
15. The promotion of competition, rather than intrusive rule making, should be the goal of regulation. As electronic communications markets undergo fundamental and unpredictable changes the test of success will normally be whether consumers, as individuals and businesses, are buying the services that they want in a competitive marketplace. 16. Defining the intended policy goals for regulating converging technologies is essential. Promoting effective competition is complex in an environment where technology means that a vast array of new services is being offered to consumers - from video-conferencing and e-commerce, to distance learning and remote teaching; from e-banking and home shopping to television on demand and interactive games; from telemedicine to teleworking; and e-government with huge potential applications. 17. Convergence means that different types of network carry essentially the same kind of services. Many of these services can equally well be received over a television set, a personal computer, or a mobile phone. A set top box allows a television set to be used for access to the internet and for e-mail. New devices are being developed continuously. 18. Digitalisation means that constraints on the number of broadcasting channels are disappearing. Existing spectrum is used to carry more channels. Instead of having a limited choice of terrestrial television and a handful of radio stations, consumers can choose from potentially thousands of digital television and radio services. There will be increasing inter-activity, including buying and selling. For the consumer, as the same services are carried over different communications platforms, the technology is irrelevant – it is the result in terms of range, quality and accessibility that matters. This poses real issues for regulation, which has traditionally been technology-focussed. 19. Because the communications markets are in a state of flux and will be different in the future it is essential that the framework for the future regulation of the communications markets is as flexible and dynamic as possible. Legislation should promote:
20. The sectoral regulatory framework must avoid over-regulation, which will stifle investment and initiative. The goal is a flexible framework that has the ability to tackle the potential anti-competitive behaviour that will arise in communications industries, especially in terms of control of access. The industries need a single set of economic rules with as much certainty as possible. There should be no confusion and overlap; and as far as possible rules should be neutral in approach to different technologies. The Competition Act will be an increasingly important resource and additional means of deterring anti-competitive behaviour, but ex-ante rules and the need for compliance will be at the heart of the regulatory framework. 21. Oftel has an extensive understanding of how firms with market power behave and the complex processes that are involved in achieving effective competition. This paper is not suggesting that existing telecommunications regulatory practices and procedures should simply be adopted across the whole of the communications industries. It proposes that a new framework needs to take account of this experience, especially in the practical difficulties associated with regulating access to networks.
The Need for Sectoral Regulation 22. Sectoral regulation for the communications markets (excluding content and public service broadcasting requirements) needs to: (i) prevent anti-competitive behaviour by those with market power; (ii) promote access to networks, infrastructure and facilities of those with market power to enhance the movement towards effectively competitive markets in communications services; (iii) guarantee access for consumers to key services where the market will not necessarily deliver; (iv) provide protection for consumers in areas such as telecommunications tariff comparisons; price controls in market segments where competition is not effective; support for self-regulation; (v) allocate efficiently scarce resources such as spectrum and numbers. 23. The Competition Act will be vital in securing the first and second objectives. However, rules over and above general competition law are needed to deal rapidly with competition issues, including high barriers to entry, problems arising from the legacy of historic monopolies and risks of anti-competitive behaviour caused by vertical integration and spectrum constraints. These features apply across the electronic communications markets. Communications markets also possess certain special characteristics, which give rise to competitive concerns for which ex ante regulation is appropriate. These include interconnection, interoperability, spectrum, numbering and call termination. 24. Sectoral regulation is needed to enable competitors and new entrants to obtain access to and interconnection with the networks, infrastructure and/or facilities of those with market power. This is essential for fair and effective competition. 25. Sectoral rules also ensure access for consumers to key services where the market alone might not be sufficient to deliver those services to everyone. 26. The EC has concluded that that there continues to be a need for sectoral regulation. The draft Directives propose a regulatory framework which includes "the set of markets that arise from electronic communications networks and electronic communications services – that is, services for point-to-point or point-to-multi-point transmission of services by electronic means. This excludes wholesale inputs to those services (unless these are also electronic communications services) such as the wholesale supply of programming material to those who supply programmes to consumers". The Directives will harmonise regulation for all electronic communications, from 2002. The roles of the EC and national regulators are defined, but considerable further work is needed to avoid an over-centralised approach. 27. In the UK, currently, there is separate regulation of telecommunications (under the Telecommunications Act 1984 and existing EC Directives); broadcasting (under the Broadcasting Acts 1990 and 1996); and radiocommunications (under the Wireless Telegraphy Acts 1949 and 1998). For industry, and perhaps consumers, the converged world needs greater clarity, flexibility and speed. A coherent regulatory framework will ensure that a consistent approach is taken across all communications platforms. Using a different framework and rules across the various platforms may distort competition. This paper is broadly consistent with the current EC proposals, but it will be important for the UK national line to be clearly formulated and argued in the EC working groups, especially in relation to the definition of significant market power. 28. Because regulation, where it is not warranted, can distort and undermine competition, and can also deter investment and stifle innovation, the application of sectoral regulation should be used in a focussed manner only in circumstances where competition law would not achieve the same results and within a reasonable timescale. 29. Ex ante regulation will include:
These requirements are needed for effective competition between networks and between the services that run over them.
30. A cornerstone of the Communications Bill should be a framework to promote effective competition with the minimum necessary intervention. Any regulatory action must bring benefits to consumers. Regulation should be rolled back as competition develops. 31. Major economic decisions need a transparent and consistent process for assessing whether action will be beneficial. If a decision involves a net cost it will need to be rigorously justified, for example, on distributional grounds. Rules and actions should be focussed, proportionate and objectively justifiable. Communications markets will need to be reviewed on a regular basis. Such reviews will require the regulatory authority to judge whether there is effective competition and what, if any, regulation is still needed. A series of standard tests should provide a framework for a coherent and transparent evaluation in any particular communications market. 32. As regulation should be proportionate to the specific case, alternatives to formal regulation such as co-regulation or self-regulation should be developed wherever possible. Current regulations need to be assessed to see whether obligations in licences can be removed, or replaced by self-regulatory or co-regulatory measures. 33. Co-regulation, where the industry works with other stakeholders, in particular groups representing consumers, should be pursued; and in some instances, it may be possible to rely upon self-regulation. But it can be difficult to gain full public confidence in such initiatives, and there remains an important role for the regulator to:
34. Where there is not effective competition, or where it is decided that it is otherwise in the public interest for there to be intervention, the sectoral regulator must retain adequate statutory ‘fall back’ powers. This will be essential to the development of public confidence in self- and co-regulation and will be an incentive for the participation of players in the industry.
Promoting Effective Competition through Network Access Rules 35. The need for sectoral rules to promote access and interconnection is a result of three special features of the electronic communications networks. 36. First, there is the presence of former monopolists, with extensive networks, who retain market power in a number of markets, particularly the access market. There remains a need for focussed ex ante rules to deal with such market power. 37. Second, the economics of supply mean that limited numbers of networks offering access for other operators and service providers. There is a risk that companies will exert market power by unfairly restricting access. The problems are greater and more complex if the limited number of networks is associated with vertical integration, with such companies also supplying content. Although further competition should develop naturally from convergence, there remain ‘gatekeepers’ with market power. Companies with market power in relation to access to networks and gateways have incentives to foreclose markets. 38. Third, there are barriers to entry in the mobile communications markets, because of the shortage of spectrum, which mean there can only be a certain number of mobile network operators. Rules are needed to promote access to the networks of those with market power. 39. Access to the communications networks (and gateways) of those operators with market power will, certainly in the short term, continue to be the major economic regulatory issue. There are thousands of service providers in the electronic communications markets. Service providers need a means of access to the networks and delivery mechanisms of those operators with market power in order to reach consumers in their homes and offices. It is therefore essential that there should be a coherent and consistent set of rules on access to networks, for competitors and service providers, including consistently applied tests for when open access should be imposed on different kinds of networks. Furthermore, the tests should be the same regardless of the ultimate consumer service: i.e. the same tests should be used when considering open access for high-speed internet access as those used when considering open access for television services. Any difference in the regulatory treatment of services could give rise to distortions of competition where services straddle the boundary (wherever that may be placed). 40. The need for this set of rules is accentuated by the fact that in the communications industry companies (for example BT and BSkyB) which operate networks and offer services ‘wholesale’ to other companies are also suppliers of retail services direct to consumers. There is a growing tendency for closer connections between those that own networks and supply services with companies who produce content. 41. Vertical integration is not per se bad. Prohibiting it could undermine the promotion of effective competition, deter investment and be disproportionate intervention in comparison to the problem posed. However, it is necessary for there to be clear rules for such companies, when they own networks and associated facilities and have market power, about when access should be provided in order to promote competition. For example, rules governing the provision of conditional access (e.g. the scrambling of television pictures) are necessary to allow different broadcasters to gain access to viewers. 42. Another example is the unbundling of BT’s local loop. Effective competition is again the objective. Unbundling will allow other operators to install equipment within local BT exchanges and use their own DSL technology to upgrade the local loop. They can then compete directly with BT and introduce choice into the technology providing broadband services to customers. The substantial progress that has been made in securing competition in unmetered tariffs for internet access, has to a large extent been achieved through reliance upon ex ante rules. For example, a determination was issued requiring BT to ensure that wholesale internet products were available to competitors. Reliance upon general competition law is more uncertain in effect and is considerably slower in implementation. In fast-moving markets, delays can cause serious damage to the competitive process. 43. Access is vital for the promotion of effective competition. It is important that there is a degree of certainty amongst industry players as to who is (and who is not) required to provide access to their network. There has to be a consistent and coherent approach, applicable to all communications platforms. Three tests for access are appropriate: (i) the owner of the network should have market power; (ii) the benefits must exceed the costs; (iii) access should only be mandated where it is effective and proportionate. 44. These tests can be applied to markets ranging from pay TV, voice telephony, interactive TV services (such as home shopping) and higher bandwidth services (such as high-speed internet access). The application of these tests will provide predictability to all parties including those companies operating networks, as well as those seeking network access. This predictability will create a positive environment for investment both in networks and services. The application of sectoral regulation to competition issues in television and radio services 45. The draft Directives exclude regulation of content (positive regulation as well as issues of taste and decency) which is a matter for national law. However, the same principles of fair-trading and the obligations of the Competition Act apply to suppliers of television and radio programmes (including the BBC) as to any undertaking. But there are currently no concurrent powers under the Competition Act in relation to the broadcasting sector. To the extent that the activities of the television and radio companies fall within the scope of the sectoral regulator, it will be essential that the sectoral regulator for the communications markets should have concurrent powers with the OFT. The sectoral regulator will have the expertise and knowledge of the relevant markets. 46. Second, there is an issue relating to the avoidance of unfair cross-subsidies of the BBC’s commercial activities from licence fee funds. This is primarily an issue of the application of the EU State Aid rules, and enforcement of them is a matter for the European Commission and would not be the responsibility of a sectoral regulator. There is however, an important potential role for a national regulator to advise government on compliance. 47. Third, it is the Secretary of State for Culture, Media and Sport who decides whether a particular service of the BBC is a public broadcasting service and can therefore be funded by the licence fee as opposed to being a commercial activity. Member states have wide discretion when determining whether a service is in the public interest. Such a decision is not an economic regulatory issue. It is, however, important that that the Secretary of State has the benefit of informed advice from the sectoral regulator in making a decision. 48. Only where a company controls access and meets the tests of having market power will the need for economic regulatory intervention arise. Rules about positive content or scheduling may obviously have a financial or economic impact, but interventions in these areas will be justified against original licence, franchise or other obligations placed on operators by government and Parliament.
Universal Access and Consumer Protection 49. A second key aspect of sectoral regulation is rules that safeguard universal access to services, and protect consumers. There is a continuing need for specific ex ante rules to provide a safeguard where the market fails to deliver. The sectoral regulator is the right body to formulate rules that achieve the specified social objective, while minimising the distortions to the market. Universal service – Telephony 50. A cornerstone of the regulatory framework for telecommunications is the universal service obligation. The level of this obligation is now set at a European level, although it is for individual Member States to decide how it is delivered. In the UK, BT (and in Hull, Kingston) must provide affordable voice telephony and low-speed data services on reasonable request. There are requirements in relation to emergency services, the disabled and the provision of call boxes as well as specific schemes targeted at those on low incomes. Nearly 96% of UK households now have a fixed line telephone in their home. This is a substantial achievement towards the goal of universal service - ensuring that anybody who wants a telephone should be able to have an affordable service. It is also an important element in helping to secure the Government’s objective of universal access to the internet by 2005. As the Government seeks to promote the roll-out of higher speed and broadband access to the internet, a range of initiatives are already occurring (although others may be needed) to supplement the promotion of effective competition. Such measures will need to be considered regularly, not least in conjunction with the periodic review of the universal service obligation. Helping consumers to be more confident 51. Sectoral regulation can also promote the right conditions for competition to work; with confident and well-informed consumers able and willing to make decisions about switching between suppliers. Switching benefits the consumer and aids the competitive process. The provision of timely, adequate and easy to understand information for consumers is critical. Information on price and quality of service allows consumers to switch between suppliers; this puts downward pressure on prices and promotes the development of innovative products. Without effective competition, there is an even stronger need for such information. Creating informed consumers is a prime example of an area where co-regulatory action can develop. Universal Service - Television and radio 52. Broadcasting markets will be subject to the same sectoral rules to promote competition as all other markets within the European framework for communications regulation. What has happened in the telecommunications markets is evidence that increased competition benefits consumers. Increased choice and lower price does not mean that quality of service needs to be sacrificed. Increased competition in telephony markets has meant greater choice and better quality. 53. There are, however, distinctive characteristics of the markets for television and radio, which mean that even though effective competition is desirable, it may not deliver all the services that the public wish to receive and which government decides should be provided. There is therefore a continuing role for public service broadcasting, and for universal access to these services. 54. Public service broadcasting in its different forms (the BBC, Channels 3, 4 and 5 and S4C) lead to the provision of particular types of radio and television services including the maintenance of programming that the market might not otherwise deliver. There is also the coverage obligations, which ensure that consumers throughout the UK have access to one or more networks transmitting ‘free to air’ services. 55. The scope of public service broadcasting obligations would not be the decision of the sectoral regulator, though advice would be given to Ministers on the potential impact of such decisions upon the development of effective competition. There is a key role for the regulator in determining the means by which universal access to the defined set of public broadcasting services is delivered. 56. As coverage obligations for universal access to public service broadcasting are key, there will therefore be an important role for the sectoral regulator to ensure that, when analogue transmissions are switched-off, consumers in rural and remote areas retain their ability to receive a specified level of service. Universal Access – the internet 57. Competition underpinned by regulatory action is helping to deliver wider access to the internet. The costs of access have fallen substantially, and other technologies, including digital television, mean that it will not be necessary to have a personal computer to gain such access. Oftel has worked with the industry, Government departments and others to assist schools and public libraries to connect to the internet, creating public points of access. 58. A Communications Bill, by creating a framework to promote competitive markets, will play a vital part in helping to deliver broader access. By targeted intervention, the sectoral regulator can facilitate the creation of specific access points at competitive prices.
Television - taste and decency obligations 59. There is considerable interest in how issues of taste, decency and impartiality obligations in television programming can be sensibly handled in an environment where a film shown ‘cut’ on television to comply with ‘taste and decency’ licence obligations can be simultaneously ‘web-cast’ ‘uncut’ over the internet.. 60. The nature and form of content regulation will be significantly influenced by the pace at which technological developments create new services. The personal computer and the television set are not yet substitutes for each other, but quite soon they might be. The availability of higher bandwidth services offers the prospect of a television programme or film ‘webcast’ via the internet and watched on a television set that has internet access. So economic and content regulation, whilst requiring different skills and regulatory frameworks, need to draw closer together. Consumer protection in relation to the internet 61. The internet is subject to ordinary criminal and general consumer protection law and therefore already has legal controls on the material that can be contained on websites. These laws apply to both content and any services received over the Internet. The foundations for more secure financial transactions over the Internet have been established through the Electronic Commerce Act. 62. Empowerment and education of users of the internet is crucial, so that, with the right knowledge and information, responsible decisions about which sites to visit can be made. A co-regulatory process and further self-regulation by ISPs and other content providers through the development of self-regulatory codes of practice based on industry agreement (for example, to endeavour to block access to sites that host harmful and illegal material) offers perhaps the most practical approach.
63. The structure of the regulatory agency will determine the effectiveness of the regime. This paper argues that convergence means that the same economic and access issues arise across the boundaries that have previously been dealt with by separate regulatory bodies. Rules about access to networks need to be applied consistently across the electronic communications sector. If this does not happen, markets may be distorted and the transition to effective competition may be hindered, thereby diminishing choice for consumers. This means that just as there is a need for a single and coherent economic regulatory framework for the converged sector, so there should also be a single sector-specific regulatory body applying this framework across the converged sector. 64. The argument for such a single sectoral regulator dealing with all elements of the communications markets is powerful. There are currently too many bodies involved in the regulation of the communications markets. The ability to regulate effectively would be improved by a reduction in the number of regulatory authorities. The risk of double jeopardy and ‘forum shopping’ must be removed. Radicommunications 65. Communications markets will, for the foreseeable future, remain different from other sectors of the economy. The sectoral regulator needs an intimate knowledge of the markets in question. The role of the sectoral regulator goes beyond that of a pure competition authority: it has a duty to "promote" effective competition and mandates rules to this effect such as those requiring access/supply or requiring non-discrimination etc. 66. The Radiocommunications Agency (the RA) is the largest regulatory body within the communications sector. It carries out economic regulation functions, in terms of management of spectrum, which is a key economic resource. Arguably such functions should be transferred to the sectoral regulatory authority so that it can take an overview of all communications markets, can obtain relevant information and make decisions based on a comprehensive, detailed and complete analysis. 67. However, much of the RA’s work is unrelated to economic (or indeed, content) regulation. Setting technical engineering standards is very different from the work that would be carried out by the sectoral regulator. There is a danger that this staff-intensive function would overwhelm a sectoral regulator or it would not be understood and could be relegated to a minor secondary function. Neither of these outcomes would be desirable. Further consideration is needed to ascertain a viable solution. Concurrent powers 68. Sectoral regulation of the communications markets must be applied consistently with general competition legislation. This will allow evolution from sectoral rules towards competition legislation as and when markets become effectively competitive. It is therefore essential that the sectoral regulator should have concurrent powers with the competition authority (i.e. the OFT) in relation to the Competition Act. 69. Concurrency allows the sectoral regulator to apply the powers under the Competition Act using expertise and knowledge of the relevant markets. It can be difficult in a particular case to decide which powers (i.e. sectoral rules/Competition Act) are most appropriate; concurrency also allows the sectoral regulator to decide the most apposite way to promote and maintain competition that benefits consumers. Concurrency means that the general competition authority works closely with the sectoral regulators to ensure that there is a consistency of approach in the application of the law and that there are no gaps. Concurrency facilitates co-operation between the bodies, reducing the scope for disputes over jurisdiction and limiting the ability of parties to play at ‘regulatory arbitrage’. 70. A single regulator for the electronic communications sector would need concurrent powers for the whole of the sector. This would mean, for example, that any allegations of the breach of the Competition Act prohibition on anti-competitive agreements would fall to the regulator for the communications sector if those agreements related to commercial activities connected to the communications markets. Mergers 71. A further issue is whether the sectoral regulator should be granted concurrent powers in relation to domestic merger proposals, which are currently considered by OFT under the Fair Trading Act. The sectoral regulators currently have no formal role in merger controls, although OFT seeks advice. There could be advantages in the sectoral regulator being granted concurrent powers with the OFT in relation to mergers (and also being appointed as a designated authority in relation to mergers investigated by the European Commission). The regulator has the in depth knowledge of the communications markets and is in the best position to assess the impact of the merger on competition in those markets. This would create a "one stop shop" for all forms of economic regulation of the communications markets. 72. However, mergers are different from enforcement of anti-competitive behaviour under the Competition Act and are more likely to involve different sectors given the spread of most large companies' holdings. There are likely to be few cases where mergers fall solely within the communications markets, so concurrency could face jurisdictional debate. Concurrency also raises resource issues. OFT is the expert in merger activity and its expertise must be utilised. Diffusion of scarce resources into two bodies may not give the best outcome. 73. These are important points but many can be met by effective joint working. Jurisdictional disputes can be prevented, as they have been in Competition Act cases by co-operation and agreeing procedures in advance. It will be essential for OFT and the sectoral regulator to work together effectively, whatever the final decision. A single regulatory agency 74. It is vital to ensure that sectoral economic/competition regulation and the regulation of content are clearly and separately defined. The prohibition or restriction of certain types of content and the promotion of ‘desirable’ content are activities that have a different rationale from sectoral economic/competition regulation. The regulation of content, and all non-economic aspects of regulating the radio spectrum (for example monitoring interference), will be outside the scope of the new European legal framework and controlled by national law. Governments will also set the scope of public service broadcasting. The day-to-day role of the regulator in content matters would thus be overseeing what is agreed and taking regulatory action only when self- or co-regulation fails. The two forms of regulation will also be subject to different legal frameworks. There is however, a balance of advantage in favour of having the different functions housed in a body with overall responsibilities for both forms of regulation. A single body would give a specific focus to the regulation of the whole industry. 75. A single regulatory agency would have, as an integral part of the organisation, a statutory board with responsibility for controls over content, balance, delivery of public service obligations, prohibitions, and timing restrictions. As much as possible would be based on co-regulation and self-regulation – but with the key element that breaches of statute or codes would be referred to the regulator, who would have the power of enforcement. 76. Other issues to be considered are the size, focus and skills of the regulator. It should be a cardinal principle of the design of a new organisation that it starts with a blank sheet of paper. The form should closely follow the function. The existing agencies should not be merged into a federal or co-habiting structure, or have vertical functional responsibilities, or follow delivery channels. That would destroy the possibility of a coherent approach across the converged world. 77. The design of the organisation should follow a careful articulation of principles, and the mapping of the necessary processes. The new regulator will require a wide range of skills in order to carry out its various functions. The agency should be able to make best use of this skill base, allowing a simplified and efficient organisation without unnecessary duplication of staff. Existing, effective co-regulatory arrangements should not be disrupted. Consumer representation 78. Whatever structure is chosen, it is important that its focus is on the consumer. The regulator’s own responsibility for furthering the consumer interest must not be diluted. A statutory duty to promote the interests of consumers through effective competition will be essential. The regulator will be a key public advocate for the consumer interest in the communications markets. 79. The regulator will need a range of effective advice from consumer bodies. On policy matters, one solution would be consumer committees representing the constituent countries of the United Kingdom and particular interests such as the elderly and disabled people. These committees could provide consumer views and input into the sectoral regulator’s policy and decision making process, directly and through research. (Their precise role in relation to content regulation would require further consideration). 80. For consumer complaints about service, contracts etc a statutory ombudsman, possibly funded by the industry, should be created. Responsibility for complaints about content would continue to be a task for the sectoral regulator. Arrangements would need to be properly resourced, but potentially offer a better route for consumer advice and complaint handling than a single Communications Consumer Council. 81. Finally, whatever decision is made about structure, it will be vital for the regulatory authority to have both managerial flexibility and sufficient resources to employ staff of the highest calibre able to deal with the complexities of the communications markets. To achieve this, consideration will need to be given to the regulator’s status within the public sector. A model closer to the Financial Services Authority rather than a Civil Service Department or a traditional non-departmental public body would give both increased managerial flexibility and greater public and industry confidence.
82. The past was based on separate legislative frameworks for telecommunications, broadcasting and radiocommunications. These divisions are no longer appropriate or sustainable. In the future there will be simply be electronic communications networks and services. The draft European Directives will apply a coherent regulatory policy framework across the electronic communications markets. The focus is, and should be, on the recipient - the consumer. It is about working, accessing information, interacting with Government, being entertained, being educated, and learning, all through a range of services provided electronically. 83. The Communications White Paper will lay the ground for legislation that provides an unparalleled opportunity to deliver a better future for everyone in this country. The right regulatory framework will help to give everyone, as consumers and as citizens, the best possible deal. 84. The task for the regulator is to promote effective competition in communications markets in a way that best meets consumers' wishes (which will vary) and that protects their interests. Competition gives consumers choice, quality and value for money. Competition stimulates investment and grows demand. A new approach to sectoral regulation is needed with rules to promote competition to enable competitors to obtain access to and interconnect with the networks and gateways of those that possess market power; to safeguard access for consumers to key services where the market alone may not deliver; and to back up where necessary rules to safeguard standards set by Parliament and government.85. This regulatory framework will be more effective and of greatest benefit to both consumers and the industry if it is applied by a single regulatory authority.
Oftel
|
|
||||||
|
|
||||||
 |
 |
|
|||||
 |
|
||||||
