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Chapter 1 Background Chapter 2 Timing
and scope of the review Chapter 3 Options
for change Chapter 4 Industry data collection in competitive markets Chapter 5 Consultation S.1 Oftel has collected regular information from the telecoms industry as part of its market information programme for seven years. During that time the telecoms market has changed and the range of data has grown significantly. Given the changes in prospect it is now a good time to take stock of the work and to explore what changes may be appropriate both to data collection and publication. S.2 This document presents a summary of Oftel’s current regular telecoms industry data collection programme and outlines a number of options for change in the current process. The review makes a distinction between collection and publication of data since these raise a number of different issues. S.3 Oftel believes that the regular collection and publication of information from the telecoms industry is consistent with its strategy of appropriate regulation but is keen to ensure that it meets the changing needs of a rapidly developing telecommunications market. S.4 Oftel sees that the primary interest in this consultation will be from data providers, particularly licensed operators and service providers. But Oftel also welcomes views from users, particularly on publication issues. S.5 Chapter 1 of this document sets out the background of the current collection and publication processes including an outline of the legal framework. S.6 Chapter 2 outlines more fully the reasons behind the timing of this review and its objectives. S.7 Chapter 3 discusses some possible options for changing the scope of the current data collection process, improving the efficiency of the current process itself and changes to the current publication procedures. S.8 Chapter 4 discusses briefly how Oftel might approach data collection in the longer term, particularly in markets which are declared effectively competitive. S.9 Chapter 5 contains details of the consultation process and a summary of the questions Oftel is asking stakeholders. S.10 Oftel wants to see new processes in place by mid 2002 and hopes to report the results of this consultation in the spring. But this consultation should be seen as the first stage of a process of ongoing review. Oftel wants to engage all providers and users of data in more regular discussion.
Background Industry Data Collection Project 1.1 The majority of Oftel’s regular data collection from industry is part of a wider project to enhance Oftel’s and stakeholders’ knowledge of the telecoms market, and aid evidence-based policy development. The project manages the collection and publication of accurate and timely information from telecoms operators and service providers on an agreed range of services. 1.2 The Industry Data Collection Project (previously Better Industry Information) is managed within Oftel’s Customers and Markets Unit, Oftel’s main systematic source of intelligence on supply and demand characteristics in telecoms markets. The industry data are complemented by other regular data gathering initiatives, most notably the market research and international benchmarking work. Together, these data provide the framework for ongoing market analysis. 1.3 Statistics on telecoms services are collected quarterly from all major telecommunication operators and service providers. Suppliers are asked to provide information on volumes of, and revenues received from, a range of services. Data are not collected for a small number of less important telecommunications services or those which are not subject to formal regulation eg hardware supply or installation. Nor are data collected from some smaller operators or service providers. But overall the data are likely to cover the majority of the output of the industry. 1.4 Summary information from this process is published via the Oftel website as quarterly Fixed and Mobile Market Information Updates. In addition to showing the size and growth of various sectors of the industry the Updates also publish specific information on major larger companies which allows market share estimates to be derived. 1.5 The most recent published data and copies of the various current proforma used to collect information from fixed and mobile operators and service providers can be viewed at www.oftel.gov.uk/publications/market_info/forms.htm. 1.6 From time to time Oftel requests additional information from the telecoms industry, for example, to help inform market reviews or competition cases. Where possible Oftel attempts to incorporate data requests for associated effective competition reviews into the regular data collection process although there may be some occasions where information is requested on an ad hoc basis, perhaps in response to a specific point made in the consultation process. 1.7 By their nature competition cases are rather more difficult to predict and consequently it is difficult to properly foresee what sort of information is required. Nonetheless, Oftel does monitor any additional data requirements arising from such cases. Where there is a persistent need for data on a particular issue Oftel attempts to incorporate the relevant information into the regular collection process. 1.8 The regular data collection by Oftel is conducted on a voluntary basis to a significant extent, although this is underpinned by legislation. 1.9 Under the terms of section 47 of the Telecommunications Act 1984 (‘the Act'), the Director is obliged to keep under review the "carrying on, both within and outside the United Kingdom of activities connected with telecommunications". He must also collect information "with a view to his becoming aware of, and ascertaining the circumstances relating to, matters with respect to which his functions are exercisable". 1.10 There are also statutory information gathering powers the Director may rely on when exercising his functions. Section 53 of the Act provides the Director with the power to require the production of any documents as described by him for any "relevant purpose". A relevant purpose includes a market review (section 47 of the Act) and the investigation of a complaint (section 49 of the Act). 1.11 Operators are also required under various licence conditions to provide the Director with specified information. Condition 33 of their licences requires an operator to provide the Director with information so that he may verify that operator's compliance with the licence. He may also require information for his use for statistical purposes. 1.12 Where Oftel is undertaking an investigation under the Competition Act 1998, s26 of that Act allows the Director to require any person to produce either a specified document or specified information which he considers relates to any matter relevant to the investigation. 1.13 There are also specific information gathering powers contained within European Community legislation. For example, Article 4 (2) (b) of Regulation 2887/2000 allows Oftel to require certain operators to supply it with information relevant for the implementation of the local loop unbundling Regulation. 1.14 Oftel’s use of information is covered by legislation including the Telecommunications Act 1984 and the Data Protection Act 1998. In accordance with its statutory duties, Oftel will not disclose information which has been provided to it in confidence. 1.15 The current legislative framework will change when the new EU directives enter into force early in 2002. These will see Oftel's powers extended to collect information from all undertakings providing electronic communications networks and services. The proposed creation of OFCOM in 2003 will see further changes. 1.16 In considering Oftel’s overall requirements for industry information it is important to separate the two main aspects of the current process – data collection and publication – as they tend to raise a number of separate issues. 1.17 The regular data collection process dates back to 1992/93 when it was recognised that, for Oftel to make progress towards its goal of providing the best deal for the consumer, a better and more detailed understanding of the telecoms market in the UK was needed. While a range of information was collected from BT, increasing competition meant that by focusing solely on BT, Oftel no longer had a comprehensive view of the market. 1.18 Such a view not only would enable Oftel to take a more evidence based approach to decision making but would also form a key measure of progress towards the goal itself. A regular process would also improve the timeliness of Oftel decision making. 1.19 The data collected regularly from telecoms operators and providers give an overall guide to market size and growth and provide a key measure of how effective competition is benefiting consumers. For example revenues and volume information can be used together to measure price level and evolution over time. Data from individual operators also allow market shares to be calculated and provide Oftel with key structural information. 1.20 The project also fits with other Oftel objectives. The regular collection of data can be important in investigating allegations of anti-competitive practice and monitoring of the relevant market following any such investigation. 1.21 Information from the industry is also a vital component of the review of BT’s price controls. First, it informs the assessment of competition and, second, trends in market shares and growth are used to inform projections of future trends which are key inputs to the financial modelling underlying the setting of X. In both cases it is essential to obtain data from as comprehensive a range of operators as possible. 1.22 Industry data also provide input into other projects associated with Oftel’s remaining objectives of well-informed consumers and adequately protected consumers particularly in measuring progress of policy initiatives in these areas in terms of increased takeup of services and falling prices. 1.23 It is not only Oftel which finds this information useful. Data are also required at a European level to measure the progress of member states towards implementation of the relevant directives. Data are formally requested by the Eurpoean Commission for its annual Implementation Reports. Oftel also supplies non-confidential data regularly to other international bodies such as the International Telecommunications Union (ITU) and the Organisation for Economic Co-operation and Development (OECD). 1.24 The need for information from these bodies has also led to a marked improvement in the level of information collected by other European regulators. Oftel has made a significant contribution to improving the consistency of international comparisons. This is crucial in allowing Oftel and others to properly assess the relative level of competition in different countries. 1.25 Within the UK industry data are also used heavily by other government departments. The DTI , HMT and the eEnvoy are all keen to measure progress towards competition in the telecoms industry. Oftel also works closely with the Office for National Statistics (ONS) in providing measures of turnover and prices in telecommunications. The telecoms industry also contributes information to a number of ONS business inquiries. These data are not thought to duplicate any of the information collected by Oftel although the relevant legislations which prevent the sharing of confidential information means that there may be some overlap. 1.26 Oftel has also recently established formal service delivery agreements (SDAs) with the Treasury which will enable a formal measure of Oftel’s performance. Industry data feature prominently in measuring performance against a number of specific targets such as increasing the proportion of the telecoms market which is effectively or prospectively competitive. The SDA framework also allows Oftel to more formally assess the outcome of particular policy decisions which will prove invaluable in determining the appropriate level of regulation in the future. 1.27 Oftel believes that it is important to publish detailed information on the telecoms market to ensure transparency in its decision making process. In addition to the regular Market Information Updates data are regularly published in Oftel review statements or competition case decisions 1.28 The regular publication of industry information improves stakeholders general understanding of the market particularly when considered in conjunction with other regular Oftel outputs such as consumer research and international benchmarking. 1.29 The data are used heavily by market analysts and telecoms consultants as well as the industry itself. The data can help inform investment decisions which can in turn encourage entry and innovation and so contribute to the growth and continuing development of competition in UK telecoms markets. 1.30 The accuracy of the published data is ultimately reliant on the accuracy of operators’ returns. But regular publication can assist in quality assurance by allowing users and producers frequent opportunities to comment on the validity of the data. The increased availability of data from other sources, such as consumer market research, both in the UK and abroad has also lead to improvements in the quality of the published outputs. 1.31 Oftel remains sensitive to commercial concerns and normally only publishes detailed information on individual companies with the prior agreement of the companies involved. Generally, operator specific data other than those published in the regular Market Information Updates are not published, except where Oftel believes that it is necessary to explain more fully the reasons for any decision.
Timing and scope of the review 2.1 While the process is clearly well established there are a number of reasons why Oftel thinks it suitable to consult on a way forward now. 2.2 Competition is increasing. Since regular data collection began in 1992 new markets have emerged. There are an increasing number of operators and service providers. Oftel’s regular data collection actually covers a smaller proportion of the overall telecoms market than in 1992. 2.3 Regulatory decisions are becoming increasingly complex and critical as many markets approach effective competition. Many markets are also changing and developing rapidly and Oftel is under pressure to make decisions more quickly than ever before. 2.4 There is also some evidence that in such markets, data relating to supplier behaviour, particularly on the relationship between prices and costs, may be more critical to assessing the precise level of competition. 2.5 Oftel wants to ensure that all of its decisions are based on the best available data. Increasing the range and timeliness of Oftel’s evidence base will ultimately lead to better decision making which will be beneficial for all stakeholders. It is also important that decisions, particularly complex ones, are as transparent as possible. 2.6 A key driver for this work is the forthcoming programme of market reviews being carried out in order to implement the new EC directives. This will place significant resource demands on Oftel if the demanding timetable for these reviews is to be met. It is essential that processes are in place to ensure that the relevant market analysis be undertaken within the timetable. 2.7 The new EU Directives are expected to enter into force early in 2002. From entry into force, Member States and National Regulatory Authorities (NRAs) have 15 months in which to transpose the Directives into national law and bring all processes and procedures in line with the new Directives. Oftel is working to ensure that revised data collection procedures are in place to meet the review timetable. 2.8 Oftel’s recent experience from conducting a number of similar reviews has shown that detailed industry data are essential to ensure they are conducted efficiently. The current review programme has also revealed that there remain some gaps in the data currently collected. 2.9 Oftel is clear that the regular collection of information from industry is necessary to ensure that its regulatory decisions remain consistent with its strategy of proportionate regulation. But it is also important to ensure that requests for information themselves remain appropriate. 2.10 The purpose of this consultation is to make certain that the data collection and publication processes are appropriate for ensuring rigour in Oftel’s decision making and monitoring of policy outcomes. 2.11 Oftel also aims to ensure that any revised procedures resulting from this review are consistent with its strategy of proportionate regulation by balancing the need for proper evidence based and transparent decision making with the need to minimise any burden on industry. 2.12 Oftel is currently reviewing its internal procedures relating to industry data collection. It is possible that there may be some duplication between data collected as part of the regular process and those collected on a more ad hoc basis, either for specific reviews or individual cases. It is planned that the outcome of this work will be reported in parallel with the outcome of this consultation. 2.13 While the legislative background is important, possible changes to legislation are not considered as part of this review. Oftel already has strong powers in this area and these are likely to be strengthened in line with EC directives in the drafting of the new Communications Bill. 2.14 Irrespective of any changes made to the regular data collection process as a result of this consultation it is likely that Oftel will require additional information from industry particularly to inform competition case analysis. It is not envisaged that Oftel’s needs will be entirely met by a regular agreed data collection process although it is hoped that any changes arising from this consultation will lead to improved efficiency in all of Oftel’s decision making processes. 2.15 There are other areas of Oftel's work which require regular information from industry. Examples include data required to monitor price control compliance and revenue data required to calculate licence fees. However, these areas should not be considered part of this review. 2.16 The following chapters discuss possible options for changing the existing process and address a number of specific questions.
Options for improvement 3.1 The previous sections have outlined the importance of the Oftel’s regular industry data collection to the regulatory decision making process. Oftel also views a regular data collection as essential for monitoring the appropriateness of regulation. 3.2 Oftel, however, is also concerned about the need to minimise costs to industry of supplying regular information. The actual costs are difficult to assess but on the basis of available evidence it is not clear that the current process of regular data collection is significantly burdensome to industry. Although no comparable figures are available, the Office for National Statistics estimate of the overall business compliance costs from all surveys carried out under the auspices of the Government Statistical Service (GSS) were £80 million in 1999. While most GSS survey forms are relatively straightforward to complete these surveys are sent to many thousands of firms in total. Oftel’s questionnaires are longer but are sent to less than 100 operators, in total, just four times a year. In addition, Oftel’s own costs of running the regular data collection programme extend to just three full-time staff and related administrative costs. 3.3 Given the importance of industry data to regulatory decision making Oftel is therefor of the view that the costs of the current process are outweighed considerably by the benefits. Question for stakeholders
3.4 Nevertheless, Oftel needs to ensure that its data collection and publication procedures remain consistent with appropriate regulation on an ongoing basis. The following section thus presents a discussion of possible improvements which could be made in each of the following areas:
3.5 In view of the changing nature of the market and the impact of convergence of broadcasting and telecoms services there is a concern that the current scope of the regular data collection process may not provide a complete picture of the telecoms industry. 3.6 In order to ensure that Oftel has a complete view of the market and in order for it to calculate accurate market shares, it is necessary to collect similar data from all operators irrespective of size. 3.7 It may be necessary therefore to expand the process both horizontally to include more operators and service providers and new markets and, possibly, vertically to collect more detailed information about more well-established services. 3.8 But there may also be scope to remove certain requirements from the regular data collection process and this review gives stakeholders the opportunity to identify any duplication or redundant requirements present in the existing process. 3.9 The current forms used to collect quarterly information from the industry provide an idea of the scope of the existing regular data collection process. These are available at www.oftel.gov.uk/publications/market_info/forms.htm. Most of the detailed information collected is on the (retail) PSTN and mobile markets. This can be justified by the overall contribution of these markets to overall telecoms revenues. Information relating to leased lines is also collected regularly. Relatively little information is collected about the Internet market although this has been addressed to some extent in the context of the recent effective competition review. 3.10 The regular data collection process does undergo a process of ongoing development. The scope of the collected information has recently been widened to reflect the increasing importance of newer services, most notably those connected with the Internet – both narrowband and broadband – and additional mobile services such as text messaging. There have also been recent improvements to the quality of information on indirect access which should help monitor the introduction of carrier pre-selection. 3.11 Nevertheless there are a number of ways in which the scope of the existing data collection process could be expanded. Areas of possible expansion include:
3.12 The issue of new services and inclusion of service providers can be considered critical in terms of monitoring roll-out and effective competition in broadband service provision. 3.13 New markets and services can emerge either as a direct consequence of regulation (eg carrier pre-selection, local loop unbundling) or emerge through technological or marketing innovation (Internet, pre-pay mobile services). These differences present different regulatory requirements in terms of data collection. 3.14 Where new services are created as a direct consequence of regulation these are generally likely to be mechanisms for promoting competition. Consequently it is important that Oftel has detailed information about these services to monitor the effectiveness of its policy intervention. 3.15 It is less clear when Oftel should collect information about services which evolve independently of regulation. Where these services create a new market it is possible that the new market will quickly become effectively competitive. Oftel’s preliminary conclusion about the retail Internet service provision market for example is that it is effectively competitive. 3.16 Oftel’s role in collecting data from effectively competitive markets is discussed in Chapter 4. However the nature of convergence means that it is extremely unlikely that there will be any telecoms markets about which Oftel will not require regular information in the short to medium term. It is important for Oftel to understand, for example, the extent to which increased Internet access is affecting competition in fixed voice telephony. 3.17 A key new area for Oftel is broadband. There is a great deal of internal and external policy interest in monitoring rollout. The timing of the regular quarterly inquiry is not currently sufficient to properly keep up with developments and so DSL and cable modem data are collected from BT and cable companies on a more frequent and timely basis. But data are also collected as part of the regular monitoring programme, the expectation being that, once rollout is suitably advanced, providers will be familiar with the reporting process.
3.18 In summary, therefore, Oftel is likely to require information on emerging markets and new services in more traditional markets for the foreseeable future. However, Oftel would welcome stakeholders views on the stage at which new services should be included in the regular data collection process. Questions for stakeholders:
3.19 Oftel is particularly keen to collect more information about service provision, an increasingly important element of the telecoms market. Until now the regular data collection process has focused primarily on licensed operators who supply network services although some data are collected from a small number of service providers. 3.20 In some markets this weakness is more stark than in others. Until recently the fixed operators contributing to the market information exercise made up the vast bulk of PSTN revenues. However the growth of indirect access, in particular, has made it difficult to be certain about the proportion of the current market which is represented by the contributing operators. Recently the scope of the exercise has been extended to include some new operators which has improved the quality of the market information data. But it is likely to become even more difficult to present a full picture as telephony is bundled with other services such as electricity and gas supply. 3.21 Another area where Oftel has limited information is in Internet Service Provision. This makes up an increasingly large proportion of the total telecoms market. While Oftel has been able to establish a reasonable picture of the Internet market from a large range of market research and other independent data fuller information from the industry would be extremely valuable, particularly as broadband services emerge. 3.22 Similarly, increasing convergence and the likelihood of operators vertically integrating businesses across different markets also mean that Oftel needs to have a much fuller understanding of the position of independent service providers to ensure appropriate regulatory response to any emerging competition concerns. 3.23 Oftel acknowledges that its powers in relation to collecting information from unlicensed operators or service providers are more limited. But it is probable that new legislation will increase Oftel’s powers in this area and in the meantime Oftel is keen to work more closely with service providers on a voluntary basis to more accurately understand this sector of the market. 3.24 Other sources of information exist. For example information on prices and market share can be obtained using market research, conducted either in-house or by external consultancy, but this can be expensive and be difficult to interpret without more detailed information from the supply-side. Oftel does not wish to impose unnecessary burden, particularly on small providers, but believes that the type of information required – which is likely to be broadly similar to that already collected from licensed operators – should be readily available. Questions for stakeholders:
3.25 A related issue is the need for greater information about the relationship between wholesale and retail provision of services. The majority of Oftel’s regular data collection focuses on retail information which although useful, provides little information about underlying costs and consequently makes retail revenue information hard to interpret. 3.26 Some recent changes have been made to collect more detailed information about interconnect services for fixed lines and attempts have been made to distinguish between the retail and wholesale provision of leased lines. Data are also collected on wholesale Internet call termination volumes and these formed a key component of the Internet review although better data on the related revenues are still required. 3.27 Any increased demand for information in the wholesale area is likely to be directed towards major licensed operators who provide the bulk of wholesale services. It is possible that demand for information at the retail end could be reduced if additional intelligence was gathered through price monitoring and market research. 3.28 However this would not be ideal. Previous experience has shown that each of these sources need to be used together to provide an accurate retail market analysis. For example the relationship between prices and actual retail revenues was an important consideration in the recently completed mobile market review. 3.29 It is also possible that improved information about retail service provision may reduce the need for data about wholesale inputs although previous experience has shown that data from alternative sources can be useful for quality assurance purposes. An input-output framework such as this should also make it easier to monitor revenue flows and so minimise the risk of ‘double-counting’ which affects Oftel’s current analyses to varying degrees. Questions for stakeholders:
3.30 The main focus of the regular data collection process remains retail revenue and volume information. Notwithstanding any possible developments in the areas discussed above there is a range of other information which Oftel could collect on a regular basis to inform its regulatory decisions. 3.31 For example, much of the data required from industry to feed into competition cases and reviews relates to cost and investment information. There are obviously some benefits to the efficiency of the decision making process if this sort of data are made available on a regular basis although it may be more difficult for operators to provide. 3.32 There are also some effective competition indicators which could be sourced from industry such as a complete listing of new service offerings. Another possible area for extension is to collect regular tariff data directly from operators. Oftel already undertakes a large amount of price monitoring although this largely involves external consultancy. It is particularly difficult to monitor actual prices for bundled services to business customers where these are often offered on a bespoke basis. A possible model is the one used to monitor mobile prices where operators send tariff information in a specified format directly to an external consultant appointed by Oftel. The methodology used in this particular exercise was formally agreed following a full consultation with the industry and other stakeholders. Questions for stakeholders:
3.33 Oftel believes that there are clear benefits of a regular data collection exercise over an ad hoc, issue-based approach. Irregular requests are more likely to be disruptive for operators and could also result in duplication. 3.34 There are also benefits in a regular data collection for the regulatory process which ultimately benefits consumers and industry alike. A regular data collection process improves accuracy, consistency and timeliness of policy decisions. It is also important to complement the regular market research programme with supply side data. Oftel also faces regular requests from government and other international bodies. While some of these requests are purely statistical and fall under the auspices of the Office for National Statistics the vast bulk require some additional regulatory input. 3.35 Industry can benefit from a co-ordinated regular data collection exercise. Certainty in timing and data requirements allows operators to ensure that appropriate processes are in place to produce the information relatively easily. Experience shows that ad hoc data requests can be extremely disruptive for operators and can delay key policy decisions. 3.36 Oftel believes that much, if not all, of the data it currently requests, or is likely to require in the future, from industry is of the sort already held on existing billing or management information systems. Oftel remains sympathetic to any genuine difficulties operators have in supplying the information and has in the past worked with operators to develop reliable estimation processes. 3.37 Oftel also accepts that it has a responsibility to ensure the efficiency of its own processes for collecting information from industry and needs, in particular, to improve the co-ordination of its regular and ad hoc data requests. 3.38 Improved co-ordination should minimise the risk of duplication, unnecessary additional burden on industry and inconsistency in the decision process. As the scope of the data increases and regulatory decisions become more complex it is vital to ensure that the data are used appropriately and consistently across Oftel. 3.39 Oftel has a number of other regular data collection processes as outlined in Chapter 2. In some cases similar data are collected although there are examples of the information being supplied by different parts of the same organisation. It may also be the case that certain information is requested at the wrong time of year in terms of the business cycle. 3.40 Oftel will consider more carefully any duplication in its own data with that collected by other regulators, in particular its proposed OFCOM partners. There are obvious examples such as cable subscriber data which are also collected by the ITC. There may also be some duplication with other areas of government, primarily the ONS although Oftel currently understands that the level of duplication is negligible. 3.41 While it is clear that industry can benefit from an improvement in the co-ordination of data collection processes both within Oftel and in government more widely there would also seem to be some merit in a more formal programme of regular communication with industry on the development and way forward for regular data collection from industry. 3.42 There may also be some practical improvements which could be made to improve the efficiency of the process such as better use of electronic data supply. Questions for stakeholders:
3.43 In a fast moving market such as telecoms the need for timely information is particularly important. Policy decisions increasingly have to be made to reflect a faster rate of market change. But Oftel is concerned about the current timeliness of the data received from operators and is not clear about the reasons underlying any delay. There has also been some criticism about the relevance of data used in recent Oftel decisions or the delay in the decision process itself (which may or may not be affected by the lack of available information). 3.44 While some recent attempts have been made to understand more fully operator difficulties in the supply of timely (or any) data the actual level of genuine difficulty remains unclear. Oftel is concerned that the non-supply of information could be a deliberate attempt to influence the regulatory process. 3.45 The current timetable is based around an initial request for quarterly data early in the month following the end of the reference period with an expectation that data will be submitted by the end of the second month following the reference period. Oftel then aims to use the third month to quality assure the data with reference to trend information, a comparison of operator returns for the period in question and data from other sources both inside and outside Oftel. This should allow publication in the third or fourth month following the reference period. The mobile operators are generally able to meet this deadline although the performance of the fixed operators is more erratic. This may, however, be a consequence of the more diverse nature of their businesses and greater complexity of the form. 3.46 Oftel is particularly concerned that the information collected from industry about the Internet may be insufficiently timely to reflect the pace of change in the market. Even in the relatively slow moving world of PSTN lags which are often around five or six months do not allow optimally informed decisions to be made. 3.47 Improvements in timeliness can only be achieved through the co-operation of participating operators. There may be a balance to be struck between the scope and timeliness of the regular data collection process. Oftel thus requests that industry consider all of these aspects together when responding to this consultation. 3.48 Oftel accepts that where there are changes to its regular questionnaire it may take some time initially to fully revise procedures for interrogating management information or billing systems but Oftel believes that these revisions should be relatively straightforward and be able to be implemented quickly. 3.49 Oftel sees three months as an appropriate target for data supply. A large number of contributors are already able to meet this deadline. This is also the lag between collection and publication of Oftel’s consumer survey data which is often used in tandem with supply side information. Questions for stakeholders:
3.50 As outlined in Section 2, when the market information exercise was first instigated emphasis was placed on regular publication of information. Little information was available in the public domain either about the size and growth of the telecoms market or its structure. Increased transparency also gives greater certainty for investors and so publication can also be considered a mechanism for promoting competition. 3.51 Oftel is clear that there are continued benefits for investors and operators in the publication of aggregate trend data. However the need to publish detailed company specific information may need to be reviewed. As markets become more competitive, disaggregated information becomes more sensitive. Publishing certain information can be perceived as undermining particular marketing strategies. Oftel has always been sympathetic to commercial concerns and still seeks the agreement of individual operators before publishing any specific information. 3.52 Restricting regular publication to aggregated information may also improve the timeliness of the data as overall short term trends can be estimated reasonably accurately from historical data, particularly if this is combined with any timely returns received from operators. This should also allow Oftel to publish information on pre-announced dates. This has some benefits in terms of transparency.
3.53 Nevertheless, the quarterly Market Information Updates continue to publish detailed information on the four mobile network operators on an equal basis and recently the number of fixed operators separately identified has increased. Market share information is also a key indicator of effective competition and is used frequently as an input to Oftel competition reviews and investigations.
3.54 Some operators have, however, expressed concern about the lack of transparency in Oftel’s rules for publishing information. While nominally Oftel has always used a two per cent market share as its benchmark for publication in the regular updates, it still seeks the agreement of the individual operator prior to publication. Consequently not all data are published at this level of detail. 3.55 To maintain transparency in its decision making Oftel wants to continue to publish regular market share information. But it would prefer to reach a formal arrangement with all participating operators. Oftel is also keen to establish whether some of the difficulties it faces in collecting accurate and timely information from operators may be due to operator concerns about the subsequent publication of the information rather than problems in its collation per se. 3.56 An alternative approach may be to publish only detailed operator information in documents outlining Oftel’s decisions in reviews or competition cases. But this may lead to, at least a perception, of inconsistency in the presentation of industry data which may in turn lead to concerns about the quality of the decision making process. Regular publication of data provides greater certainty and should serve as a guide to any eventual decision. 3.57 Another possibility is to restrict operator specific information only to those deemed to have significant market power in particular markets. This may reduce the amount of information currently published in the regular publications. Another alternative may be to publish an indication of market concentration using some kind of concentration ratio. 3.58 Oftel is also keen to establish whether the current lag between the data reference period and publication (currently somewhere between four and six months) is a concern to users. Oftel also wishes to establish whether there may be some sensitivity for companies in providing information prior to final confirmation in stock exchange or shareholder reports. Questions for stakeholders:
3.59 The previous section has discussed a number of possible options for changing the scope and procedures underlying both the collection and publication of telecoms industry data. 3.60 It is useful to examine alternative options within a cost benefit framework. The options are summarised in three tables which outline the options available in terms of the scope of the data collection, the process and the publication of collected information. In practice the costs and benefits of changes in each of these areas are closely inter-related and the total net cost and benefit of any set of changes will need to trade-off elements from each analysis. Options for changing the scope of the current regular data collection: (Data currently collected from
licensed operators and small number of service providers on range of
services listed at
Options for changing the process of the regular data collection: (Data currently collected on a quarterly basis from licensed operators and small number of service providers on range of services listed at www.oftel.gov.uk/publications/market_info/forms.htm)
Options for changing the current publication of data from the regular data collection process: (Summary quarterly
data currently published approximately five months after reference period
on majority of services
3.61 Oftel believes that the current process delivers a significant net benefit to all stakeholders. Oftel has also identified some additional benefits in extending the scope of the current exercise. There is also scope for improving the efficiency of the current data collection process which should deliver further benefits. The costs and benefits of publication for each individual stakeholder group are harder to identify although the importance of transparency cannot be ignored. Questions for stakeholders:
Industry data collection in competitive markets 4.1 The previous section has discussed possible options for changes to Oftel’s current regular industry data collection programme in the short and medium term. In the longer term Oftel’s data requirements are likely to be broadly similar where markets are not effectively competitive. Oftel must continue to have information about these markets in order to properly perform its regulatory function. 4.2 But Oftel also needs to consider how it will continue to monitor markets which it declares to be effectively competitive. 4.3 While Oftel has not formally set out its exit strategies form such markets it is likely to be gradual. Even in effectively competitive markets Oftel may have a consumer protection role. It is likely that to properly perform this function Oftel will require some form of monitoring data from the industry. 4.4 Oftel also needs to ensure that competition is being sustained and that any decision to remove formal regulation is correct. Oftel will also still be obliged to investigate any anti-competitive practice which may emerge following a relaxation of regulation. Such claims will be easier to investigate and, if necessary, to act on if detailed information is ready to hand. 4.5 A key point to bear in mind is that if the collection and publication of data is relaxed in effectively competitive markets that it will be difficult to form a complete picture of the total telecoms market. While there has been some recent improvement in the quality of aggregate information available from other sources, most notably the Office for National Statistics, alternative sources are unlikely to be sufficient to enable Oftel and other stakeholders to have a full understanding of the structure of the telecoms industry as a whole. 4.6 It is possible that market monitoring represents a self-regulatory opportunity. Already some information is published by industry bodies (eg Mobile Data Association) although this is generally limited to information which is not particularly sensitive. 4.7 In any future environment some thought will need to be given to how ‘new’ markets are monitored to ensure that competition evolves properly to the benefit of consumers. It is difficult to guess new markets where it is necessary or appropriate to collect information. Oftel’s expectation is that it would prefer to err on side of caution and collect at least some information from all new markets. 4.8 Oftel would welcome views not only on the current data collection process but how it might continue to monitor developments in a more competitive environment. Oftel does not believe that any continuing process – particularly based primarily on current processes – is likely to significantly add to industry burden. Although fuller information on the full burden attached to data supply will allow Oftel to form a firmer view on this issue. 4.9 As noted previously, the publication of operator specific information is more likely to raise sensitivities in more competitive markets. Question for stakeholders:
Consultation How and when to comment 5.1 Oftel invites comments from interested parties on the contents of this consultation document by 5 April 2002. Oftel is interested in responses from operators and service providers on all areas covered in this document. Oftel is also interested in the views of consumer and other users of the data, particularly in relation to publication issues. Oftel would also welcome any other information that potential respondents believe is relevant to the issue of regular collection and publication of data from the telecoms industry. 5.2 Comments on the proposals should be made in writing or in electronic form and sent to: Kenny Osborne Tel: 020 7634 8793 e-mail: kenny.osborne@oftel.gov.uk Publication and viewing of responses 5.3 On this occasion, Oftel is not programming a formal period during which interested parties may comment on the responses made by others. Nevertheless, in the interests of transparency, comments will be published on Oftel’s website and made available in its Research and Information Unit , except where respondents indicate that a response, or part of it, is confidential. Respondents are therefore asked to separate out any confidential material into a confidential annex which is clearly identified as containing confidential material. Oftel will take steps to protect the confidentiality of all such material from the moment that it is received at Oftel’s offices. However, in the interests of transparency, respondents should avoid applying confidential markings wherever possible. Appointments to view written comments in Oftel’s Research and Information Unit must be made in advance by telephoning 020 7634 8761 (fax: 020 7634 8946). If respondents would like to discuss the contents of this consultation document, please contact Kenny Osborne on 020 7634 8757. Alternative formats 5.4 Copies of this consultation document are available on disk. Accessible formats such as large print, Braille and audio cassette can be made available on request. 5.5 Please contact the Oftel Research and Information Unit on 020 7634 8761 or by e-mail at infocent@oftel.gov.uk for more information. 5.6 This document is available on Oftel’s website at www.oftel.gov.uk . Hard copies are also available from Oftel’s Research and Information Unit. Internet notification 5.7 Oftel has a free e–mail based mailing list to help people stay informed about the work that Oftel is doing. Each time an Oftel document is published and placed on Oftel’s website at www.oftel.gov.uk, subscribers to the list receive an e–mail informing them about the document. To register, please go to the What’s New section of the website and link to the electronic form. Summary of questions for stakeholders General
Scope of data collection
Data collection process
Timeliness
Publication
Summary
Data collection in competitive markets
Next steps 5.8 Following the end of this consultation Oftel will publish a statement of conclusions and will proceed with any changes to its regular collection and publication of information from the telecoms industry as appropriate after taking into account views expressed by respondents. The consultation criteria 5.9 Oftel considers that this document meets the Cabinet Office code of practice on written consultation documents. The code is reproduced below for convenience. If you have any comments or complaints about this consultation process please contact: Oftel Co–ordinator for the code of practice: Rob Jex tel: 020 7634 5350 e-mail: rob.jex@oftel.gov.uk 1) Timing of consultation should be built into the planning process for a policy (including legislation) or service from the start, so that it has the best prospect of improving the proposals concerned, and so that sufficient time is left for it at each stage. 2) It should be clear who is being consulted, about what questions, in what timescale and for what purpose. 3) A consultation document should be as simple and concise as possible. It should include a summary, in two main pages at most, of the main questions it seeks views on. It should make it as easy as possible for readers to respond, make contact or complain. 4) Documents should be made widely available, with the fullest use of electronic means (though not to the exclusion of others), and effectively drawn to the attention of all interested groups and individuals. 5) Sufficient time should be allowed for considered responses from all groups with an interest. Twelve weeks should be the standard minimum period for consultation. 6) Responses should be carefully and open-mindedly analysed, and the results made widely available, with an account of the views expressed, and reasons for decisions finally taken. 7) Departments should monitor and evaluate consultations, designating a consultation co-ordinator who will ensure that all the lessons are disseminated.
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