A new future for communications?

Allan Williams, Senior Communications Policy Officer at Consumers' Association (CA), takes a first look at the draft Communications Bill.

At the time of writing, the Communications Bill has just been published, and few can yet have had time to read or digest its four weighty volumes. Despite delays to its publication, the next stage of debate and parliamentary scrutiny is likely to be over before the summer recess. So, with public debate focused on media ownership and senior OFCOM appointments, it's important to step back and consider whether the draft Bill has delivered on some of its original objectives.

Lighter touch regulation

CA's overarching concern with the proposals for OFCOM was the adoption of a light touch approach which assumed that the majority of regulatory objectives can be reduced to or achieved through the promotion of competition and the roll-back of formal regulation. The White Paper suggested that OFCOM would be over-reliant on industry to deliver its primary duty of protecting the consumer interest, and would only take action if industry failed to develop codes and mechanisms to provide adequate consumer information, protection and redress.

We are pleased that the draft Bill takes a more realistic approach to co- and self-regulation, recognising that relying primarily on industry to protect consumers could fatally undermine OFCOM's own primary duty to protect consumers. However, we would still welcome greater clarity regarding the grounds on which industry codes will be judged to have failed and OFCOM will take action:

• CA particularly welcomes support in the draft Bill for the proposed telecoms Ombudsman scheme, which will provide consumers with simple and quick redress mechanism. The scheme is a challenge to operators to deliver on the oft-stated desire to move towards greater co- and self-regulation. This will require the full participation of all telecommunications operators.

• Any withdrawal of formal regulation should be conditional on ensuring that consumers remain protected by and represented within alternative regulatory structures. Co-regulatory schemes with adequate consumer involvement and regulatory backstop powers would deliver equally flexible light touch regulation without the disadvantages associated with self-regulation, but there are important resource implications. The Consumer Panel will have a key role to play by representing consumers in these processes.
  

Consumer protection and representation

CA has long argued that consumer advocacy fulfils a complimentary but quite different role to regulation, providing a counterbalance to the other interests seeking to shape regulatory decisions. In 1999 we argued for the establishment of a statutory consumer representation body for the communications sector as a whole with a remit encompassing broadcasting, telecommunications, the Internet and new services as they arise. Although it falls short of this original proposal, CA supports the proposal to establish a Consumer Panel.

We are now keen to ensure that the advantages of consumer representation within OFCOM are maximised (including access to information and resources) and the disadvantages are minimised (including the dangers of capture and self-censorship).The legitimacy of consumer representation bodies relies on their effective advocacy on behalf of consumers, not just in their statutory relationship to regulatory authorities:

• It is essential for the Consumer Panel to have the powers and freedom to operate as an independent consumer advocate, rather than restricting its functions to those of an advisory committee to OFCOM. The Panel must also have sufficient resources to avoid its being overwhelmed by the legitimate demands of advising OFCOM. We are pleased that the panel will be able to advise other bodies - for instance in Europe and with advertising and competition authorities - and to communicate its work directly.

• CA has argued that the Panel should mainly focus on economic regulation including issues of choice, value, redress and disadvantaged consumers. However, as convergence is likely to blur the distinctions between content and carriage issues, we welcome the proposal that the Consumer Panel should advise the regulator on issues relating to the competition aspects of content provision such as the public service remits of commercial channels and the BBC, misleading advertising, or the level of genuine choice and diversity of content.

• We particularly support the proposal that the Panel should be operationally separate from OFCOM. This status will provide a number of advantages such as an independent research budget, but will also require it to demonstrate both its efficiency and effectiveness in promoting the consumer interest. We also support the proposed obligation on OFCOM to provide information and give public reasons when it disagrees with the Panel's conclusions, as currently happens with super-complaints to the OFT.

Relying on competition

The 'competition agency as watchdog' role is centrally important to advancing consumer welfare. The prevention of competition abuse is hindered by the complex web of firms, regulations, market structure and established patterns of market behaviour by firms and consumers, so it will be essential for OFCOM to use its knowledge of the sector to ensure that the competition regime in communications is consistent with that applied by the OFT.

At the moment, it is unclear how OFCOM will exercise its competition powers, given the ongoing reform of both communications and competition regulation. The Enterprise Bill contains a number of key provisions which CA would like to see mirrored in the final Communications Bill:

• CA has particularly welcomed the powers given to the OFT in respect of industry codes of practice. In a lighter-touch regulatory system, consumers may increasingly rely on codes as a reassurance that they are selecting a reputable firm. Unfortunately some codes of practice are largely cosmetic and offer little consumer protection. We look forward to OFCOM ensuring that codes are meaningful to consumers.

• CA is keen for consumer organisations to assist with ensuring markets work effectively, so we are pleased to see that super-complaints will be given a statutory basis. It is envisaged that super-complaints will concern situations where markets rather than the activities of particular companies fail to work for consumers. The Consumer Panel will have a key parallel role in identifying issues of market failure for OFCOM to investigate.

• CA supports the new approach to market investigation. We welcome wholeheartedly the combining of the complex monopoly provisions with the ability to seek out problem sectors. However, as with all such reforms their success will depend on the willingness of the agencies to use their powers fully. We would expect OFCOM to work closely with the Consumer Panel to identify and address such problem sectors.

Conclusions
While CA supports many of the reforms proposed in the draft Communications Bill, there are many more issues which remain to be resolved. Some of these - such as media ownership - are identified in the policy document, while others are less visible. CA will be paying particular attention to the implementation of the European telecoms package through Statutory Instruments prior to the final Bill, to ensure that hard-won UK consumer protections are not eroded through moves towards greater harmonisation.

Section 3.1.2 of the policy document masterfully understates the way in the changing fortunes of the industry have undermined OFCOM's raison d'etre - convergence - yet there remain good reasons for regulatory reform. CA has argued in favour of a converged regulator for the communications industries for some year, but it is clear that OFCOM cannot deliver benefits without attention to the purpose of these reforms and the challenges that OFCOM will face to deliver on them.
For further information, please contact Allan Williams or Peter Jenkins at Consumers' Association, tel 020 7770 7000.