Cynllun Blynyddol Drafft 2011/12

Executive summary

Ofcom's Draft Annual Plan sets out our work programme for 2011/12

1.1 This Draft Annual Plan presents our strategic purposes, our proposed priorities and our work programme for the twelve months from 1 April 2011 to 31 March 2012.

1.2 We encourage those with an interest in Ofcom's work to respond to this consultation by 1 March 2011. Your views will help inform our Annual Plan for 2011/12, which will be published at the start of our next financial year (April 2011).

Consumer behaviour and new technologies are driving change in the communications market

1.3 Ofcom's principal duty is to further the interests of citizens in relation to communications matters and to further the interests of consumers in relevant markets, where appropriate by promoting competition. The needs of consumers and citizens are, therefore, at the heart of our programme of work.

1.4 There have been significant developments in the technology, devices and platforms available to consumers. While many traditional communications services still remain highly popular, consumers are also accessing new, converged services and media.

1.5 These changes in how consumers are using communications services create a range of challenges for regulation. Concerns such as mis-selling still need to be addressed and new issues are also emerging, for example where consumers seek to switch between services.

Ofcom's strategic focus to 2015 must respond to these developments

1.6 We have considered future market developments and the changing consumer use of communications services. We have also reviewed our role within the sector and concluded that:

• Due to the characteristics of our sectors, ex ante competition policy is still required in certain areas to support the interests of citizens and consumers.
• It will remain important to manage the efficient allocation and use of scarce public assets like spectrum and numbering.
• Market failures within our sectors suggest that there are continued benefits from a carefully judged consumer policy in support of competition policy.
• The need and public support for content protection remains clear, despite convergence making the role of content regulation more challenging.
• There is still demand from the government for Ofcom to offer its technical and industry knowledge to provide support on policy issues. Ofcom will focus on areas where we have clear powers that enable us to make a real difference.

1.7 In summary our strategic purposes to 2015 are to:

• Promote effective and sustainable competition.
• Promote the efficient use of public assets.
• Help communications markets to work for consumers.
• Provide appropriate assurances to audiences on standards.
• Contribute to and implement public policy defined by Parliament.

1.8 It is important that we are able to assess our progress against these strategic purposes to be sure we are delivering them effectively. Therefore we will identify clear and positive outcomes that we are seeking to secure for citizens and consumers. We will monitor our progress towards achieving these outcomes, reviewing both our output and wider market developments. We recognise, however, that these outcomes will depend on wider industry and consumer developments as well as on our own actions.

Ofcom must also respond to wider economic challenges

1.9 The government has set out its plans in the Comprehensive Spending Review to address the UK's public finances. Public sector bodies are expected to achieve a substantial saving in their budgets. We will play our part in meeting the public spending challenge.

1.10 Our target is to reduce our spending over the next four years. The majority of savings will be made in the first year and by 2014/15 this will deliver a 28.2% real-terms saving on Ofcom's current annual funding cap of 143m.

1.11 We have reviewed how we deliver effective and targeted regulation while striving to maintain value for money, and have prepared detailed proposals for reducing expenditure and delivering greater organisational effectiveness. These proposals allow us to provide high quality sector-specific regulation and deliver our strategic purposes within the financial constraints set by government.

1.12 Our proposals build on Ofcom's record of efficiency and value for money. We have delivered six consecutive years of like-for-like budget reductions in real terms. We have also sought to reduce regulatory burdens wherever appropriate.

1.13 Ofcom is well prepared to implement the necessary savings, albeit from a base that does not provide easy opportunities to further reduce our spending. We are therefore proposing to stop certain activities and deliver our objectives through different approaches which offer material efficiency gains.

1.14 We are planning to make significant changes to our governance structure and supporting advisory bodies to deliver savings and refine our decision-making process. However, some of these measures will depend on legislative changes in the Public Bodies Bill and the European Communications Framework.

1.15 As resources are limited we will make choices guided by our strategic purposes and our core duty to promote the interests of the citizen and consumer. We have already made a number of immediate cost savings including completing a two-year pay freeze, proposing to cease future defined benefit pension accruals, and reducing spend on key supplier contracts. Our ongoing work, such as our licensing and investigations procedures, will see a number of changes that will provide further savings. These may also benefit stakeholders where our approach simplifies interactions with Ofcom.

1.16 We believe these changes can ensure we meet our financial objectives without undermining our revised strategic purposes and core priorities. Inevitably, there will be more difficult choices to make in relation to resource priorities than at any point in Ofcom's history.

We are also implementing new or revised duties

1.17 There are several amendments to UK legislation implemented or proposed by government that will change our duties. Some of these enable us to reduce our costs while others will require us to undertake new responsibilities. They include:

• Implementing the provisions in the Digital Economy Act 2010 aimed at addressing online copyright infringement.
• Orders under the Public Bodies Reform Bill, through which the government has proposed to reduce Ofcom's duties in some areas, for example, the frequency of the media ownership review and the public service broadcasting review.
• The transfer of regulation of post to Ofcom from Postcomm, proposed in the Postal Services Bill.

1.18 There are also requirements for Ofcom to comply with specific provisions of the revised European Communications Framework. These include:

• Revising our General Conditions and Universal Service Conditions.
• Changes to the disputes resolution and enforcement processes.
• Amendments to our market review processes, for example the requirement for market reviews in certain markets to be conducted every three years.

1.19 We will also continue to engage with the European Commission (EC) on its Radio Spectrum Policy Programme, with a view to supporting proposals that are consistent with our Digital Switchover (DSO) and spectrum clearance timetable.

Our priorities for 2011/2012

1.20 Our priorities for the coming year are based on our revised strategic purposes and our programme of budget reductions and efficiencies. The priority issues we have identified for the next financial year will be our primary focus, and for each priority we have identified what we would like to achieve.

1.21 There are also a number of other important areas that require ongoing work across a number of years. We will continue to deliver important services to consumers and other stakeholders, as well as a number of other major work areas which are an important part of our 2011/12 work programme.

1.22 We will also remain responsive to new issues, emerging market failures, specific issues for all consumers across the UK, and government requests based on where we can make the most difference.

Annual Plan 2011/12 proposed priorities

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