Ofcom, what next?

 Ofcom, what next?

It’s been a dramatic past few years for Ofcom; from major budget cuts to the 4G spectrum auction, there has rarely been a time when the regulator has not been wrestling with a major decision. During this period its CEO Ed Richards has been central to both the organisation’s survival and its key decision making. Richards became chief executive in 2006 having previously acted as the organisation’s chief operating officer. He leaves the body in good shape, with the regulator well respected by the telecoms industry following big battles with some large media organisations. Describing Richards’ reign at Ofcom, the organisation pointed out that he had overseen a positive period for British mobile phone consumers, with prices at some of the lowest rates in Europe, if not globally.    

Ed Richards’ reign
‘Ed Richards has done a very effective job at Ofcom’, says Helen Goodman, shadow minister for culture, media and sport, ‘At a time when telecoms and broadcasting are so central to our everyday lives, it is essential that they continue to be subject to proper regulation in the consumer interest.’

One of the challenges Richards has faced over the past few years, and a major task for his successor, will be continuing to prove Ofcom’s worth to a government that has at times been sceptical; David Cameron previously said the organisation needed to be ‘slimmed down’. When the regulator’s budget was cut several years ago, many credited Richards with maintaining the organisation’s importance. As he departs however, the pressure will surely intensify for the body to again prove its worth – this will be the first point for the new CEO to address.

It’s telling that as Richards leaves his post a spokesperson for the Department of Culture Media and Sport (DCMS) praised how the organisation has adapted to shifting circumstances: ‘Ofcom has a world class reputation and has tackled huge challenges presented by the significant changes in the communications industry over recent years. It has made significant efficiency savings during this parliament, and is on track to exceed its target for budgetary reduction, making a real term saving of almost 30% over four years.’
Under Richards’ stewardship, Ofcom believes that it has delivered one of the most competitive mobile phone markets in the world, a place where there is great value to be found for the consumer. It points to the 4G auction where all four of the major operators were able to acquire spectrum.

The organisation will also have to make sure that the period of transition between Ed Richards and his successor is smooth. Ofcom has allocated a generous amount of time for the transference of power to take place; Richards will remain CEO until the end of the year as it searches for his successor. Only time will tell whether this method works out for the best. In the meantime the regulator has said that it is aiming to maintain continuity, with the head of the grid divisions working to ensure that it is business as usual.
 
Legal obstacles

 

Ed Richards made no secret of the fact that he believed the legal processes that repeatedly hindered Ofcom decisions needed reform. Speaking at the press conference for the opening of the 4G auction, Richards said: ‘There is a real question about the ability of ourselves and other regulators to be able to make timely decisions. I do not think the UK is in the right place: it is too legalistic, too bureaucratic and prone to gaming.

‘Everything we do is subject to the huge shadow of litigation – the threat of multiple courts and multiple years moving from appeal court to appeal court. We are dealing with multinational corporations with huge reserves.’ The problem that Ofcom frequently faces is that the current appeals process can be used tactically by companies looking to delay decisions with which they don’t agree. Every part of an Ofcom ruling can be challenged and there is almost no downside to a business going down this route. Once the legal process begins, the cases often get mired in the courts, which can cause lengthy delays. Although Ofcom would accept that its decisions need to be scrutinised, the current process is clearly open to abuse. The trouble is that the investment required by a major firm in legal fees can be far less than the potential losses that a damaging Ofcom ruling could bring about, only giving more incentive to companies looking to take advantage of the system as it stands.  

 


It’s something that Helen Goodman MP also believes hampers the sector: ‘Ofcom is hamstrung by the existing regulatory regime. The standard of appeal in the telecoms market should be brought into line with other sectors, with cost capping introduced. Mobile phone companies have deep pockets and Ofcom does not have unlimited resources to fight such challenges.

‘Reform of this process was first mooted seven years ago. Since 2010 the Government has consulted on this three times but has repeatedly kicked it into the long grass when faced with pressure from the incumbent mobile network operators.’
Responding to Goodman’s comments, a spokesperson for the DCMS said: ‘The government has consulted on streamlining the appeals framework but no final decision has yet been made.’

Switching


A major issue across a number of industries that has received a lot of attention from the government has been the ability for consumers to switch providers. The mobile industry is no different and it was an issue that came to the fore recently when Three sent a letter to Ofcom urging it to push ahead with measures to increase consumers’ ability to switch. 

Speaking to Mobile, an Ofcom spokesperson explained that it was an area that the regulator believed was of high importance: ‘Ensuring consumers can change communications providers easily is a key priority for Ofcom. We’re already introducing significant improvements to switching processes, led by ‘gaining providers’, for landline and broadband customers.   ‘We're committed to ensuring consumers can switch more easily on all networks. We’re already seeking views from industry and consumers on the best way to achieve this. Changes of this kind in the communications sector typically involve significant litigation and extensive appeal rights, which mean that ensuring benefits for consumers can take time.’


It’s an area that has support on both sides of the House of Commons, a spokesperson for the DCMS said: ‘The Government is committed to making it easier to switch between providers of electronic communications services. The Government is working with Ofcom and industry to decide how best
to achieve this.’


The Labour Party’s Helen Goodman was even more emphatic in how Labour would address the issue: ‘As part of our plan to bring consumer telecoms costs down, a Labour government would help Ofcom achieve provider-led switching in the mobile market by reforming the appeals process. No market is working effectively if people can’t switch their service provider – several telecoms operators have been asking for these changes to make the market more competitive.’
Quite how Richards’ successor deals with all these different challenges will be interesting to observe. One thing is clear; they will have quite a job following on from one of the most effective regulatory heads in the business.

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