Rocky road ahead for Ofcom

Ofcom proposals dissected by industry

The government admits there will be "conflicts" and "trade-offs" between the broadcasting and telecoms industries when the proposed communications regulator OfCom gets off the ground.

In a meeting in London last week, interested parties from the world of the Internet, telecoms and broadcasting gathered to discuss the proposals for Ofcom -- due to be up and running in either late 2002 or early 2003. The government has published a white paper outlining the responsibilites of the new regulator and industry has until 12 February to respond to the proposals.

Director of communication policy at the Department of Trade and Industry David Lumley admits it will not be an easy job to unite the interests of the telecoms and broadcasting markets. "It is very clear there will be conflict between Ofcom's three different objectives. It is up to Ofcom to reach a balance in a clear and balanced way with the necessary trade-offs," he told attendees at a meeting held by the Federation of the Electronics Industry last week.

As television, Internet services and telecoms converge, the government believes a new regulator is necessary to cope with change, push forward competition and take care of consumers' interests in a converged world. The existing telecoms watchdog Oftel has come in for a great deal of criticism for the way it has handled the emerging Internet markets and many of its critics believe it does not have enough powers to deal with the growth of narrowband and broadband Internet services.

The DTI hopes Ofcom will have greater powers to fine companies which act anti-competitively although generally it is hoped regulation will be kept to a minimum. The government has scrapped plans for Ofcom to set up a Universal Service Obligation for the delivery of broadband services in the UK but believes a strategy to ensure "widespread availability of broadband" is necessary.

For ISPA's (Internet Service Providers' Association) secretary general Nicholas Lansman the most important thing is to get the legislative framework right and strike a balance between the needs of the consumer and the importance of promoting competition. If Ofcom is to be effective it will need a wide range of weapons in its armoury, he says.

"When eventually Ofcom gets going it needs the tools to be able to act quickly and decisively. It needs for example a whole range of fines and to be able to order refunds or limit services," says Lansman. More powers to intervene in the delivery of services could prevent a repeat of the unmetered debacle, where ISPs went bust and failed to refund customers. Oftel claimed it is not part of its remit to interfere.

Lansman is concerned that the interests of the Internet community could be overtaken by those of the broadcasting industry and points out that there are only 136 references to "Internet" in the white paper as opposed to 592 for "Broadcasting". Telecoms has even less mentions, coming in at a measly 78. Lansman also stresses the importance of employing the right people at Ofcom. "One of the failings of Oftel was there was not enough people with experience of the Internet," he says.

Unlike Oftel, Ofcom will not have an individual regulator but a board of directors which the DTI insists will have the flexibility to react to the ever-changing Internet market. "The board will take decisions but it can choose to delegate that to individuals if it chooses," says Lumley.

Head of regulation at Nortel Mariam Ogurcak worries how Ofcom can make a difference in the changing world of technology. She complains that 90 percent of the white paper is concerned with content rather than the mechanisms for delivering content. "Ofcom will have an awful lot to do to make sure there is innovation and that competition is promoted," she says. "We are concerned that instead of looking into the future it is looking to preserve existing services," she says.

BT's senior vice president of development at BTopenwWorld hopes Ofcom will keep its regulation to a minimum. "At the moment Oftel writes the rules in advance. Rather than try and devise rules for every scenario, [Ofcom] should let people innovate and then, within the framework of the Competition Act, tackle any abuses afterwards," he says.

From the BBC's point of view the white paper is light on its regulation, leading some analysts to ask if the BBC is about to be granted a universal Internet access obligation to fulfil the government's hopes for widespread Net adoption in the UK. The BBC's controller of policy development David Levy is keen to make sure Ofcom continues the principles of universal access. "The issue is whether the proposals are sufficient for universal access and whether the aspiration towards universality is genuinely achievable," he says.

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