ofcom review announcementOn 12 March 2015, the UK’s communications regulator announced a major review of the telecoms industry, its first in a decade. Ofcom acts as an independent regulator and authority in matters of competition for the UK’s telecommunications industries.

Ofcom’s Mandate

Under the terms of the Communications Act of 2003, Ofcom is empowered “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.”

Review, in Review

Ofcom’s first Strategic Review of Digital Communications was initiated in December 2003, and extended into September of 2005. Its principal focus was the perceived monopoly of British Telecom (BT) over other players in the burgeoning telecommunications market. The Review led to the adoption of new rules, spelling out the terms by which competitors could gain access to BT’s infrastructure. Under the new provisions, competing telecoms suppliers were at last able to use BT’s network to offer telephony and broadband services to their customers.

Achievements in the Past Decade

Speaking to reporters upon announcing the Review, Ofcom’s Acting Chief Executive, Steve Unger said: “We have seen huge changes in the phone and broadband markets since our last major review a decade ago. Only five years ago, hardly any of us had used a tablet computer, high-definition streaming or 4G mobile broadband. “The boundaries between landline, mobile and broadband services continue to blur, and people are enjoying faster services on a growing range of devices. Our new review will mean Ofcom’s rules continue to meet the needs of consumers and businesses by supporting competition and investment for years to come.” Ofcom sounds a positive note about the last 10 years, with average broadband speeds having increased by a factor of over 20, and prices for broadband services and the average mobile phone package having come down by half. To achieve these figures, Ofcom amended its regulatory approaches in tandem with the evolution of the telecoms market. Retail price controls for competitive services were waived in 2006. Four years later, new rules were adopted to make the superfast broadband market more competitive. In 2011, wholesale mobile call rates were capped, with the knock-on effect of reducing prices for calls to mobile phones. A bandwidth spectrum for 4G mobile services was awarded in 2013, along with new regulations making it available to 98% of premises. In its European Broadband Scorecard, Ofcom ranks the UK first among the EU’s five leading economies, in terms of network coverage, usage, adoption, and choice.

Back to the Present

ofcom announce review Ofcom’s second Strategic Review will put the spotlight on the markets for broadband, mobile and landlines. It will assess the availability of products in these sectors, and evaluate their potential for competition, investment, and technological innovation. This will be an adjunct to the watchdog body’s standard reviews of individual telecoms markets, which take place every three years. The Review will also consider the regulatory landscape, and its future development. The investment plans of major market players and the potential for mergers, acquisitions, partnerships, and joint ventures will be examined. So too will the influence of the Internet over telecoms services operating online, and the shift in use from traditional telephony to mobile devices. For broadband, mobile and landlines, Ofcom will focus on three areas, within each market segment:
  1. Incentives, for the Private Sector: with particular emphasis on driving investment.
  2. Development, Through Competition: Ofcom seeks to identify and eliminate potential stumbling blocks, which may hamper development within the industry.
  3. Regulation & Deregulation: The Review will look at possible measures to ease restrictions, where these are deemed beneficial.
  Ofcom will conduct the Review in two phases, the first of which will examine the possible influences on current and future markets for digital communications services and approaches to market regulation. This will be done in consultation with relevant stakeholders in the UK telecoms market. A discussion document is promised for summer of 2015. In the latter part of the year, Ofcom hopes to publish an outline of its initial conclusions, to round out the second phase of the Review.

Reactions to the Announcement

Ofcom’s second Strategic Review will take place within a climate of telecoms mergers, some of which have already caused alarm. For example, EU antitrust regulators and BT’s competitors are expressing concern over the company’s acquisition of the UK mobile operator EE, amid dire warnings of increased prices for customers. Within the industry, many seem to view Ofcom’s intervention as a positive step, to reinvigorate competition – provided their Review comes up with something of substance. Consumer advocacy groups are also looking to the industry watchdog to deliver rules that will ensure greater satisfaction for customers.  

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