MPs to cast closer eye on broadband ripoffs
Luff gets tough
As chair of the Trade and Industry commons select committee, Peter Luff MP is one of most influential figures in telecoms. He sat down with Ofcomwatch editors Luke Gibbs and Russ Taylor recently to talk about the increasing politicisation of the regulator, his broadband concerns, and the recent phone scandal. He had some stern words for both OFCOM and BT.
Let's talk about mis-selling. In broadband you have some unique types of...well I won't call it mis-selling because I have not researched it, but you have statements to the effect of: 'this is free broadband'. Consumer advocates often say the use of the word 'free' is inherently misleading because it is not free when you have to purchase something else to get it. And you've also seen these claims of 'up to 8 megabits per second' and after thousands of tests most of the connections are actually a small fraction of the promised speed. What's your view on this?
It's such a complex area for the consumer to understand actually what is being offered. My concern in the mobile telephone market is that there is almost too much competition. The offers are so bewildering - how on earth do you compare what's being offered? On what rational basis do you reach a decision? And broadband - it's technical offering actually bewilders most consumers because you are asking for a degree of technological sophistication they won't have.
But if I am promised 'up to 8 megabits per second' and I consistently receive less than 2 megabits per second ...
I had a problem with my broadband connection at home - no one could work out why it was not delivering a much higher rate...eventually we just put a new router in and the rate went up again. I got the rate I wanted, which is a reasonable rate anyhow.
The problem is that people say, "I'm terribly sorry, it's not our fault", particularly when it's a problem with BT providing the infrastructure. There's a lot of buck passing that goes on as well. So, it's quite difficult to regulate in each case: "Our computer is not functioning", "the router is not functioning properly", "there is someone down in the street that has done something"...
'You live too far from the telephone exchange' - I've seen all types of excuses.
It's really difficult. Well, I think the industry has got to be really careful about not making excessive claims and if it doesn't then there will be a toughening up of the regulatory environment.
It's an odd industry. I think the only industry that is more misleading in terms of excessive claims are the laptop manufacturers that tell you the battery charge should last four hours. I've never had a battery last as long as the manufacturer claims. And it seems in broadband you get the same sort of puffery that is consistent. When one does it - the industry leader - all the rest have to follow because if I am saying 'up to 8 megs a second' then there is no incentive for anyone to be truthful and say I am offering '2 megs a second' because why would you buy 2 when you can have 8 for the same price? You have a race to the bottom when it comes to puffery in the broadband industry.
Good point. I can sympathise with that.
Are we likely to see changes if the Conservative Party comes to power in this area? The Economic Competitiveness Group, as part of its review, has done some work on regulation. It's a broad question - generally about regulation and specifically about this area.
I don't know. I am not close enough to the policy-making process so I cannot answer that question. I am chairman of the select committee so I don't really wear a party hat when it comes to these issues. I think that the Lords investigation into economic regulation will be very influential, actually. I think it is an important inquiry. A lot of us will watch and see what that says. I hope it will be motivated by a desire to increase competition rather than regulation. The test will be whether or not you can make an industry more effective by increasing competition than by regulating more intensely. So, I hope that's the direction we move in.
When you look at Ofcom today, is the resulting product - the Ofcom you see operating and appearing before you in the committee - is that the Ofcom people imagined? Is it consistent with what you thought it would be?
I think I just need to ask more searching questions of Ofcom than I used to. That's what I would say. I thought it was a Rolls Royce - now I think it may only be a BMW.
More people should think about it, do you think?
I think telecommunications is the Cinderella of the infrastructure of the UK. That's a recurring concern of mine.