How will Ofcom reduce our reliance on BT if it won't break them up?
Regulator needs political cover to bring fibre to millions of homes
Opinion The publication of Ofcom’s 2005 Strategic Review of Telecoms was preceded by many long evenings of intense debates within Ofcom and with BT and other stakeholders. The review took 18 months and resulted in the UK having the most competitive broadband market in the world.
It’s worth remembering why that happened – because Ofcom made the “access” network – the copper to peoples’ homes – open to different providers. That led to competition which drove down prices as well as spurring investment in equipment and new service bundles.
So I really do feel for Ofcom as they publish its Strategic Review of Digital Connectivity. In the intervening ten years digital has only become more important. In 2004, when the first strategic review started, only 25 per cent of households had a fixed broadband service; now it is 78 per cent.
In 2004 complaints were about the quality of dial-up and we struggled to imagine what people would do with megabytes of data. Now we struggle to imagine life without megabit connectivity. In 2004 Facebook had just launched in Harvard and Google just launched on the stock exchange. Now the digital revolution is in full throttle and Google and Facebook are criticised – rightly – for not paying taxes on revenues equivalent to the GDP of some countries. For many, separation from their tablet or smartphone constitutes a cruel and unusual punishment, and the government itself is committed to digital by default.
And yet there are still millions of households that have no access to the internet, either because they don’t want it or because they can’t get it.
Millions more who do not feel confident using it for one reason or another – be it security fears or a lack of digital literacy.
The current government appears to have abandoned them to their offline fate whilst charging benefits claimants for calling the Universal Service Helpline on the basis that they should be getting help “online”.
This is after dumping Labour’s commitment to universal broadband for all by 2012, taking the funding for it – and more – and handing it to BT to create a monopoly in superfast broadband, albeit at a super-slow rate.
The groundswell of interest on the Tory benches in breaking up BT is fed by a desire to appease irate constituents without blaming their government’s incompetent handling and absence of long term-vision.
So Ofcom had a difficult challenge. To set out the vision for our critical digital infrastructure that the government lacked, reverse the monopolisation of broadband and give consumers and businesses the protection and the power to participate actively in our digital economy and society.
That they have not entirely succeeded is more a consequence of the difficulty of the challenge than the quality of the report. There is much to be welcomed in it.
Firstly they recognise there is a problem – continuing the status quo is not an option, they say.
Then there is the emphasis on fibre. BT appears to see its future as sweating its copper assets to produce ever-faster speeds over ever-shorter distances.
Ofcom says quite clearly it will promote a large scale rollout of fibre to the premises for businesses and households. That chimes with what we have been saying in the Labour Party, that fibre has to be our destination, copper cannot be our future. Who knows maybe now the Minister will actually answer my questions on fibre instead of only referring generically to “fixed communications”.
Then there is a continued emphasis on competition, which shows Ofcom hasn’t bought the theory popular with incumbents that monopolies invest more because they know they’ll get all the customers (they don’t).
And the increased emphasis of consumer rights, including automatic redress, goes some way to compensating for the government’s refusal to champion the interests of the digital citizen.
But I fear four key points mean the impact of the report will be slow and it may not be sufficient.
There is the key question of how to increase competition. I oversaw the 2009 Ofcom report on duct access and have tried and failed three times to get a response from the Digital Economy Minister on the potential for new fibre in existing ducts. Ofcom says it will open up BT’s ducts, but that was supposed to happen in 2009. Ofcom does have experience of taking an existing remedy and making it actually work (Local Loop Unbundling) but it was a slow process and BT have plenty of opportunities to obstruct it.
Secondly the absence of any real reference to digital inclusion – the report acknowledges the divide but is silent on what to do about it.
Thirdly the emphasis on targets and SLAs [service level agreements] which may be difficult to monitor and can be gamed.
And fourthly there is no reference to data, which effectively drives the business models of future digital connectivity, just as ARPU drove the business models in the old dispensation. Yet it is ignored.
Overall, rather than a bold break, this is an increase in detailed, line by line regulation, have Ofcom got the technical and operational resources to make it work before it’s too late?
All the measures are subject to further consultation and debate. And yet our digital infrastructure is critical and it is strategic and we have wasted five years in the policy wilderness. Ofcom will need government political cover to make this happen, but the Secretary of State’s mind is on Europe not the ducts and poles in his backyard. ®
Chi Onwurah, is the shadow digital minister. She was previously Head of Telecoms Technology at Ofcom.