The Channel

Boost Ofcom's powers and fix mobile market woes, Three and TalkTalk tell MPs

Funnily enough, BT really doesn't agree

By Kat Hall


Mobile telcos Three and TalkTalk told MPs today they want more power to go to Ofcom in the forthcoming Digital Economy Bill, in order to rebalance the market away from the dominance of BT/EE.

Speaking at an evidence hearing on the forthcoming Digital Economy Bill, TalkTalk chief exec Dido Harding said: "I think inherently there are a lot of provisions within this Bill that are very good and pro consumer. And I would encourage the committee to look very favourably to them."

One such measure would be proposals to make the basis on which operators can legally challenge Ofcom decisions more difficult.

"A stronger regulator that can get things done and decisions that are taken much faster, without using up 50 per cent of the appeals tribunal’s time," said Harding.

"I think the way you ensure there is sufficient competition and have choice is to have a very strong regulator, that doesn’t believe any of us actually when we say 'trust us, we will be OK, we will do it for you.'"

David Dyson, head of Three, agreed: “Ofcom needs more powers to make decisions based on consumer interests.”

"We are the bottom of the class when it comes to switching [between providers],” he said. “I think Papua New Guinea is the only one who ranks alongside this. Ofcom tried to legislate on this five years ago and it got litigated against by Vodafone on a technicality and since then it’s been kicked into the long grass.”

Between 2008-2013, Ofcom accounted for 50 per cent of all cases in the competition appeals tribunal, because the standard of appeal in the telecoms sector is much lower in that other sector, said Harding. "What that means is we have a very cautious regulator."

"BT has managed to raise $45m dollars from a private equity fund to fund their litigation pot. Ofcom spent £10m in the last two years on litigation," said Harding in reference to a previous story revealed by The Register.

Dyson agreed that Ofcom needs greater powers to avoid being litigated against: "Three is supportive of the Bill proposing to raise standard of appeal to those in other industries."

Unsurprisingly Sean Williams, managing director of strategy at BT group, disagreed: "It is not true to say everything gets appealed. BT did not appeal a charge control this year, which tool £1bn of profitability out of BT – out of Openreach, in fact – over a three year period. We did not appeal a similar charge control which did a similar thing, or the one before either.

He added that BT was an "extremely powerful regulator" that is accountable to nobody but the competition appeal tribunal.

"Ofcom makes many impactful decisions, and that is why it gets so many decisions appealed," he said.

During the hearing Williams also said that plans for a Universal Service Obligation of 10Mbps was "sufficient". He said this was something BT could achieve without public funding.

"We are on the way to doing that and should have coverage to 95 per cent of country by next year... we should be able to do it to 99 per cent, but the last bit will be by satellite and 4G."

However, Harding said MPs should be wary of such claims.

"I think you should be very worried when you hear large incumbents saying, 'set up a USO but don’t let it get too far ahead of what we have in our business case'. That is not what business should be doing. Businesses will invest more if they are scared their customers will go elsewhere. Not because they have been given a promise by government."

She said it ought to be funded by the private sector, but imposed on a structurally separated Openreach.

Dyson added: "I also think you should be very worried when you hear statements from BT that is planning to take profits from the duct access and reinvest that in cross-subsidising mobile access that is just fundamentally wrong and not supportive of competition."

Both Three and TalkTalk are calling on Ofcom to slap a 30 per cent cap on operators bidding in the next spectrum auction – a move that would limit the proportion of airwaves an operator can own. ®

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