To suggest that ‘speculation is rife’ would, outside of the regulatory cottage industry, probably be considered an overstatement not altogether untypical of bureaucratic bodies striving to sustain the perceived value of their existence.

Yet even before industry activists were reminded during CMA’s 50^th anniversary dinner of the incumbent’s retirement next March, the notion of a Green Paper to revise the Ofcom-founding Communications Acts (2002 and 2003) had long been trailed in Westminster.

The formal job-ad for the next Chairman of Ofcom may perhaps have been noted by the wider Sunday-Times-reading world of business.  The trenchant observations on regulatory leadership in the Caio review of next generation broadband access may have been drowned out by the crashing waves of a full scale banking storm but that turmoil has itself focussed wider attention on the roles, performances and expectations of regulatory bodies.

The storms now raging have very effectively revived long-suppressed questions about the limitations and inadequacies of lightly-touched market regulation.  These concerns are by no means limited to the exposure of the financial services industry.  By virtue of the timing of the regime change and a new-found appreciation of the requirements for more-proactive regulatory leadership to serve some higher objectives, the current search for the next Chairman of Ofcom has become a test of intellectual rigour and the ability of government and major consumers to identify what will be expected of this key regulatory body in a post-crunch society - not just for next year but for well beyond the next general election. 

The foundations of Ofcom in 2003 were based on the notion of technological and commercial convergence of what had been (before packetisation) different strands of communications and multi-media services.  The high ground, an enticing blend of media magic and advanced technologies for a post-industrial society, seemed altogether more interesting than the fundamentals of utility infrastructures.  These foundations may now need to be re-examined, not least because the progress of the convergence agenda has been held back by the failures to encourage investment, innovation and new entrants in basic connectivity.

Broadband Quality

The cosy, oft-repeated (some would say arrogant) notion that all is well in Broadband UK encountered a comprehensive reality check in a recent global survey of broadband quality.  Like other refreshing examples of research rooted in reality, this survey differed from the usual run of comparisons of advertised speeds and prices.  With a massive test and measurement programme it looked instead at what consumers actually get for their money.

The world is already weary of make-believe marketing.  The researchers took a view on what levels of quality could be considered adequate now and in the next 3-5 years.  They looked beyond headline download speeds and took into account the upload and latency characteristics that are increasingly relevant for next generation living and working.

On these composite measures of broadband quality the UK experience is barely making today’s grade.  For European leadership we need to look to countries such as Sweden and the Netherlands for signs of reasonable progress.

It is not coincidental that in these countries the incumbent Telco’s have ceded that independent locally managed ‘Open Access’ networks are a welcome initiative.  In both countries the regulator has encouraged incumbents to collaborate with these new players and in the Netherlands KPN has taken a 41% stake in the company at the heart of the fast-growing OnsNet portfolio of city/community networks.   

This is a far cry from the regulatory timidity that allows incumbents to defend their innovation-inhibiting monopolies long beyond the expiry of any ‘national champion’ justification.  It’s a far cry from the complacency that allows terms such as ‘Broadband’ and ‘Open Access’ to be redefined, diluted and detuned to some ‘best efforts’ nod to avoid upsetting legacy positions.

It is a fair bet that regulatory bodies across all sectors will now be expected to demonstrate an ability to serve some rather more forward-looking higher purpose than picking up the pieces after a series of consultations to determine if most sector stakeholders (and occasionally their business consumers) can perhaps agree that the pieces really are, probably, broken …… with the proviso, of course, that sticking them back together will be the subject of further consultations.

Responsibility Wriggle-Room ?

A pragmatic approach to a new era of regulatory leadership is to reconsider the foundation thinking that pervaded expectations prior to the dot.com crash – that bursting bubble of hype that heralded Ofcom’s arrival.  It is already evident that some of those annoying overlaps  between regulatory bodies may provide opportunities for load-shedding in the interests of focussing attention on the essential, if less glamorous, basics.

If the telecoms industry is guilty of marketing over-statements do we not have an advertising standards authority?  If significant market power is too closely held do we not already have regulators for fair trading and competition?   

Consumer watchdogs do a very good job at some distance from the dogs they are watching; they are certainly not in the business of also feeding the beasts.

No-one in recent times has enthused much about spectrum trading.  The supposed windfall from the 3G licences has turned out to be a mighty grim bargain; a block on innovation from new, would-be, market entrants, and not a penny of that £23bn devoted to remedying the inadequacies of rural telecoms infrastructure provisions or better broadband.

Even the USA seems to be ahead of UK thinking in attempting to remedy their global standing in a broadband-connected world. Their Broadband Data Improvement Act (S 1492) was carried into law on October 10th.  The new law directs the FCC to conduct inquiries into the deployment of advanced telecommunications services on an annual basis and establishes a matching grant program for state non-profit and public-private broadband tracking projects.

Moreover it is increasingly evident that telecoms regulation at the pan-European level is delivering more timely and effective benefits for businesses and consumers.  This is especially true in areas such as spectrum management and mobile networks where radio waves refuse to respect national boundaries.  Roaming customers are not much interested in narrowly-drawn geographic market definitions.

If the current banking crisis tells us anything it is that our national regulators set up to satisfy national politics are not sufficiently in tune with a globally interconnected world.

Post-Crunch Regulatory Realities 

So the next Chairman of Ofcom will be steering a ship in uncharted waters with different but as yet undefined navigational tools.

The ship will certainly not be at the top end of the luxury cruise market but more likely a working coastal cargo-boat delivering basic and essential utility infrastructure aid to under-nourished communities previously badly served by un-moderated market economics.

Let’s hope the incoming skipper can assemble a crew that will keep a better lookout, survive the storms ahead and not be distracted by the media sirens.

___________________________

NOTES:

The study 'Broadband Quality Scores' was undertaken by Said Business School, Oxford and Universidad de Oviedo, Spain.  The study was sponsored by Cisco, September 2008. 

See also:

The BERR/Caio Review 'The Next Phase of Broadband UK: action now for long term competitiveness', September 2008, (PDF file) can be downloaded from http://www.berr.gov.uk/files/file47788.pdf 

and 'Fibre delivers much more than more than faster connections' - a commentary on the FTTH plans for Titanic Quarter, Belfast.

This editorial was prepared for the Communications Management Association as a contribution towards discussion of emergent policy positions. It should not be read as a definitive statement of CMA policy.  The CMA is part of the BCS group.  The CMA's UK membership represents business consumers of networked services and products - an annual aggregate expenditure of around £13bn.