Ofcom Sidelined in Broadband Review
Warner, Jeremy, The Independent (London, England)
Francesco Caio, former chief executive of Cable & Wireless, is no doubt a talented chap who knows an awful lot about modern telecommunications. The future of broadband Britain is an equally worthy cause.
Yet is it really necessary for the Department of Business, Enterprise and Regulatory Reform to order an independent review into why no one is prepared to make the investment necessary to ensure that 100Mbps of bandwidth or more is streamed into everyone's home and business?
What's the point of Ofcom, the communications regulator established at huge cost to the taxpayer and the industries it regulates, if it is not to address issues of precisely this sort?
Or perhaps Shriti Vadera, the business and competition minister who seems to be in charge of the new review, and her ultimate masters in Downing Street, don't have any confidence any longer in Ofcom's ability to find solutions.
The answer to the question the review sets out to establish is in any case fairly obvious. Britain has one of the most competitive telecommunications and broadband industries in the world, but that also makes it too fragmented for the huge infrastructure investment necessary to ensure Britain is fully set up for Web 2.00 and Web 3.00.
The Government is hoist on its own petard. High levels of competition have resulted in some of the lowest broadband prices in the world, but also an environment in which there is no one with the possible exception of BT with the financial muscle necessary for the task of rewiring the whole country with fibre optic cable.
BT won't do it because it doesn't trust the regulator to give the rate of return necessary to justify the investment. In any case, it is not convinced that people would be prepared to pay for the infrastructure even if it its price were underwritten.
Other countries such as France and Germany which seem to be ahead of Britain in rolling out the necessary infrastructure have got there before us because a more statist approach has been adopted, with incumbent telecoms players allowed to charge high prices to invest in tomorrow's technology.
The issue of how to persuade BT to invest in a twenty first century infrastructure is as old as New Labour itself. Before he came to power, Tony Blair signed a Faustian Pact with BT's then chairman, Sir Iain Vallance, under which BT would indeed make the necessary investment in fibre optic infrastructure in return for various regulatory concessions, including a level playing field with cable on pay TV. Once in power, the arrangement was quietly dropped. The imposition of a windfall profits tax on BT drove Sir Iain into such a rage with his new political friends that he vowed never to vote Labour again. There was certainly no question of betting the company on a twenty first century infrastructure after that.
Nor would his successors be so rash as to commit to a national programme of investment without guaranteed arrangements on rates of return which would undermine present, high levels of competition in the market for broadband.
Meanwhile, Ofcom is left twiddling its thumbs wondering whether it has been sidelined. Ofcom is these days run by the person who, as policy adviser on media and telecoms to Tony Blair, recommended the establishment of this monstrous communications regulator in the first place, Ed Richards. He created his own job.
It was never obvious why you would want to combine content and infrastructure regulation under one roof, and the more time that elapses, the less obvious it becomes. Indeed, it is sometimes hard to work out what the purpose of Ofcom is at all, with alternative competition regulators making all the running on issues such as the BSkyB stake in ITV.
The old Oftel, a reasonably effective telecoms regulator while it lasted, seems to have vanished without trace since being subsumed into Ofcom, which is perhaps why Mr Richards has been frozen out of the current review. …