Spectrum

Communication Regulation in the UK
International Seminar
Electronic Communication Regulatory
Framework in the Era of Convergence
10 November 2010
Vince Affleck
Director International, ITU & OECD, Ofcom
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Index
1. Ofcom – A converged regulator
2. Ofcom’s duties
3. Regulation of Electronic Communication networks/services
4. Content Regulation
5. Spectrum
6. Future programme
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1. Ofcom - a converged regulator
2
Ofcom formed from 5 previous regulators
Spectrum management
Broadcasting standards
Telecoms regulation
Television regulation
Radio regulation
3
Convergence in communications sector
• Platform level convergence
– Analogue to digital – VOIP
– Fixed and wireless combinations
• Service level convergence
– TV over broadband
– Fixed and mobile
• Device convergence
– Single fixed and mobile telephone handsets
– PCs providing voice as well as internet
– Mobile TV
Bluetooth
• Industry convergence
– Consolidation within / across segments
Hub
Wi-Fi
4
Previously adjacent markets are competing
Terrestrial analogue broadcasting
Web streamed and on demand – DSL and fibre
Digital satellite, cable, terrestrial
Mobile TV
5
Ofcom Board
Background/
Experience
Appointment
Process
Norman
Blackwell
(Non Exec)
Millie
Banerjee
(Non Exec)
Mike
McTighe
(Non Exec)
Economist
/Finance
(Private/
Public)
Telecoms
(Private/
Public)
Telecoms
(Private)
Tim
Philip
Gardam
Graf
(Non Exec) Deputy Chair
(Non Exec)
B’casting
(Private/
Public)
Colette
Bowe
Chairman
(Non Exec)
Newspaper Ind Economist
(Priv/ate/
(Private/
Public)
Public)
Non-executive members are appointed by a representative
from BIS + DCMS + Ofcom Chairman + Independent
assessor
Chairman
appointed by a
representative
from BIS +
DCMS +
Independent
assessor
Ed
Richards
CEO
(Executive)
Jill
Ainscough
(Executive)
Broadcasting Broadcasting
(Private/
(Private)
Public)
Stuart
McIntosh
(Executive)
Telecoms
(Private/
Public)
CEO appointed Executive Members
by Chairman
appointed by
Chairman and Non
(Subject to
Executives
approval by
BIS+ DCMS)
The Board‟s policy & technical expertise across the sector
and independent appointment process
Ofcom: funding and staffing
•
Funds raised by industry licence fees
•
Ofcom retains a % of revenue from spectrum licenses
rest passed to Treasury
•
870 staff in Ofcom (from 1152 staff in legacy
regulators)
•
Being reduced to 700 from April 2011
7
Ofcom: Governance
•
Statutory public corporation – independent of
Government
•
Ofcom staff are public servants (not civil servants)
•
Board Structure
•
Board subject to Code of Ethics & Standards
•
Duties to consult, publish annual plan and reports
•
Decisions appealable to specialist tribunal (CAT) that
sets standards for all UK regulators
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Ofcom: Accountability
• Directly accountable to Parliament, not to a Ministry
• Publication of regular reports available to the public
• Annual Report to Parliament e.g. budget
• Annual Plan first published in draft form and consulted on
• All decisions and regulations are published
• All decisions and regulations are duly reasoned and open to judicial
review
• Regular consultation with stakeholders
• Extensive research to support regulatory activity
• Freedom of Information Act applies
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2. Ofcom‟s duties
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Ofcom: main duties
To ensure:
• the UK has a wide range of electronic communications services, including
high-speed services such as broadband
• a wide range of high-quality television and radio programmes are provided,
appealing to a range of tastes and interests
• television and radio services are provided by a range of different organisations
•
people who watch television and listen to the radio are protected from harmful
or offensive material
• people are protected from being treated unfairly in television and radio
programmes, and from having their privacy invaded
• the radio spectrum is used in the most effective way
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Ofcom: what we do not do
We are not responsible for regulating:
• disputes between consumers and telecoms providers
• premium-rate services
• the content of television and radio adverts
• the Internet
• newspapers and magazines
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Ofcom‟s five main objectives
Support and
protect consumers
across the UK
Secure citizen
interests (as
guided by
Parliament)
Promote
competition and
innovation
Maintain and
strengthen the
communications
infrastructure of
the UK
Simplify and
reduce regulation,
while maximising
value for money
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3. Regulation of Electronic Communication networks
and services
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Regulating electronic communication networks and
services
We regulate by imposing obligations on SMP providers of networks and
services regarding:
• Access to bottleneck facilities
• Interconnection
• Universal service
Additionally, we have:
• concurrent powers to apply competition law
Regulating electronic communication
networks and services
Market Review approach
1) Define markets
• Identify relevant market
• Use competition law/economic principles [SSNIP test]
2) Assessment of market power
• Does an operator (or operators jointly) have significant market power (SMP)?
• Ability to profitably raise price and behave independently of competitors and consumers
• Market share, barriers to entry/expansion, switching costs, are key factors
• Absence of market power means effective competition in the market
3) Impose regulation (“remedies”)
• Only on operators found to have SMP, and where ex post competition law cannot
address issue
• Consider range of possible remedies, from light (transparency) to heavy (access, price
control)
• Should be proportionate and appropriate – address the competition problem in the least
interventionist way, and take account of relevant trade-offs
Next Generation Access
• BT has SMP in wholesale broadband access market
• BT offers high speed broadband access services over DSL
• In order to provide more advanced services, get higher speeds, BT is
rolling out fibre into the access network
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NGA will support new and improved applications
Services that may require higher speeds
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NGA: regulatory issues
Investment challenges
Uncertainty surrounds:
• business case for investment
• designing and building networks that support
super-fast broadband services
• how the regulatory environment affects
investment
Competition challenges
Questions around:
• How to secure competition that will bring the
most benefits to consumers
• what implications there are for existing
competition
• how the can good consumer outcomes be
secured
Regulatory approaches must balance investment and competition
• Wholesale „active access‟ products to deliver widespread investment and competition
• Options for effective and sustainable competition deeper in the network though „passive access‟
• Flexible pricing approaches that reflect risks
• Clear and well managed path to transition
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Regulation of NGA
• Passive products will not work everywhere.
Active products offer the scope for competition
more widely
• In future these can support more innovation and
differentiation, but will still have drawbacks
Passive Line Access
Coppe
r or
Fibre
Customer
Street
Cabinet
Fibre
Local
Exchange
Active Line
Access
Metro
Node
Active Line
Access
Core Network
• High quality active products are fundamental to
delivering competition
Active Line
Access
Active Line Access
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NGA: Ofcom decision
•
•
•
BT required to offer an active wholesale access service (VULA)
VULA is :
–
Virtual Unbundled Local Access
–
Similar to Local Loop Unbundling in PSTN network
Pricing flexibility to reflect risk
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4. Content Regulation
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Purposes of content regulation
• Ensuring a wide range of TV and radio services of
high quality and wide appeal
• Maintaining plurality in the provision of broadcasting
• Applying adequate protection for audiences against
offensive or harmful material
• Applying adequate protection for members of the
public against unfairness or the infringement of
privacy
Regulating for Quality
Regulating to Protect
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Television content regulation achieves quality and
protection goals through a map of rules and quotas
Quality
and
Plurality
Protection
(Harm, Offence, Privacy, Fairness)
• PSB remits and
BBC service
licences
• Consolidation and
cross-ownership
controls
• Advertising
minutage and
scheduling limits
• Independent
production quotas
• Genre output
quotas
• C4
• Accessibility
quotas (e.g. for
subtitling)
Codes to define:
• Content standards for
programmes and for
advertising
• Requirement for clear
separation of advertising
from programmes
• Guidelines on fairness and
respect for privacy in
programming
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Ofcom regulates broadcast content through
licence conditions
•
Communications Act 2003 requires Ofcom to set standards for the content of
programmes and advertisements
•
Standards contained in a series of Codes of Practice
•
Ofcom licences all commercial television broadcasters - Includes terrestrial
(commercial public service channels), satellite and cable. BBC remains as main
public service channel. Not licensed by Ofcom
•
License conditions are a “Soft law” - not legal procedures, but licensees must
comply
•
Duty on broadcasters to ensure:
– Wide range of programmes
– High quality programmes
– Appeal to variety of tastes and interests
– Effective competition in provision of services
Licensee obligations
•
Licensees must comply with Codes of Practice
– Broadcasting Code: standards for programme content
– Advertising Standards Code: standards for content of advertisements
– Rules on the Amount and Distribution of Advertising
•
If licensees do not comply, Ofcom can impose a range of penalties
– Published adjudication
– Broadcast apology
– Financial penalty
– Revocation of licence
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The Content Board: composition
Composition
•
Chair is a non-executive member of Main Board
•
Representatives of diverse backgrounds across UK, including the regions
•
Other content committees include:
– Fairness Committee – judges fairness and privacy cases,
– Sanctions Committee – sets level of sanctions for breaches of the Code
– Radio Licensing Committee – awards commercial and community licences
The Content Board: Role and Remit
•
The Ofcom Board seeks advice and recommendations from the Content Board on
any content-related aspects of decisions it has reserved for itself. All other contentrelated decisions are delegated to the Content Board.
•
The Content Board serves as Ofcom’s primary forum for the regulation of television
and radio quality and standards. It is charged with understanding, analysing and
championing the voices and interest of the viewer, the listener and citizen.
•
It examines issues where the citizen interest extends beyond the consumer
interest, with focus on those aspects of the public interest which competition and
market forces do not reach.
The Broadcasting Code
Principles
• Broadcasters and audience take responsibility
• Freedom of expression
• Protection for under-18s
– safeguard those too young to make fully informed choices for themselves
Areas Covered
• Impartiality and accuracy in news and current affairs
• Special impartiality rules at time of elections or referendums
• Fairness and Privacy
• Programme sponsorship and commercial influence (advertising regulation
delegated to the ASA)
• Harm and offence
• Crime
• Religion
Cross platform regulation and responsibilities
FREE TO AIR
TV
PAY TV
VIDEO ON
DEMAND
OTHER AV
CONTENT
Content
regulation in
Context
(e.g. watershed)
Navigation
standards
(EPGs, rating,
watershed)
Navigation
standards
and access
controls (pins)
Choice of
control tools
(filtering,
blocking, safe
search)
Consumer responsibility
Regulatory Controls
MEDIA LITERACY
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5. Spectrum
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Ways of Managing spectrum
Command & control
All decisions made by
the regulator
Approach that has
historically been adopted
for over 90% of the
spectrum
Market mechanisms
Decisions made in the
market
Licence-exemption
Regulator sets rules,
but users not licensed
Preferred approach in
UK: Trading,
liberalisation, technology
& use neutrality
Approach currently
adopted for 9% of
spectrum. Some argue
for radical increase
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Spectrum: Ofcom‟s regulatory principles
•
Spectrum should be free of technology, policy and usage
constraints as far as possible
•
It should be simple and transparent for licence holders to change
the ownership and use of spectrum
•
Rights of spectrum users should be clearly defined and users
should feel comfortable that they will not be changed without
good cause
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Spectrum pricing
• Is more effective than some other constraints (e.g. roll-out obligations which can be difficult to
enforce)
– If spectrum users have to pay a market rate for spectrum they will be more incentivised to
use it efficiently
– This may mean rolling out services more quickly and widely in order to maximise returns
on investment
• Discourages spectrum hoarding
– A market based price is likely to make speculative acquisitions less attractive
– Where spectrum was not bought through a market mechanism, but was awarded
administratively, the subsequent application of incentive pricing may then encourage the
release of spectrum that is being underutilised
• Ofcom’s role is not to raise revenue
 Reduces spectrum scarcity thus promoting innovation and competition
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Major awards pending
Amount
2.6GHz
205 MHz
800 Mhz (Digital dividend)
128 MHz
3.4-3.6GHz
160 MHz
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6. Future Programme
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Priorities for 2010/11
Consumer & citizen
• Broadband and mobile phone
not-spots
• Encourage consumers to
take up and use broadband
• Ensure consumers can
switch between
communications providers
• Update content regulation to
meet the changing needs of
audiences
Competition
• Implement regulation to
support effective
competition and efficient
investment in super-fast
broadband
• Ensure fair and effective
competition in pay TV
Infrastructure & spectrum
• Ensure wireless services for
the London 2012 Olympic and
Paralympic Games will be
delivered
• Start successful clearance of
800Mhz band to create
opportunities for new services
• Prepare plans for release of
spectrum for mobile
broadband
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Ongoing work areas for 2010/11
Consumer & citizen
Competition
• Ensure availability, take-up
and effective use of
communications services
• Promote effective
competition in fixed and
mobile telecoms
• Review and promote
available consumer
information
• Review regulatory rules
that affect funding of
content
• Protect consumers and
audiences from harm and
unfair practices
• Enforce competition and
resolve disputes
Infrastructure & spectrum
• Support digital switchover
• Promote efficient allocation
of spectrum
• Develop stable international
framework to underpin
spectrum awards
programme
• Understand network
capabilities
• Understand experiences of
business consumers
Identify opportunities for deregulation and simplification
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