Memorandum submitted by the Computing
Services and Software Association (CSSA)
1. In this response, CSSA continues to assert
the principles espoused in its original response prior to the
publication of the White Paper:
Developing a Consistent and Coherent
Regulatory Approach: promoting a uniform, consistent and non-sector
specific regulatory approach.
The Regulatory ApproachCompetition
Law: moving away from sector-specific regulation and towards general
The Regulatory ApproachContent:
ensuring that the converging industries are not subject to the
same regulation which is applied to the broadcasting industry.
Providing Access to All: developing
an inclusive information society.
2. At the outset, CSSA emphasises that successful
development of the knowledge economy depends on close co-operation
between industry and a range of government departments and agencies,
not just the DTI and DCMS. Therefore, we are keen to ensure that
the proposals for co- and self-regulation contained within the
White Paper are embraced by all relevant agencies of government.
3. CSSA welcomes the concept of OFCOM as
a recognition by the Government that the accelerated rate of convergence
between the broadcasting, telecommunications and information technology
(IT) sectors has altered many of the fundamental assumptions upon
which traditional regulatory structures have been based.
4. Moreover, CSSA also applauds the Government's
overarching objectives for the White Paper, namely:
To make the UK home to the most dynamic
and competitive communications and media market in the world.
To ensure universal access to a choice
of diverse services of the highest quality.
To ensure that citizens and consumers
5. CSSA believes that the introduction of
OFCOM with its prescribed limitations represents an important
opportunity in the UK's regulatory philosophy. One which reflects
an acceptance by the Government that the rapid growth of the Internet
took place within an environment which allowed the development
of Internet-related services to take place without any significant
regulatory interference and that a similar approach is needed
for the converging industries. It is important that OFCOM not
develop as a mere re-branding and perpetuation of regulatory functions
overtaken by technology, and should ensure that it demonstrates
from the start a greater responsiveness to users' concerns than
has often been the case with OFTEL.
6. However, CSSA is concerned that the interregnum
between the passage of legislation and the introduction of OFCOM
will create a climate of regulatory weakness, which powerful interests
could exploit for their own benefit. Moreover, CSSA is also concerned
that existing regulators such as OFTEL, RA and the ITC during
this period will effectively become lame ducks with regulatory
enforcement falling a distant second to need for individual regulators
to secure their own positions within this new environment.
7. CSSA believes this period of uncertainty
may also result in the loss of key skills with a high risk that
personnel within the existing regulators might be attracted to
other positions offering greater career certainty. Such a loss
of talented individuals would clearly erode OFCOM's credibility
before it has even begun work. The CSSA would be concerned were
OFCOM's interests to be a continuation of the marked imbalance
in the White Paper between broadcasting and other issues, which
might then lead to a low priority being given to the efficient
working of telecom markets in the UK and their huge contribution
to overall national global competitiveness.
8. Equally, unification of a number of disparate
regulators creates the possibility for tribal or territorial conflicts
to arise both before and after OFCOM comes into existence. In
particular, CSSA is anxious that regulators within the existing
structure do not view the intervening period as an opportunity
to strengthen their position in advance of their move over to
OFCOM at the expense of the new regulatory arrangements. If this
new structure is to be successful then flexibility and fluidity
must be paramount, therefore care must be taken to avoid the construction
of "little fiefdoms" which would inevitably result in
internal conflict and an external loss of confidence. The potential
for this problem also highlights the need for care in establishing
"who" OFCOM is, in terms of the delegation of regulatory
decisions and announcements. In CSSA's view, extensive delegation
beyond the proposed OFCOM board heightens the risk of tribal behaviour.
9. Therefore, CSSA calls upon the Government
and the existing regulators to work closely with industry during
this intervening period to ensure that transition arrangements,
including the transfer of key personnel, are as smooth as possible
and that poor regulatory implementation does not occur during
this period of flux.
10. CSSA welcomes the move away from sector-specific
rules for the converging industries especially for the merging
industries, which unlike the telecommunications and broadcasting
industries, are characterised by intensive competition, vigorous
price competition and broad consumer choice. This approach is
regarded as crucial if the Government is to achieve its three
main IT related priorities, namely: making the UK the global leader
in e-commerce by 2002; delivering 100 per cent of public services
electronically by 2005; and universal access to the Internet by
2005. CSSA believes that this approach will more than adequately
protect consumers whilst at the same time stimulate competition
within the converging industries.
11. CSSA hopes that the provision of concurrent
powers with the Office of Fair Trading to exercise the powers
contained in the Competition Act for the communications sectors
will signal the development of a set of principles which are uniform,
consistent, technology-neutral and able to react to future technological
12. However, it is important to note that
CSSA is uncomfortable with the assertion by some companies that
the proposed new regulatory structure will result in interference
by the regulator in the marketplace only when something has gone
wrong. CSSA believes this reactive rather than proactive approach
is inappropriate in oligopolistic market segments or where there
is existing evidence of significant market power. In these circumstances,
both Government and industry should acknowledge that pre-emptive
action by the regulator is sometimes not only desirable but crucial.
Over the last two years we have witnessed OFTEL reacting rather
than leading the push towards local loop unbundling, the result
has been uncertainty and a wholesale loss of confidence by both
the telecommunications industry and the wider user community in
the ability of the regulator to deliver a significant technological
benefit to both business and the citizen. There is clear evidence
that potential new entrants have been driven away. OFCOM must
have the power to act swiftly and decisively when it has to against
a dominant market player otherwise its ability to assist in the
implementation of positive and wide-ranging technological change
will be fatally comprised and undermined.
13. CSSA applauds the Government for resisting
temptation and recognising that the broadcasting and Internet
sectors should be dealt with differently when it comes to developing
a regulatory structure. Any explicit attempt to link these two
sectors together would have seriously damaged the development
of e-commerce in the UK and would have placed the UK at a significant
international disadvantage. Indeed, CSSA would welcome an explicit
statement from HM Government that it recognises the futility and
harm to British trading interests implicit in any Government's
attempting to regulate content on the Internet.
14. The recognition of this threat by the
Government and therefore the subsequent emphasis on industry co-regulation
through the work of the Internet Watch Foundation (IWF) should
be applauded. CSSA believes that organisations such as the IWF
represent the most appropriate mechanism for creating a safe and
secure environment for all ages within society to access the benefits
of the new technologies. CSSA is also supportive of the Government's
use of general criminal law to enforce content regulation on the
Internet and that within reason whatever is applicable "offline"
should also be enforceable "online".
15. It should also be noted that CSSA calls
on the Government to consult closely with industry and representative
organisations should it decide to establish a set of objectives
and principles which would apply to all content delivered by electronic
communications. The recent experience of the Regulation of Investigatory
Powers Act and the Electronic Communications Act demonstrates
the need for Government to establish close and productive working
relationships with industry.
16. The past year has not been a good one
for the achievement of the Government's objective to provide universal
access to the Internet by 2005. This overarching goal effectively
underpins the successful development of e-commerce in the UK and
the growth of eGovernment. Continuing problems over the unbundling
of the local loop and unmetered access to the Internet have severely
affected public confidence in the abilities of both Government
and industry to deliver the promised benefits of the information
age and to create an inclusive society. This must change.
17. CSSA welcomes the publication in January
this year of the OFTEL international benchmarking analysis that
confirms what users have been claiming for at least the last five
years with respect to the relative tariff levels in the UK, Germany
and the USA. CSSA recommends that OFCOM undertakes a regular international
benchmark of key telecom services to monitor the UK's international
18. For the regulatory authorities to assist
the creation of an inclusive environment where all citizens can
benefit from the digital age, regulatory policy should concentrate
on encouraging competition in emerging sectors and implementing
a consistent regulatory approach. The decision not to ban vertical
integration is welcome, and should permit telecom suppliers to
add new sources of revenue, not be exclusively dependent on line
charges, and so allow more vigorous competition in access pricing.
19. In terms of action items, CSSA believes
the single most important is to get UK organisations online and
using the technologies, information and knowledge that then become
available. By "online" we no longer mean via a low speed,
dial-up connection; that capability has been met; we must now
shift to providing high bandwidth, "always-on" connectivity.
20. To this end, CSSA suggests the Government
adopt clear targets for broadband availabilityto business
and other organisations, schools and citizens generally. The targets
should address availability in terms of both access and price,
as either will be a barrier to uptake. An acceptable "access"
metric might be that the service is capable of being used within
four weeks of order; pricing should reflect international benchmark
studies and UK should aim to fall below the OECD average in all
21. Suggested targets might be:
Minimum 0.5Mb/s access to 90 per
cent of UK businesses by July 2002
Minimum 2Mb/s access to 90 per cent
of UK businesses by December 2003
Minimum 10 Mb/s access to 95 per
cent of population by July 2005
22. The targets can and should be challenging:
technology is advancing rapidly and the targets themselves, in
an economy the size of the UK, will spur innovation.
23. These targets provide a clear focus
for investment by industry in infrastructure, development of applications
and deployment of services. Industry will then be left to do what
it does best: market these services and capabilities. This is
the best possible "awareness" campaign.
24. However, CSSA is concerned that the
goal of universal high bandwidth could be lost among the regulatory
flux which will inevitably occur over the next couple of years
before OFCOM comes into existence. We have already seen the effect
an intransigent dominant player can have on the pace of local
loop unbundling and CSSA would not want to see such a scenario
repeated again. Therefore CSSA argues for the strictest possible
monitoring of the deployment of bandwidth deployment with consideration
given to the introduction of a Broadband Universal Service Obligation
should the pace of change fall below an acceptable level. For
CSSA and its members it is impossible to overstate the importance
universal broadband roll-out means for the deployment of high
quality services and the benefits these would bring to not just
business but also Government and the citizen as well.
The regulatory structure proposed in the White
Paper meets many of the concerns CSSA had regarding the introduction
of a system which would affect the development of the emerging
industries. However CSSA does remain concerned that the interregnum
before the introduction of OFCOM could present an unacceptable
threat to the future growth of the UK's information economy. While
the targets for broadband roll-out are not sufficiently aggressive
enough to encourage the development of a fully inclusive society.
This latter goal of inclusivity must remain paramount in the thoughts
of both Government and industry for the foreseeable future.