Memorandum submitted by the Office of
Communications (Ofcom)
OFCOM: PREPAREDNESS AND HANDOVER
INTRODUCTION
This memorandum briefly highlights the key milestones
in Ofcom's development since the Select Committee first suggested
the need for a single, converged regulator for the communications
sector; the activity which has taken place during 2003 to prepare
to assume its regulatory responsibilities; current state of preparedness;
and Ofcom's prospective work programme for 2004.
KEY MILESTONES
In mid-2001 the Government pledged that Ofcom,
as a single regulator to replace the Broadcasting Standards Commission,
the Independent Television Commission, Oftel, the Radio Authority
and the Radiocommunications Agency, would be up and running before
the end of 2003.
The Office of Communications Act 2002 permitted
Ofcom to be established as a preparatory body to enable a seamless
handover of responsibilities from the legacy regulators. The Chairman,
Lord Currie, was appointed in August 2002. The part-time members
of the Ofcom Board were appointed between September and December
2002.
At the same time—and recognising that
there would be a period of dual running between Ofcom and the
legacy regulators—Ofcom was given a launch budget of £52.3
million. This budget, which was to cover Ofcom's set-up costs
and to meet the outstanding liabilities of the existing regulators,
was provided by the DTI, with the approval of HM Treasury, in
the form of a loan, repayable over five years, on standard Treasury
loan terms. Ofcom was classified as a Public Corporation, independent
as a regulator within its Statutory Remit, accountable to Parliament
and with a high degree of financial and operational autonomy within
the overall financial ceiling agreed with HM Treasury.
Ofcom's Chief Executive, Stephen Carter was
appointed in February 2003. The other two full time Members of
the Board and the senior executive team were appointed in April.
At the same time the Content Board was appointed, in shadow form
pending Royal Assent to the Communications Bill.
In parallel, the Communications Bill was completing
its passage through Parliament during which it was subject to
extensive debate and amendment right up to the point of Royal
Assent on 17 July. That left five months for Ofcom to become fully
operational before the end of the year to meet the Government's
undertaking. This has been a challenging timetable.
The Communications Act 2003 has given Ofcom
263 functions and duties compared with the 128 duties which the
existing regulators have had under the previous legislation.
PREPARATION DURING
2003
In keeping with Parliament's original vision,
the Ofcom Board has sought to establish a genuinely converged,
genuinely new regulator, both in cultural and organisational terms.
This has involved:
— a new organisational structure which
does away with the old sector based silos;
— a single headquarters location with
a single set of Information Systems and Communications Technology,
and a parallel approach in the Nations and Regions; and
— as far as possible, a single set
of Terms and Conditions for employees, which replace an "entitlement"
culture where progress is based on seniority with a performance
culture.
A launch team of 60 people, including external
project management specialists, have delivered this programme
over the past nine months.
During the Summer, Ofcom's structure was established
around three main Groups: Content and Competition which comprises
Content and Standards including consumer issues and Competition
and Markets; Strategy and Market Developments which is the strategic,
technology and research centre for Ofcom, and Operations, which
includes the engineering field force and a unified Contact Centre
which will handle the 250,000 enquiries and contacts with the
public across the Communications Sector which Ofcom expects to
receive each year.
Staff from existing regulators have been transferred
to Ofcom under so-called TUPE-terms. They have therefore had to
be matched individually into jobs in the new structure. This process
was completed in October. At the same time some 80 external appointments
have been made to bring in new skills. The remaining 60 or so
external appointments will come on stream in the first quarter
of 2004.
The existing regulators employed 1,152 staff.
When fully staffed up, Ofcom will have a headcount of 880—a
23% reduction. We have also changed the skills mix, reducing the
number of administrative, process and support staff and strengthening
Ofcom's capabilities in Research, Technology, Economics, Strategy
and Competition Law.
The net result of these changes is that on a
like-for-like basis, Ofcom will cost some 5% less than the regulators
it replaces (though it will of course need in addition to repay
the start-up loan. Ofcom's costs will also reflect an extra £8
million a year in respect of the new, additional duties given
to Ofcom by the Communications Act and VAT which for the first
time becomes payable on Ofcom's external expenditure to discharge
its telecommunications and spectrum management functions).
The new, unified Terms and Conditions of service
have been voluntarily taken up by more than 75% of colleagues
joining Ofcom.
The core work to establish Ofcom has involved
nine parallel projects with 130 critical milestones and 2,200
separate open tasks.
Ofcom's London-based headquarters staff completed
the move into the re-furbished Riverside House on the South Bank
on 9 December, one week ahead of forecast and under budget.
OFCOM'S
CURRENT STATE
OF PREPAREDNESS
As Vesting Day (29 December) has approached,
the existing regulators have worked increasingly closely with
Ofcom on current policy and regulatory issues. Formal statutory
responsibility rests with the existing Regulators until 28 December.
But decisions and appointments have increasingly been made jointly.
All the staff transferring to Ofcom are now based in Ofcom's premises,
with small handover staffs remaining with the existing regulators.
Ofcom has therefore already in effect "started".
It has:
— published its guidelines on Consultations
with the public and industry (including a commitment to secure
the Plain English Campaign "Crystal Mark" for all Consultations
with the public);
— published our Regulatory Principles;
— completed the eight necessary Consultations
to conclude the Technical Transposition of existing licences etc.
to comply with the terms of the Communications Act, ahead of Vesting
Day;
— with the ITC and OFT developed in
detail, and subsequently implemented, the Competition Commission's
remedies to accompany the Carlton-Granada merger decision;
— consulted on the criteria for creating
effective self-regulatory and co-regulation schemes (including
the specific proposal for co-regulation in broadcast advertising);
— consulted on the detailed introduction
of trading in the wireless spectrum;
— launched the Statutory Public Service
Broadcasting Review; and
— and launched a Strategic Review of
the Telecommunications Market.
In terms of activity in the Nations and English
Regions, sites are being identified for Ofcom's converged offices
in Cardiff, Glasgow and Belfast. Two sites have also been identified
(Haydock in Lancashire and Whyteleafe on the edge of London) as
the English administrative bases for Ofcom's engineering field
force. The recruitment process for the Directors of Nations and
Regions is well advanced. Following helpful discussions with the
Territorial Offices and useful input from the Devolved Administrations,
the recruitment process for the National Advisory Committees is
underway.
The appointment of Colette Bowe as the Chair
of the Consumer Panel was announced on 8 December. Appointment
of the remaining members, which are also subject to the approval
of the Secretaries of State, is being undertaken on a timescale
to enable the Consumer Panel to meet in January.
A recruitment process is similarly underway
for the members of the Advisory Committee on Older and Disabled
People.
OFCOM'S
FORTHCOMING ACTIVITY
During January, Ofcom will publish and consult
stakeholders on its Business Plan for 2004-05. During 2004, Ofcom
will be undertaking the following Policy projects:
— Spectrum, take-up and transition
issues in digital switchover.
— Review of digital radio.
— New commercial radio licensing framework.
— Issue new digital TV licences.
— Review licence terms of C3 and 5.
— Review of local loop unbundling.
— Network charge control review.
— Review of Universal Service Obligation.
— Implement spectrum trading and new
pricing regime.
— Prepare for and influence international
spectrum policy, including preparations for 2007.
December 2003
| 
