Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 100-119)


2 MAY 2006

  Q100  Mr Evans: You do not think that the main operators are making excessive profits because of this international roaming rip-off?

  Lord Currie: No, I think they are making the pricing above cost in that particular service delivery but that, as Stephen said, is offset by lower prices elsewhere. Overall I do not think you would argue that the mobile companies are making excess profits, but the fact that these cost subsidies may be inappropriate is something that concerns us. One of the reasons it may have happened is that in the past a majority or a very large part of international roaming was business-related, but that is changing quite significantly and that is a structural shift in the market that calls for shifts in pricing ranges.

  Q101  Mr Evans: Can I ask you both, have you had the operators before you? Have you discussed with them the international roaming charges and have you asked them to reduce their prices and, if so, what did they say to you?

  Mr Carter: Yes, yes, yes and "We are looking at it extremely closely."

  Q102  Mr Evans: So why have they not done it?

  Mr Carter: Whilst I would accept the comment made by the gentleman on the left that international roaming as a service has been available for some time and so these high prices have been in the market for some time,I think my Chairman's point is a very valid one that one of the consequences of cheaper air travel and increasing travel is the visibility and the penetration of pre-pay mobile services, and the visibility of expensive international roaming has only really come to the fore in the last two or three years and there is no doubt in my mind that the mobile network operators have been slow off the mark in dealing with that. And as I made an observation to one of them a couple of months ago it is a sorry state of affairs when European politicians or domestic politicians are more in touch with your customers than you are. So I agree with the point. But since the European initiative, which is actually relatively recently, the level of engagement has accelerated and, as I say, I think we will see some significant progress over the next six to nine months.

  Chairman: A somewhat unusual position for politicians to be in, I accept that. This is a very interesting area, you can see the passions but we must move on because there are several areas to cover.

  Q103  Rob Marris: I have one final question on the area, Chairman. Are you pursuing this issue in series or in parallel? That is, if the European multilateral approach breaks down and you have a plan B that you are already working on, are you then going to turn around and say, "Oh, it has broken down, perhaps we had better look at the unilateral approach in the UK"?

  Mr Carter: Both.

  Q104  Rob Marris: So you are doing it in parallel. On 3G, is it a bust or not? People have paid a lot of money for these licences; take-up is very slow; do you think it was a commercially wise decision for the companies to make that huge investment? The reason I ask, before you say "That is a commercial decision", is because we have been talking about release of spectrum on re-platforming and all those kind of issues that we talked about on the CMS kind of things, but what is going to happen when those auctions take place and what kind of approach do you think those bidders will take to what happened on the 3G stuff where take-up has been slower than most commentators expected?

  Lord Currie: My guess is that they will be rather more aware of the risks this time around than they were last time and I think that will affect the types of bids we see. Clearly that does not alter the fact that an auction approach to releasing the spectrum makes sense. I do not think that the Chancellor can expect the bonus that he benefited from back then.

  Q105  Rob Marris: Given what we also talked about with Mr Clapham about broadband take-up and so on, does it disappoint Ofcom that the 3G take-up has been lower than had been forecast?

  Lord Currie: Disappointed? I think we are talking about a new technology and new technologies sometimes succeed beyond any reasonable expectation and sometimes fail. It is not for us to comment whether this is a failed technology or whether take-up is just somewhat slower, but in a dynamic market of the kind we have you do expect some big successes and you also expect some failures. It is possible that 3G is in that category, but I really would not want to speculate. It is really for the commercial players themselves to make those judgments.

  Q106  Chairman: Will the Chancellor be making so much money from future spectrum auctions as he did from that one, that is the bottom line? Significantly less.

  Lord Currie: It is very hard to predict these things.

  Q107  Chairman: Not that hard.

  Lord Currie: It would be unwise to write it in.

  Q108  Mr Weir: Moving to the premium rate services, one of the things that we MPs—certainly I do—get complaints about on telecom is premium rate services and in particular rogue internet diallers where no one seems to take responsibility for what is happening. I notice that in December 2004 you published a review on this subject, but I would ask how you are taking this forward as your annual plan does not seem to give much mention to this area.

  Mr Carter: There is a dedicated co-regulator, ICSTIS, which was set up specifically to regulate the premium rate industry and, as you rightly refer to, largely because of a spike of concern around rogue diallers we, in conjunction with the DTI—in fact at the DTI's request—did a review of the powers and the rules around operators in that market, and that resulted in an increase in powers to ICSTIS and an increase in fining capability and also some changes to the prior permissions regime and also some changes to the payment regime between different services providers so that if people were being scammed there was a reasonable time period whereby one operator could identify the problem and recoup the money before the money had been paid on to the other operator. The early signs are that that, on that particular problem, is beginning to bite.

  Q109  Mr Weir: The period was 30 days, is that correct?

  Mr Carter: Correct.

  Q110  Mr Weir: Given that people get telephone bills generally on a quarterly basis do you think that is a long enough period? It can be some time before you realise that you have been a victim of a rogue dialler.

  Mr Carter: We accept that and of course it is not the case—because there is this double lock mechanism because there was an extension in the prior permissions regime, so that there is an obligation on the service provider that is allocating the numbers, so you are not wholly dependent upon the money transfer as a safety. The collective view at the time was that the 30-day extension was a sensible place to start and, as I say, the early signs are that it is biting reasonably effectively.

  Q111  Mr Weir: One of the other recommendations is that ICSTIS should require companies to have effective customer service and refund policies in place. Do you think that is working: because again that is one of the complaints, that people go to the company and cannot get them to take effective action when they have perhaps very large bills from rogue dialling?

  Mr Carter: It would be worth asking ICSTIS for their own independent view because they are the independent committee for the supervision of, and they will have their own view, but I think they would say that the new regime again has worked well. We have coupled that with an increase in resource and budget for ICSTIS—we are the budget setting body for ICSTIS or approval body—and that has given them more resource to handle the overflow of complaints so that that allows them to draw the problem to the attention of those providers who are not living up to those service obligations. I am not sure that I would describe it yet as a virtuous circle, I think that would be a too rose-tinted view of it, but I definitely think that on all of those measures you are seeing it improving.

  Q112  Mr Weir: You also recently announced changes to the 08700 numbers.

  Mr Carter: We did.

  Q113  Mr Weir: A number of government departments and others are getting some 18 months after the current numbering review to implement these recommendations. Why so long a period?

  Mr Carter: Generally, I think, when you are making major changes in markets it is a good idea to have a glide path, just because (a) it is good regulatory practice and (b) it allows people to adjust their businesses and services, and whilst there are aspects of the 087 number range, which have been called into some question, I think we have been reasonably alive to those and, as you say, we have made some quite significant changes: i.e. we have removed revenue share or are proposing the removal of revenue share. You need to allow businesses time to migrate services on to alternative numbers. As it relates to the government departments and public authorities, of course they have the choice not to use those in the first instance. That is not a matter for us, we have issued guidance on that matter and ultimately it is a matter for individual departments and the Central Office of Information.

  Chairman: We have two more areas to pursue and we will go on to Directory Enquiries. Rob Marris.

  Q114  Rob Marris: Mr Carter, can you name me four Directory Enquiries' telephone numbers, out of the 200 that there were—there may not still be 200?

  Mr Carter: I do not know but I am not even sure that I should even if I could. I could certainly name you three but then what would happen is that the 197 I did not name would phone me up within a second and say, "So what is so good about them?" to which I think the answer is, as you have rightly observed, now more than one and that provides competition.

  Q115  Rob Marris: Do you think it has worked?

  Mr Carter: If I am allowed, it was not done on our watch.

  Q116  Rob Marris: No, I realise that; I checked that and it was done by Oftel in 2003.

  Mr Carter: My own personal view—and I think this is also our official view—on balance, yes.

  Q117  Rob Marris: Has it brought the price down?

  Lord Currie: There is quite a wide range of prices in the market. I am not sure that on average it has brought it down but, interestingly, if you do look at our recent survey what it shows is that some of the most accurate providers of information are not necessarily the more expensive. So there is still quite a range in the marketplace and my perception will be that a market which was totally new, started off with quite a lot of difficulties of adjustment, is now settling down and that seems to be the evidence from the research that we have conducted recently.

  Q118  Rob Marris: The impression of many, including me, is that the prices are higher and that the accuracy is not much greater taken across the piece. Is that not what you are finding, both in terms of prices and in terms of accuracy?

  Mr Carter: It is undoubtedly the case that there are a number of providers where the price charged is higher than the previous charge of 192—unarguably. We do not know the accuracy number because there was not a baseline on accuracy previously. So no one knows that—that is pure hypothesis. One of the issues is, and what that teaches you about deregulating or liberalising markets, that it is a good idea to do a baseline analysis, so that you can do a compare and contrast to see whether or not there has been progress, which is why I say that on balance we think it has because, as my Chairman points out, there are actually a number of providers providing considerably cheaper and highly accurate services. Interestingly there are also more expensive providers providing accurate services, so there is a spread across the market.

  Q119  Rob Marris: We heard earlier about uSwitch; is there a kind of "uEnq" that one can look up to find out where this information is, because if I ask you to provide it you will probably provide a similar answer that you did to Mrs Curtis-Thomas?

  Mr Carter: We have published, we have done specific work on the Directory Enquiries market and as my Chairman has alluded to we have published that twice now and that is accessible on our website.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2006
Prepared 21 June 2006