Examination of Witness (Question Numbers
20-39)
DR COLETTE
BOWE
13 JANUARY 2009
Q20 Peter Luff: We will be exploring
digital inclusion a little later on. What I worry about—apart
from the fact Ofcom take quite difficult public policy decisions,
the digital dividend is an example and issues arise which are
not pure economic issues but issues of public policy—it
also faces a lot of competing priorities in the public. A small
row about Russell Brand or a vote-rigging scandal on Strictly
Come Dancing consume enormous amounts of media space, enormous
amounts of your time as Chairman when actually there are many,
many much more important strategic issues your organisation faces.
Keeping Ofcom focused on those issues—spectrum allocation
which you said is an important issue, telephony, the whole public
service broadcasting ethos and ethic—is a real challenge
when often you are blown off course by tabloid journalists understandably
interested in these short-term scandals.
Dr Bowe: I want to say two things
about this. Of course the media often cover these problems that
happen in broadcasting. You have touched on Ross and Brand—there
are always these sorts of issues going on. The media is right
to; I do not want to be dismissive about that. I do not want to
say, "Oh, this is some media agenda". People care about
this. People care about what they see on their screens and what
they hear through their radios. I would never, ever want to be
dismissive of the intense interest that those sorts of issues
attract in the media. As a regulator, Chairman, you know this;
I know this; everybody in the room knows this. You have to listen.
It is maybe the most important quality that you have. If actually
the national media, the regional media, are saying to you, "People
are deeply concerned about these various issues that are happening
in terms of broadcasting standards", then you listen. Now,
does that mean that therefore you spend all your time as Chairman
or, indeed, as Chief Executive working on those issues? It does
not. The agenda of Ofcom is a big one; an awful lot of what we
do, as you have said, is about spectrum, it is about public service
broadcasting. Even as we sit here now there is an Ofcom Board
meeting which I am not attending which is devoting itself to public
service broadcasting; that is actually what the Board is discussing
at this moment. I would never be dismissive of the interest that
the media take in standards issues. Actually those of you who
saw your newspapers last week and over the weekend will have seen
that a completely different, hugely important issue, broadband
speeds, got massive press coverage, and rightly, and I was delighted
to see that. When Ofcom is doing things that are important for
the people then it gets coverage, and broadband is a very good
instance of that.
Q21 Peter Luff: One personal question:
do you watch much television? We do not. We are the worst people
to comment on this.
Dr Bowe: I knew you were going
to ask me this. I thought, "Shall I pretend that I'm always
watching crucial dramas and hard-hitting documentaries".
Q22 Peter Luff: You must watch Strictly
Come Dancing? Surely we all watch that?
Dr Bowe: No, I am an X Factor
person. Alexandra lives near me in north London. I was completely
behind Alexandra on X Factor.
Q23 Mr Hoyle: Did you vote?
Dr Bowe: I did. I voted for Alexandra.
I was contemplating giving you this shtick about what I
watched and then I thought I had better tell the truth and confess
which is, I watch an enormous amount of television and an awful
lot of it is football; and I am a passionate fan of football.
I am afraid I spend large parts of my weekends watching—
Q24 Mr Hoyle: A true Red!
Dr Bowe: Absolutely. I hope I
am addressing a fellow supporter here?
Q25 Mr Hoyle: No, Bolton Wanderers!
I have stuck with them all my life.
Dr Bowe: We might have to have
a word about this next time.
Q26 Peter Luff: I should warn you,
you have Chelsea in the chair so be very careful.
Dr Bowe: We will not intrude on
private grief then! Nobody say "three-nil" it is cruel!
Mr Hoyle: I think it should be repeated!
Peter Luff: Actually Philip Davies unusually
got something rather wrong in his question about Ofcom's remit
because it is going to grow, is it not?
Q27 Mr Weir: As you will be aware,
the Hooper Review recommended that Ofcom take on the Post Office.
Do you feel the Royal Mail services would fit within Ofcom's remit?
Dr Bowe: Yes, I do. I suppose
what I have got to say to you is that I knew before I accepted
the invitation to do this job that that was a likely outcome.
I guess you can take it that I think this is workable. I had read
the Hooper Report and I saw Richard Hooper in the corridor as
I came in.
Q28 Peter Luff: We have him before
the Committee next week.
Dr Bowe: I do not want to spare
his blushes too much but I think it is a darn good report actually,
and I read it with immense interest. I knew the possibility that
Ofcom would be asked to take on postal regulation would come up.
Yes, I think in quite a lot of ways it fits with other things
that Ofcom does, critically because it is founded on the idea
of a universal service obligation; and that universal service
obligation for post is something that all through my time working
on consumer issues re Ofcom I have been very interested in in
the context of broadband, and we can come back onto that. Long
story short, yes, I think Ofcom can do this. Ofcom has quite a
good track record, as you know, of managing regulatory integrations.
So, yes, we can.
Q29 Mr Weir: You talked earlier in
answer to Mr Davies about Ofcom being a "light touch regulator".
Given the importance and the controversy if you like of universal
service obligation, how does that fit in with Ofcom's general
ethos in life towards regulation?
Dr Bowe: Just casting my mind
back to the exchanges I had with Mr Davies, I do not think I was
accepting the idea of Ofcom as a "light touch regulator".
I think that is a wrong conception of Ofcom actually. Ofcom has
got quite a hard touch when it has to have, and there is no question
but that the maintenance of the universal service obligation is
a tough, tough regulatory intervention in a marketplace. I think
Ofcom would have no problem. Ofcom's regulatory mantra, if you
like, is not light touch—it is the right touch. The right
touch can be actually quite an interventionist one at times. Yes,
the regulation in post can fit well within Ofcom's ability to
develop the appropriate regulation for different circumstances.
Ofcom does not do "one size fits all" regulation; it
does different things for different parts of the sector. I am
very confident that it can handle postal regulation in the right
way.
Q30 Mr Weir: Given the importance
of a separate regulator up until now, and Ofcom has a wide range
of responsibilities as we have heard, my concern would be: is
it going to get sufficient care within that general range of responsibility
given the huge importance to communities up and down this country
that the universal service obligation is strong and enforced within
the regulation, is it going to get that necessary work within
a larger organisation like Ofcom?
Dr Bowe: The short answer is,
yes, it will. I prefaced my whole conversation with you this morning
by talking about Ofcom's primary statutory duty to further the
interests of citizens and of consumers. I can give you the most
confident assurance that the important issues around postal regulation,
as and when or if and when they arrive with Ofcom, will be treated
with the utmost seriousness and all the care that they deserve
and that the people of this country demand.
Q31 Helen Southworth: You have got
very strong commitments to consumer protection issues and consumer
issues generally within Ofcom, but do you think Ofcom reacted
quickly enough to the very rapid changes in television which allowed
for the growth of quiz television? How would you like to see Ofcom
under your direction identifying issues like that in the future
and responding?
Dr Bowe: The honest thing for
me to say is that I do not know whether Ofcom reacted quickly
enough; and I say that in a quite literal sense. I was not on
the Ofcom Board at that time; I was not, as it were, party to
what information Ofcom had, when it had it and how it processed
it. I am afraid I have to give you a completely agnostic answer
to the first part of your question. I think what we have now seen
is that Ofcom is extremely alive to the risks around this kind
of funding of television. Ofcom has shown itself to be very tough
in the kind of penalties that has exacted from those who have
abused people's trust in these kinds of shows. I think where Ofcom
is now is actually in a pretty alert case from the standpoint
of consumer protection in respect of these kinds of scandals and
scams.
Q32 Helen Southworth: How would you
expect Ofcom to relate to consumers? The main reason we picked
up quiz television was because people told us about it and we
went and had a look. What would you expect Ofcom to do in similar
circumstances?
Dr Bowe: I would expect Ofcom
to do exactly the same. That is why I am being slightly agnostic
in what I am saying about: what did Ofcom do at the time, as I
say, having not been there. I think as a regulator—and,
by the way, as we go into this year this is something I would
like Ofcom to be doing—you have to interrogate your sources
of information. How does a regulator know things? It gets complaints;
things come up in the media; it does research; and it does the
kind of research where you are trying to look round the corner
at what is happening next so you are not being too reactive. Does
Ofcom do enough of all of those things? I hope the answer to that
is, yes, but it is a question that I am going to be asking. The
second sort of thing I think we need to have quite a careful stand-back
look at this year is, okay, if we think we have got enough of
various sorts of information—and, by the way, I should have
mentioned a source of information to us is the Ombudsman Service,
which I know is in your constituency, so I must not leave them
out—having acquired that information, does the regulator
act quickly enough on it? That is the kind of question you have
to ask yourself all the time. Sure, we have processes; our processes
are good; they are fashioned so that they are challengeable, as
they have to be because we have a lot of draconian powers; but
are our processes too elongated; do we take too much time over
things; do we devote enough resources to them? These are all questions
that I will be asking the organisation.
Q33 Mr Whittingdale: Can I come back
to Philip Davies's area and the cost of Ofcom. Since it was set
up Ofcom has had its budget reduced in real terms for four successive
years. Do you envisage that that will continue, or do you think
that we have reached the point where there are probably few more
efficiency savings that can be found?
Dr Bowe: One thing we do know
for sure is that going forward from now, because of the probable
arrival of the postal regulation, Ofcom will need to have a larger
budget than it had to carry out its previous work. Whether that
can be accommodated by further in real terms cuts at this stage
it would be premature for me to say. Ofcom's budget-setting process
happens in the spring of each year, so I have yet to preside over
one. I would be quite reluctant at this moment to give either
of these committees any commitment that would lead you to think
that there are cuts in Ofcom's expenditure that could be easily
found. I think it would be highly imprudent of me to do that,
and I am afraid I am not able to do that.
Q34 Mr Whittingdale: Could I then
take you to an answer you gave to Philip Davies earlier about
the degree of regulation by Ofcom. You said, I think, that the
public would be surprised if Ofcom were to set out to do less
regulation or indeed no regulation. I can recall when David Currie
took up the job that he actually, as a statement of almost regulatory
philosophy, said that the ultimate objective for regulating should
be to create the conditions to put itself out of business so the
competition actually could thrive as it would remove the need
for a regulator. Do you share that objective, and in which areas
do you think there is a possibility that we could achieve it?
Dr Bowe: I think what you have
described David Currie as saying is a very elegant economist's
way of looking at markets. Although I think I confessed right
at the beginning of this session to having once been an economist,
I am certainly not one in the league of Lord Currie; nor actually
do I think that markets left to themselves get on and do the job,
frankly. What I think the job of an Ofcom-type regulator is is
to understand those markets and to understand where they can do
the job—and I will come back to that point in a moment;
but really importantly, I am sure Lord Currie if he were sitting
next to me here today would acknowledge this wholeheartedly, markets
can only work with what they have got. If the people who are participating
in that market, the consumers, do not have full or adequate or
readily get at-able information, that market will not work. Everybody
here knows that markets do not always generate the kind of information
that consumers need—it is a statement of the blindingly
obvious. A really important job of a regulator is to understand
those kinds of failures in markets where information is not readily
available, or clearly available to consumers, and to take action
to make sure that they are. Then consumers can make their choices.
Then consumers can be free to say, "I'm going to do that
or I'm going to do that". If you have not got the information,
frankly, that is a very difficult call. If you think about a lot
of what Ofcom had done in terms particularly of its relationship
with various parts of the telecoms industry you can understand
that in terms of mandating the provision of information into the
marketplace. Places where I think the market has worked well hitherto,
well there are lots and lots of parts of this sector where there
is very lively, very vibrant competition. Do I think there is
any part that could be completely immune from any regulatory intervention?
I do not think I would want to say that actually, because markets
change; new products come up; new services come up; new ways of
dealing with people come up; people behave in different ways.
John, if you are tempting me to say that there is some part of
Ofcom's regulatory brief which will always be ring-fenced from
regulation, I am afraid I am going to resist that temptation.
Q35 Mr Whittingdale: You will be
aware, for instance, that Ofgem did actually withdraw from the
regulation of domestic electricity supply on the basis that competition
had been achieved. Surely competition in itself will ensure that
consumers receive the information as to which is the most competitive
product—that is a basic part of the market. Are there not
going to be areas, maybe it is mobile telephony or some other
area of telecom, where the equivalent position can be achieved
and you can step back?
Dr Bowe: I think regulators have
to think long and hard before they do that. What I am declining
to do today is give you an assurance about an Ofgem-like approach
to any particular sector of our market. That said, and I do not
want you to get the wrong impression from what I am saying here,
I am perfectly prepared to contemplate any such group, as is the
rest of the Ofcom Board. This is not about me; this is about the
Ofcom Board. Right at this moment I think it would be highly unwise
to sort of say "Job done; all sorted. Consumers are well
protected there—they can get all the information they need.
There are price information sites; they are all working perfectly;
everything's fine". That is a laudable aspiration and, I
think going back to where we started this bit of the conversation,
which is what David Currie initially said, yes, I think it is
a highly laudable aspiration. Are we there yet—I do not
think so.
Q36 Mr Whittingdale: One final point
on this section before I take over from Peter. You also referred
to the fact that Ofcom had become a byword for the quality of
its research and consultations. If that is correct, it has not
always necessarily been popular for doing so. If there has been
one consistent complaint from various industries which Ofcom has
regulated it is the number and volume of consultations which pour
out of Ofcom occupying enormous amounts of time. Are you aware
of that concern? Do you think it has some merit which you might
be able to address?
Dr Bowe: I indicated a few minutes
ago that I was aware of this concern. I used a phrase like "Ofcom
is a famously prolific regulator". I think you could probably
infer from that what my views are about this. When we talk about
"regulatory burdens" as a regulator we have to be very
alive to that kind of burden. There is another aspect to this
actually which we do not hear so much about but which I am actually
quite passionate about which is this: if regulated firms in this
industry with all their resources find it difficult to cope with
the volume that comes out of Ofcom, imagine how you would feel
if you were the policy officer of Age Concern, for example, trying
to cope with all of this. This has been, I am afraid, a bit of
an issue of mine over the years and it is something I would really
like to address as Chairman. I believe that there is more that
this regulator could do, working with consumer stakeholders, to
highlight to people that the voluntary sector is very, very, as
you all know, really thinly stretched in the resources it can
give to this kind of work. I would like to find better ways in
which we can help people like the Policy Officer of Age Concern
to address the huge volume of material that comes out of Ofcom,
much of which is of crucial importance for the people they care
about. I know Ofcom has made big efforts on this, John, but I
do not think it has impacted at all, and it is going back, as
I keep doing, to my consumer and citizen agenda, that I think
this is something we really have to make some progress on this
year.
Peter Luff: I think that concludes our
questioning on your personal background and the general questions
about Ofcom as an organisation. In that case, I will hand over
the Chair to John while we move to the individual policy areas.
Mr John Whittingdale took the Chair
Mr Whittingdale: Can we now turn to one
or two of the specific challenges which Ofcom is currently considering,
and I am going to invite Adrian Bailey to begin.
Q37 Mr Bailey: I want, first of all,
to cover competition in pay-TV, and can I preface my questions
by saying how much I welcome your passionate commitment to watching
football on television. I have to say, as the Member of Parliament
for West Bromwich West, as you might expect, I am a season-ticket-holder
and lifelong supporter of Cheltenham Town in Division One, and
I do have specific interests about the way that money is allocated
to lower-league football clubs, but I do recognise—
Dr Bowe: Am I allowed to say "Hear!
Hear!" at that point, Mr Bailey!
Q38 Mr Bailey: I do recognise that
is beyond your remit, but obviously, with millions watching football
every week, the issue of competition in pay-TV is a really big
one and I would welcome your insight into this. Now, under the
draft Annual Plan, I believe that Ofcom, in, if you like, co-ordination
with the European Commission, is looking at, in effect, opening
up the market so that Sky does not have the monopoly. I would
be interested in your perspective on this and what the implications
of that are in terms of the cost of pay-TV to, if you like, the
rank-and-file supporter.
Dr Bowe: Where we are at the moment
is that Ofcom is just coming to the end of a consultation on how
a broadcasting organisation that owns the broadcasting rights
to this kind of premium content, and it is not just football,
by the way, it is first-run films as well, as you know, which
is the other sort of driver of this, how such a broadcaster might
be required to wholesale it to other broadcasters. We are just
coming towards the end of that consultation, so I cannot sort
of pre-empt the end of that, but I think your question was a sort
of hypothetical one, was it not, which was: what would happen?
I think what we are talking about is the possibility of more widely
available premium content like that on paid-for channels which,
depending on the terms of whatever commercial deals were struck,
would obviously be in the interests of viewers, and I was going
to say "supporters", but it is viewers more generally,
I suppose. It is an issue of deep concern to a lot of people that
they feel cut off from being able to see such kind of premium
content and, as I say, we are at the end of a consultation on
that, the results of which will be coming out shortly. The reason
we are doing it is because we are very, very much alive to the
concerns of viewers who feel that their access is somewhat restricted,
as things stand, but it would all depend of course on the commercial
terms.
Q39 Mr Bailey: Interestingly, as
far as football is concerned, it has been pointed out that, if
Sky is obliged to wholesale certain, if you like, products to
other television operators, then there is no incentive for them
to bid against Sky for the rights anyway, and that of course could
mean less money going into football. How do you see it working
out?
Dr Bowe: I do not know how it
would work out because you have just put your finger on a possible
sort of evolution of what might happen. I do not know how it would
work out. We would have to see how the commercial realities of
that situation worked themselves out. I think I have probably
said enough this morning for you to know that any outcome that
led to less money going into the development of the game would
be a source of personal sadness to me.
|
