Ofcom Annual Plan 2009-10 - Business, Innovation and Skills Committee Contents

Examination of Witnesses (Question numbers 80-91)



  Q80  Miss Kirkbride: Ofcom has been rebuffed on the issue of porting and whether or not there should be a two-hour porting time and we should move over to recipient-led porting. Where are we on this matter?

  Mr Richards: We have not been completely rebuffed because we have managed successfully to move the UK from five to two days. That is a huge step forward. We are pleased with the progress we have made. We wanted to go further and have had to rethink that. One accepts that that is one of the things that happens. That is the way the process works and we do not have a problem with that. The most significant development is that the new framework directive just agreed in Brussels provides for one day porting. Therefore, the following move is for us to consult on the next steps. The backdrop to that is the European legislation which provides one day. We will then ask ourselves whether on a cost benefit basis there is a case for moving even further than one day and that we are examining carefully at the moment. I do not want to preordain where we will come out on that because we need to look at the relative costs and benefits.

  Q81  Miss Kirkbride: For the moment the two hours has been dropped?

  Mr Richards: No; it is one of the range of possibilities we are looking at. What you are trying to weigh up with that question if you have already moved from five to two is the incremental benefit to consumers of making it even lower. If Europe requires us to move from two to one that is a further gain. Then you say: what is the cost associated with moving from one day within 24 hours to two hours versus the benefits? We need to establish how valuable consumers would find that. Do they really value highly a two-hour or four-hour opportunity, or are they relatively indifferent as long as it is within a couple of days or a day? One compares that with the cost associated with such a move. That is exactly what we are looking at presently. There has been real progress. Five days was too long; two days is much better, and we will now look at whether there is a next step that will reduce the time even further.

  Q82  Miss Kirkbride: Recipient-led porting is the norm in Europe, is it not?

  Mr Richards: Yes.

  Q83  Miss Kirkbride: Where are we on that?

  Mr Richards: You are absolutely right to raise it. There are two dimensions: first, how long it takes; second, whether it is recipient or donor-led. At the moment we have donor-led porting. Many other parts of Europe have recipient-led porting and that is another issue on which we shall consult and see whether there is a case for moving over to it. There are very different views about in the industry. It is true that recipient-led porting is the method used in other countries but there is also concern in this country on the part of some operators that that could lead to a rise in mis-selling and slamming.

  Q84  Miss Kirkbride: Why?

  Mr Richards: Because at the moment if it is donor-led there is an opportunity for the donor to ask if you are absolutely sure rather than it just popping up to say you have been transferred. That is one of the differences. We are not sure how serious that concern is and we must assess it, but that is the issue. Over the past three or four years we have had big issues in this country over mobile mis-selling. That is one matter where we have had considerable success during the past 18 months. If you look at the graph of mobile mis-selling, it was very high and it came down when we first introduced a voluntary code and then a formal one. The numbers now are very low and I am delighted about that because the industry has responded to the code and public outrage about it. The numbers are good. If we go right back to the start of the session when we were challenged to say where we had moved things on for consumers, I believe that mobile mis-selling is a story of considerable success. The numbers have come right down and we do not regard it as a serious problem, but that is why we do not want to take risks and recreate it and we shall consult on those issues and see what the next steps should be.

  Q85  Miss Kirkbride: It is possibly partly mis-selling and partly sheer confusion at the range on offer. I have a particular case in my constituency involving EasyTalk where the cancellation rate for the phone line is £300. Would that constitute mis-selling in your view?

  Dr Bowe: Is this an early termination charge?

  Q86  Miss Kirkbride: Yes.

  Dr Bowe: It depends on the initial terms of the contract.

  Q87  Miss Kirkbride: Even if it is in the contract is not a charge of £300 a damned cheek?

  Dr Bowe: The question is whether it is fair. The whole question of what is a fair charge to a customer has come right up the agenda this week with the decision of the Supreme Court on bank charges. Perhaps you would send me the constituency case and we will have a look at it.

  Q88  Miss Kirkbride: I shall certainly do that. I am not sure about banks but there we are.

  Dr Bowe: That will probably take us into other areas. The Supreme Court judgment is relevant to the whole issue of what are fair charges in our sector.

  Mr Richards: We have been exploring this and have reached a provisional view about termination charges, but we must understand the Supreme Court judgment. There is a direct read across in terms of what is and what is not fair in a contract. We are digesting that at the moment and until we have finished that we shall wait to see what our next steps are on early termination charges. A lot of issues arise from that question; it is not the first time people have raised it.

  Q89  Miss Kirkbride: But the Supreme Court decision was about the imposition of bank charges when you have gone into the red and you are not authorised to run up an overdraft. I would have thought that was a slightly different issue from a termination charge that you agree to but which is usurious and unfair.

  Dr Bowe: The generic issue is about the fairness or unfairness of what are actually contractual terms. From the sound of it that is where your constituent's problem arises.

  Q90  Peter Luff: Perhaps the outstanding questions can be dealt with by exchange of correspondence. For example, I wanted to ask you about access of third-party providers to mobile services and the impact on directory inquiry services in particular. There are lots of other things we could have asked about, but if it is acceptable to the Committee and the witnesses perhaps we can do that in correspondence.

  Dr Bowe: As you wish.

  Q91  Peter Luff: We have had a rich feast for the past two hours. There is a bewildering array of important issues to be dealt with and in most cases we have only scratched the surface. I have not asked about other substantial areas. This is a frustrating experience for all of us. We are very grateful for the comprehensive way you have answered our questions. I shall hold you to your promises and intentions on radio microphones. Who knows what will happen? This is the last time in this Parliament we will see you jointly. Thank you for your tolerance, frankness and openness.

  Dr Bowe: Thank you. We find these sessions extremely helpful and we hope you do too.

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