Memorandum submitted by Tiscali UK Limited
Tiscali UK Limited is an Internet Service Provider
with a Public Telecommunications Operator licence and an interconnected
network. The company is part of Tiscali sPa, the leading European
Internet and telecommunications service provider, that has evolved
from being a national operator primarily focused on Internet access
and voice services for the Italian market, into an integrated
pan-European ISP with a presence in 15 European Countries and
a 16 per cent market share with 7.3 million active users.
Tiscali is independent from incumbent operators
and keen to take advantage of new technologies that enable it
to offer exciting new services to consumers and businesses. Tiscali
believes that a level playing field is crucial for the success
of the European Telecoms Market. The company hopes that the implementation
of new European Framework for Telecoms in the UK and the creation
of the Office of Communications will enable it to deliver innovative
communications solutions in this country.
Tiscali understands that the new regulator,
OFCOM, intends to promote competition, in much the same way that
Oftel has done for the telecoms market. Tiscali believes that
there have been many recent examples of anti-competitive behaviour
in the telecoms sector, especially in the broadband market, which
Oftel admits that it has failed to address satisfactorily. The
company is concerned that OFCOM will also have difficulties in
preventing abuses of dominant positions, if it is not structured
in such a way so as to ensure that it is able to intervene to
promote competition and use the Competition Act to take swift
action to stamp out anti-competitive behaviour. Tiscali is concerned
that the Government's current proposals for the creation of a
new regulator may require some adaptation if it wants to achieve
its goals to make the UK home to the most dynamic and competitive
communications and media market in the world.
Tiscali understands that the current licensing
system for networks, services and associated facilities will be
replaced with general conditions of entitlement for all communications
providers. This should result in a lighter regulatory burden for
licensed telcos, although ISPs will almost certainly be subject
to more regulation than was previously the case.
Tiscali accepts that there are some markets
within the communications sector which are competitive today and
which would benefit from a relaxing of regulations. However, there
are other areas such as the broadband market, where we believe
that further intervention and action from the regulator is required
to ensure that alternative carriers can compete with BT.
It will undoubtedly be hard for the new regulator
to tackle all of the issues that are facing the telecoms and broadcasting
sectors. Tiscali is concerned about the number of functions and
duties that the new regulator will have to manage particularly
in relation to broadcasting and seeks assurances that the issues
facing the telecoms sector will be addressed promptly and by persons
with expertise and understanding of network regulation.
Tiscali appreciates that OFCOM will also be
required to ensure that consumers' interests are protected and
believes that the most effective way to provide consumers with
protection is through the delivery of competition in the communications
industry and choice in communications services.
With regards to Content regulation, Tiscali
appreciates that regulation that protects the quality, diversity
and impartiality of programming needs to be retained, but hopes
that this will not have an impact on the Internet industry since
ISPs have very little control over the content that is transported
over, and hosted on, their networks.
Tiscali welcomes the introduction of rights
of appeal against the regulator's decisions and hopes that this
will result in greater accountability and transparency in relation
to Ofcom's decisions and not in further delay and uncertainty
for alternative providers.
1.1. Structure and expertise
Tiscali understands that OFCOM will be required
to take over regulation of the broadcasting and telecommunications
sectors from Oftel, the Radiocommunications Agency, the Independent
Television Commission, Broadcasting Standards Commission, and
the Radio Authority. Although there is certainly increasing degree
of overlap between the two industries, we believe that there are
still considerable differences between the two sectors and the
task of regulating these industries and understanding the markets
that exist and are developing will be a significant challenge.
Whether OFCOM succeeds in its key aims of promoting competition
and protecting consumers will undoubtedly depend on whether the
regulator has sufficient resources, the right expertise and the
confidence to tackle anti-competitive behaviour. We trust that
the Government will do its utmost to ensure that those persons
who are appointed to OFCOM are capable of carrying out the wide
range of functions that are to be assigned to the new regulator,
and the challenges that lie ahead. We would ask in particular
for reassurances that the Government will ensure that persons
with experience and understanding of both sectors are appointed
to the board so as to ensure that sufficient attention is devoted
to telecoms. We believe that in addition to the establishment
of a Content Board, that OFCOM should also establish an Economic
Policy Board to advise on economic regulation of networks.
We are concerned that OFCOM will be required
to fulfil rather many duties, which will also require balancing.
We believe that it would be beneficial for duties to be simplified
so that it is easier for OFCOM to manage and balance this workload.
1.3 Importance of Long term outlook
We are concerned that there could be a potential
conflict of interest between the requirement to protect consumer
interests and the requirement to promote competition, if the regulator
is not minded to take a long-term outlook. Consumers are best
served by a competitive environment. We would suggest that the
regulator is specifically instructed to take a long-term approach
in the regulation of these sectors to ensure that alternative
suppliers of communications services and networks have the opportunity
to compete and provide consumers with real choice in these services.
1.4 Functions of promoting media literacy
and the Content Board
Tiscali would request that the Government clarifies
how these functions will be applied to the Internet and how this
will affect ISPs. Tiscali supports the development of a content
rating scheme and is a member of ICRA, the Internet Content Rating
Association. Tiscali believes that self-regulatory measures such
as ICRA are the most effective way of managing content issues
and hopes that the Government will continue to work with the industry
within the context of ICRA on content issues. With this in mind
Tiscali would like clarification on the role of the board in relation
to regulation of content on the Internet.
PART 2 CHAPTER
2. 1 Definitions of electronic communications
networks and services and requirement to notify OFCOM.
It is not clear from the definitions that have
been provided whether provision of Internet access would be classified
as an electronic communications service. We would like to understand
whether ISPs who provide access to the Internet either via a third
party's networking facilities or via a third party's core network
together with some of its own additional facilities would need
to notify OFCOM that it wished to provide, or was already involved
in the provision of, Electronic Communications Services. There
are many ISPs who do not own or operate an interconnected network
or modems which are required to deliver Internet access but who
do have servers and are involved in the provision of additional
services. There are other Virtual ISPs who do not own any infrastructure
and who outsource the entire technical function to an operator
who manages the service, which they essentially market, on their
behalf. We would appreciate clarification as to whether these
ISPs will be regulated by OFCOM and to what degree.
We believe that it is possible that the services
provided by ISPs may be classified as associated facilities but
would appreciate clarification on this point and on the implications
that would follow on from this.
Furthermore with regards to the definition of
a content service, we would appreciate clarification as to whether
ISPs who provide access to content which is provided to them by
other third parties would be deemed to provide a content service,
if they do not edit this content.
2.2 Separation of BT's Network and Retail
We understand that OFCOM plans to set access-related
conditions and impose privileged supplier conditions. Significant
intervention will be required from OFCOM in the setting of these
conditions for the telecoms sector if BT's network business is
still linked with its retail arm. Alternative operators have recently
experienced considerable difficulty in getting access to network
facilities that are required from BT to deliver competitive services
to BT's retail arm. We believe that we would not have encountered
these difficulties such as protracted discussions over the terms,
conditions and pricing of the services if BT's network business
operated as a separate entity. We appreciate that Oftel wants
new services delivered to the market as soon as possible, however,
without competition in these services, consumers are going to
be disadvantaged if not in the short term then in the medium to
long term. We would urge OFCOM to consider a proper separation
of BT's Network and Retail arms. We believe this would solve many
of the current problems that are faced by alternate operators
in the telecoms sector and enable them to compete on a level-playing
field with BT. Furthermore, we believe that the incumbent operator
also needs to be given a clear message that abuses of dominant
positions will not be tolerated and that they will have to pay
a hefty fine and compensate other operators, if it is found that
breaches of this nature have occurred and that this activity has
had a detrimental effect on competitors' businesses.
2.3 Conditions for provision of networks and
services and regulatory burden on non-dominant players
We have read with interest Oftel's consultation
on the general conditions of entitlement together with the draft
Communications bill. The Government has stated that the introduction
of OFCOM should lead to a lighter regulatory burden for the industry.
We are concerned however that the proposed new regime will result
in many new conditions and regulatory requirements being imposed
on non-dominant players like ISPs who were not previously regulated.
In particular we are concerned that the proposed regulations relating
to provision of information on pricing will result in a significant
increase in non-dominant players workload, especially when you
consider how fast the market moves and how rapidly prices change.
We understand that OFCOM is required to protect consumers, however,
we would question whether these regulations are proportionate
and necessary where a market is competitive.
2.4 Dealing with disputes over access
We note that OFCOM will be required to establish
"promptness standards" and trust that the deadline for
issuing a determination on a dispute will be set at no later than
4 months after a complaint is lodged, in accordance with the EC
Framework Directive. We hope that this will result in a significant
improvement on the current situation whereby the regulator can
take at least six months or even longer to reach a decision on
cases referred by alternate operators. With regards to these standards
we would like some assurances and safeguards that they will be
met. We believe that OFCOM should be required to publish details
on its performance to timescale targets. We would also suggest
that complainants should have the opportunity to refer cases to
a higher authority, if OFCOM is not able to reach a decision within
the set deadline. We would expect that timescales for decisions
to be made on appeals should be set at no more than three months.