Joint Committee on The Draft Communications Bill Appendices to the Minutes of Evidence


Memorandum submitted by the Institute for the Management of Information Systems (IMIS)


  IMIS, the Institute for the Management of Information Systems, is the professional body for those who have responsibility for delivering the benefits of ICT-based systems. Its 10,000 or so members work in both public and private sectors and for suppliers as well as users.


  The biggest challenge is to ensure that:

  OFCOM = Radio Communications Agency + Oftel + ITC + Radio Authority + BSC—W (being the efficiency factor)—X   (X being the removal of unnecessary and/or counterproductive inherited regulation)

    and NOT

  OFCOM = Radio Communications Agency + Oftel + ITC + Radio Authority + BSC + Y   (Y being the expansion to nominal establishments from the numbers actually in post with the current regulators to fulfil unchanged functions—as envisaged in the Towers Perrin Report)

    and certainly NOT

  OFCOM = (Radio Communications Agency + Oftel + ITC + Radio Authority + BSC + Y) x Z    (Z being regulatory creep as the lack of definition of Public Service Broadcasting allows OFCOM to "embrace" services delivered over the Internet and supposed market failures are used to justify ever more detailed intervention over infrastructure and/or content.)

  3.  OFCOM (and its predecessors) need to redress the damage done by unbundling and over-regulation which have helped cause the UK to fall behind most of its overseas competitors and be critically dependent on a single communications network at a time when the risks of such dependency are rising rapidly.

  Local loop unbundling (introduced because competition was perceived to be too slow in producing results) has not only failed (including in the US from whom the idea was copied)—it has perpetuated critical dependence within the UK on a single infrastructure while reducing the incentive for the incumbent operator (BT) to invest in the radical improvement of that network (originally driven by the promise of open competition in 2002).

  Society (from business to social services, from banks to hospitals, from individuals to government departments) is increasingly dependent on communications links. If your Internet Service Provider was your life support system how many times a day, week or month would you be dead. Voice networks are an order of magnitude more reliant but "total" failure is a characteristic of modern centralised communications networks.

  Over the course of the past few years several major UK cities and counties (as well as large parts of London) have been cut off for hours on end (usually when power supplies to major switching centres have failed). There have also been major failures in emergency communications networks (national and local) and we can see the scale of local failures when shared ducts or masts are damaged. And that is before factoring in the risk of deliberate sabotage for criminal or terrorist purposes.

  The original (1982) Government objective was competition in the local loop (for both communications and entertainment) by 2002. The removal of capital allowances (almost immediately afterwards) also removed UK investment in most of the new players. The hierarchies of planning and other regulation then delayed the roll-out of that funded by overseas investors. DTI and Oftel then (mid 1990s) perceived a need to intervene because of the "failure of market forces" and removed the imperative to have competitive local networks by 2002 in favour of "unbundling the local loop" (albeit blaming the decision on Brussels). We can now see the consequences.

  Meanwhile the UK has yet to give type approval to low-cost alternatives, such as the two meg satellite-transmission based communications networks that mushroomed in New York after September 11 and are now being used across the United States for transcontinental corporate networks (regardless of local supplier vagiaries) and standby facilities.

  Today we can see the descendents of the men with the red flags who kept the UK behind France, Germany and the United States in the early adoption of motor transport doing the same again. We need a radical new approach to achieve HMG objectives for 2005, let alone those now being envisaged for 2010. The prime role of Government in stimulating investment is as customer (c.f . . . the Victorian mail contracts which underpinned the financing of key railway and steamship lines) and not as regulator, at least not until real problems (usually not forecast by those calling for ex ante regulation to prevent something different) require action.


  Ofcom must be focussed away from promoting "notional competition" (multiple services over a single shared infrastructure) and towards to fostering UK competitiveness vis a" vis other nations as a location for communications dependent industries (robust, reliable, price competitive capacity for both business and consumers).

  That will almost certainly require the centrally funded Public Sector to help pull through investment in competing networks by mandatory multi- (at least dual-) source procurement policies.

  That will give OFCOM an interesting relationship with HMG as a dominant customer (40 per cent of the market and rising). The consequent issues of accountability, performance monitoring and independence are unlikely to be well addressed unless OFCOM reports publicly and regularly to a Committee of Both Houses on its dealings with Government Departments (not just DTI) as well as on its overall performance against its objectives.

July 2002

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