Examination of Witnesses (Questions 806-819)|
THURSDAY 27 JUNE 2002
806. People writing in on our online forum are
highlighting a number of issues raised by this bill and affecting
consumers. They are concerned about further concentration of media
ownership. They are dissatisfied with services to rural areas,
especially broadband services They are stressing the need for
plenty of broadcasting for children. They are discussing regulation
of content on the internet. In your experience, what are the "hot
spots" for consumer issues in communications?
(Ms Bradley) I would say that perhaps the hottest
spot in relation to communications is being clear about the nature
of consumer interest in communications across the piece and particularly
in reference to some of the views expressed by the last set of
evidence givers. I think we would make a very strong case for
there being a very significant consumer interest, not just in
the means of delivery for communications, which are broadly service
and competition questions, but very much in the material which
is being delivered down those channels, the content. It would
be a very strange world if consumers were only interested in the
means of delivery and not the quality of the goods or services
which they then have given to them. Following from that, and actually
from the range of issues you have raised, there are very clear
consumer dimensions in terms of both competition and delivery
and, indeed, content. Dealing with those slightly separately,
on competition and delivery the critical questions are absolutely
about access. They will be about access to digital services, access
to broadbandand you raised the rural question as well.
But the problems for consumers over the next period will be whether
or not they can have that access in terms of service delivery
and/or reform to have it. There are some very big issues about
being able to deliver that. On the consumer interest in content,
we would argue that there is, as with all regulatory environments,
a very important question about guaranteeing universal service
and, for us, universal service is delivered by virtue of the phrase
"public service", usually applied to broadcasting but
generally applicable to content in this environment. Perhaps the
biggest issue is not just in the question of creating a framework
for OFCOM which will guarantee continued universal access to a
diversity and range of quality programming as we described it
in relation to public sector broadcasting, but making sure that
that regulatory framework is capable of application across the
whole range of content, because we will be in a position in the
medium term future where our content, including public service
content, is going to be delivered by very many different panels.
Just by way of illustration, you can imagine a situation where
it would be quite feasible for someone to be watching a television
programme but getting their subtitling through another medium
altogether, perhaps on mobile phone technology or something similar
to that. So there is going to be a mixing of delivery channels
to create that universal public service access to content.
Anne Picking: Very comprehensive. Thank you.
807. I want to come back to this issue of the
scope of the Consumer Panel which I was beginning to take up with
the previous witnesses. You want clause 96(2)(g) deleted in order
to let the Consumer Panel address content issues without needing
OFCOM's invitation so to do. Supposing the Government accepted
this, is there not a danger, as some of those who have opposed
this argue, that there will be then some duplication between what
the Content Board does and what the Consumer Panel does? If that
were agreed, would you expect that these content issues would
come to dominate the Consumer Panel's work almost to the point
where it would almost need its own Content Board within its operation.
(Ms Bradley) I think one needs to deal with this in
two separate parts. The first question which some people are concerned
about in relation to the Consumer Panel's interest in content
is about double jeopardy. To look at that first, there seems to
be a considerable amount of confusion about the relationship between
the panel, the Content Board and OFCOM. The Consumer Panel is
an independent body established to advise OFCOM in a range of
remedies. It is not therefore part of the regulatory structure.
The Content Board is. It has delegated powers from the main board.
If you are creating an independent structure, as we are in the
Consumer Panel, it makes absolutely no sense to tell it then that
it commission advice only when it is asked to do so. It must be
able to issue advice in all those areas where OFCOM has powers,
including those which the main board has delegated to, effectively,
a sub-committee, which is what the Content Board iswhich
is not to deride or reduce the significance but simply to be clear
about it forming part of the regulatory structure. So there is
a "from first principles" argument which says the Consumer
Panel in its independence should have that right. To address the
question about duplication, I would argue that on the basis of
experience in a range of other regulatory environments where there
are similar consumer panels, the answer is "Absolutely not".
There is plenty of material which will require the Consumer Panel
to take some very important decisions on the advice it will give
OFCOM on both competition and content questions and it would be
ludicrous for it simply to duplicate the work being done by the
Content Board. But that is not to say it will not have separate
interests. That is because the Content Board and, indeed, OFCOM
should be operating in the public interest and the Consumer Panel
is there to give a consumer perspective on that public interest
but it is not the whole public interest.
808. To pin this down a little more specifically,
the Content Board is going to set up what looks as if it will
be quite an elaborate form of consulting people in the various
nooks and crannies of the country, and it will also, I suppose,
address individual complaints about a particular programme that
has given offence or whatever. Would you then envisage the Consumer
Panel, in any work it might do on content, looking more at the
sort of collective consumer interest in it rather than immersing
itself in the minutiae that the Content Board is going to deal
(Ms Lennard) Absolutely not in the minutiae but looking
at the broad content issues. Indeed, reference was made earlier
to the different types of expertise that would be necessary. It
will be vital for the Consumer Panel to have the expertise across
the board. It is something that we have to tackle ourselves, as
a consumer body which has worked in this area for a number of
years, where we are dealing with converging industry and converging
technologies and where we and other bodies are having to deal
with issues where content and service delivery are inextricably
linked together. The problem will undoubtedly need economic, social
and technical expertise and it appears ludicrous to have a regulatory
authority that is going to need that expertise and not to have
a panel that is able to have a similar type of expertise. Obviously
we recognise it is not going to have infinite resources, it is
going to have to prioritise its work, it ought to have a sensible
working relationship with OFCOM and the Content Board. We have
suggested a mechanism through a memorandum of understanding to
do that and where it does seem sensible to share forward consumer
research to avoid that type of duplication. Obviously the panel
is also going to have to be open and accountable, so, if it does
appear that its work is going in one particular direction to the
dereliction of its other duties, it needs to be held accountable
809. On that point specifically, would it be
a good idea, as BT, among others, have suggested, that because
the Consumer Panel is outwith OFCOM (unlike the Content Board
which will be part of OFCOM) it should be funded and appointed
by the Secretary of State and not by OFCOM?
(Ms Bradley) We would be perfectly happy if that were
the case. A lesser option is for the Secretary of Stateyes,
absolutely essentialto make the appointments, but for the
money to be a ring-fenced grant going through OFCOM would be perfectly
acceptable as part of the general agreement.
810. There seems to be some confusion amongst
the great constellation of interests affected by this bill about
what the Consumer Panel is to be and, therefore, who should be
represented on it. Is it to be a panel that represents consumers
of communication services or is it to be a panel that represents
consumers of OFCOM's regulatory services? I do not know where
the confusion has come from because the policy guidance is quite
clear that it is the former. Could I first ask you what you understand
it to be and secondly ask the bill team what they understand it
(Ms Bradley) We understand it to be of the consumer
interest in a broad sense, not of those who are affected by regulators.
811. The domestic consumer.
(Ms Bradley) The domestic consumer.
(Mr Suter) We have the same understanding.
(Ms Bradley) That is good.
812. I hope the confusion is cleared up then.
(Ms Lennard) That is why we think it would be extremely
helpful if the word "consumer" were used in the bill
where appropriate and not confused with other terms, such as customer
or user, which set up even more confusion.
Chairman: We have made the same point.
813. In OFCOM's general duties, you want consumer
interests to have statutory priority over citizen interests in
standards, fairness and privacy, protection of children and other
vulnerable groups, and prevention of crime. Why is that?
(Ms Bradley) It is fundamentally because of our understanding
about the purpose of regulation. We think the purpose of regulation
is to achieve the conditions in which we get the best of the market
with appropriate controls to ensure that there are adequate protections.
These are fundamental on the whole about our interests as consumers,
but the regulator acts in the public interest. We were just checking
through the bill and we think we need to look to see whether there
is a clarity about the fact that the regulator should be acting
in the public interest. Once the regulator is acting in the public
interest, getting that balance between the market and regulation
right is what it needs to do fundamentally for the consumer. That
is why we want that priority in for the consumer.
Lord Pilkington of Oxenford
814. Are you not worried about this fairness
and privacy? When you consider that there is one statutory body
to deal with this because it was regarded as so important. If
you are suggesting this, we would have to create an ombudsman,
would we not, to protect these interests? We cannot take them
(Ms Bradley) No, not at all. Of course they should
be in there, and, indeed, will be. They are covered in the primary
duties, the other duties, that the regulator will have. It is
about what the main driver of the regulator should be that we
are keen to establish.
815. I do not see the necessity to put them
in different categories. They are different things really. I think
you muddle the situation when you say where the driver should
be. There are two drivers to this train. You cannot put them together
like that, I would suggest.
(Ms Bradley) I do not think we want to put them together.
I think we agree they are separate and should be understood as
separate. We would absolutely agree with the previous evidence
given about it that the bill is not clear enough about where it
is talking about consumers and where it is talking about that
816. From what you have said, the answer to
my colleague's questionWould you give consumer interest
statutory priority?is no.
(Ms Bradley) No, I think we would give it priority.
But that is not to say that there cannot be other duties which
are very significant in OFCOM's role.
817. I will not press this but I cannot see,
if there has been gross unfairness, that in any situation a consumer
interest can take priority. You are dealing with something which
is almost taking the function of a court.
(Ms Bradley) I think particularly we were trying to
get across that, for example, one of OFCOM's duties as listed
at the moment is the promotion of competition, and we agree with
that, but we very much saw promotion of competition as a means
to an end and it is really asking what is promotion and competition
for. The promotion of competition should be to further the public
interest and the consumer interest. That is what we are trying
to achieve. What is the driving force for OFCOM and then the other
duties would be as part of that. As I say, that is not to denigrate
or devalue the other duties but to ask what is the means and what
is the end.
Lord Pilkington of Oxenford: You have lost me,
I am afraid.
818. For the purpose of clarification, what
you are saying, as I understand it, as I think this Committee
understands it, slightly flies in the face of what we are hearing
from the online forum, where, for example, Sandra Blackburn writes,
"While I support the need for increased competition, I think
this must come second to the underlying needs of the citizen."
I think the sense of what we are hearingand I happen to
agree with itis that when you are describing the public
interest, the rights of the citizen have to take priority over
the rights of the consumer.
(Ms Bradley) I do not think we disagree with that
but we want to be clearlet's go back a stepthat
the consumer interest is not just about the economic aspects of
OFCOM's regulatory role. It needs to be seen across the piece.
OFCOM should always, as all regulators do, be operating in the
public interest. That would be of more significance and sometimes
outweigh the consumer interest. But, to take account of the consumer
interest as a very significant element in their work is key and
to understand that the value of competition is partly, if not
wholly, about delivering that is also very important.
Baroness Cohen of Pimlico
819. As presently drafted, clause 3(3) reads
that, "In performing their duty under this section in furthering
the interests of the customer"and we are going to
have to sort these words out"OFCOM should have regard
to those customers in respect of choice, price, quality of service
and value for money." You want to add "access, equity,
redress and information". My question is: Surely to heavens
that is covered in all sorts of other parts of the bill. To take
examples, access in 3(1)(d); equity in 3(2)(a); and there is lots
of redress if you go further back in the bill, clauses 12, 81
and 96. Why do we need all these extra words in 3(3)?
(Ms Bradley) I am not sure, to be perfectly honest,
that we need the extra words. What we need is better understanding
from the people drafting the bill about what the consumer interest
is. It goes back to the point I was making earlier on that the
consumer interest is very often in a market environment in relation
to a regulator's functions achieving a balance between those things
like choice, information, value for money and quality, equity
and access issues. The consumer interest will have to achieve
the right sort of balance between those things and we will very
often say, as representatives of that consumer interest, that
in order to guarantee universal service we will trade off some
of the choice that might otherwise be available. This is trying
to make sure that where one wants to guarantee some universal
service one can do so, recognising that sometimes it has limits
on choices in the market places. I do not suggest that all of
that is written into the bill but I think it is true to say that
during the drafting of the bill there has been some real tension
between the two departments and between various interested parties
around the bill in the understanding of the relationship between
consumerism and citizenship, and a sort of boxing off of consumerism
into a set of things which are only about competition and economic
regulation. So, if we can establish in the bill the sense that
consumerism has this broader relationship with OFCOM's role, we
do not need those words there. That is our way of getting them
in, getting a sense of a broader role.