Joint Committee on The Draft Communications Bill Minutes of Evidence

Memorandum submitted by the Communication Workers Union (CWU)


  1.  The Communication Workers Union (CWU) is the largest communications trade union in the UK, representing approaching 300,000 members in the postal, telecommunications and financial services industries. We represent the overwhelming majority of staff in BT and O2 and have members in other telecommunications companies like ntl and Telewest.

  2.  The main thrust of the draft Communications Bill is to bring together into one regulator OFCOM the previously separate regulation of telecommunications and broadcasting. We strongly support this central objective. Indeed we called publicly for the creation of OFCOM fully five years ago when we published a policy booklet entitled ``Tomorrow's Telecommunications" in April 1997.

  3.  Our reservations—and the subject matter of this evidence—concern three related issues:

    —  We believe that OFCOM should be more accountable to Government and Parliament principally through the issue of an annual government policy framework within which OFCOM should operate.

    —  We believe that OFCOM should have an active role in the promotion of broadband Britain and that this should be explicit in the proposed Government policy guidelines.

    —  We believe that OFCOM should be promoting a highly trained UK communications workforce based on secure, motivated and rewarded staff.


  4.  Over the past two decades, the UK has evolved a model of so-called independent regulation whereby a regulator appointed by Government with powers granted by Parliament effectively determines who can provide which services on which terms. The current draft of the Communications Bill embraces this model in respect of the proposed OFCOM.

  5.  The CWU's experience of such a regulatory model has been particularly with Oftel with which we have inter-faced for 18 years. However, we have also observed closely the operations of other regulators for such services as gas, water and electricity. It is our firm belief—supported, we believe, by many politicians and consumers—that independent regulation has become too independent of both Government and Parliament. Therefore we believe that the proposed OFCOM model needs revision.

  6.  Our concerns about the current model of independent regulation have been highlighted most recently by the activities of one of the UK's newest regulators, Postcomm. Early this year, Postcomm published proposals for liberalisation of the UK postal market in a form that was never envisaged by either Government or Parliament—namely the licensing of bulk mailers instead of the reduction of the price/weight threshold—and proposed a timetable that was never contemplated by either Government or Parliament—namely full liberalisation three years before the EU requirement. This approach was so contrary to the views of so many politicians that at least 130 MPs signed at least one of several Early Day Motions protesting and the Secretary of State for Trade & Industry reportedly felt obliged to write to the regulator urging a rethink.

  7.  In our view, regulators should be the instrument of policy and not the determinant of it. Policy should be decided by the elected Government of the day which in turn should be accountable to the Parliament of the day. Such guidance should have statutory authority. The present Government took a hesitant step in this direction with the Green and White Papers on the Regulation of the Utilities as well as the Utilities and the Postal Services Acts. This means that certain regulators are now issued with guidance on social and environmental objectives, but this guidance does not address the broad policy priorities to be followed by the regulator in question which we are convinced is essential if regulation is to become more accountable.

  8.  As regards the communications industry, our proposal would mean the Government issuing—preferably each year, but certainly each Parliament—a formal policy statement on how it would like to see the industry contributing to the Government's broad economic, social and political aims. It would then be for OFCOM to operate within the terms of that policy as regards its activities and to explain in its own annual report how it has taken account of, and given effect to, the proposed policy.

  9.  A new clause to this effect should be included in the draft Communications Bill.

  10.  So much for the accountability of OFCOM to Parliament via the Government. What about the accountability direct to Parliament? Superficially it is there in abundance. Paragraph A38 of the Regulatory Impact Assessment on the Bill pointed out that "OFCOM will be audited by the National Audit Office and kept under review by the Public Accounts Committee, as well as the Select Committees on Trade and Industry and Culture, Media and Sport".

  11.  But essentially this is no different from the current arrangements in respect of regulators like Oftel or Postcomm. By spreading the accountability so thinly between so many bodies which are examining so many other regulators and so many other subjects, effectively one is diluting the accountability to little more than a facade. A much clearer structure is necessary which lays out exactly what is required of OFCOM and the time limits within which it must operate.

  12.  There should be a dedicated Select Committee to monitor the work of OFCOM and perhaps the other major regulators.


  13.  Government has some clear policies as regards the communications infrastructures of the UK:

    —  To make the UK the best and safest environment in the world for e-commerce by 2002.

    —  To ensure that everyone who wants it has access to the Internet by 2005.

    —  To make all Government services available electronically by 2005.

    —  To make the UK the most extensive and competitive broadband market in the G7 by 2005.

  14.  In our view, OFCOM should be an active player in promoting these policies, no more so than in relation to the development of broadband Britain. Broadband changes the experience of Internet usage through the always-on and faster connection to richer and more variegated services.

  15.  For the individual customer, it means much faster loading of web pages and access to more sophisticated services. It means that the user is likely to spend more time on line and make more use of interactive and commercial services. Also it means the ability to access services which require greater bandwidth like video on demand or video-conferencing. Finally it makes running a business from home a much more practicable and effective proposition.

  16.  For the nation, it means a high-tech infrastructure than will enable us to locate worthwhile jobs anywhere in the country, since the information superhighway does not require special access to power or physical resources or need road or rail links. It means the ability to attract international investment and compete effectively with other modern economies. One recent study has suggested that success in the new technologies could increase the UK's non-inflationary rate of growth from 2.5 per cent to 3.5 per cent by 2005.

  17.  The objectives are clear, but our ability to reach them is much less so. In our view, the simplistic reliance on competition—and specifically the faith in local loop unbundling (LLU)—to deliver broadband Britain has been shown to be a failure.

  18.  The Broadband Stakeholder Group (BSG) report of November 2001 argues that:

    —  Based on its extensiveness index, which combines coverage and addressable market into a single index for each country, the UK is currently ranked 5th in the G7 (ahead of France and Italy).

    —  Based on its competitiveness index, which combines regulation, choice and price into a single index for each country, the UK is currently ranked in 4th place in the G7 (ahead of France, Italy and Germany).

  19.  Therefore OFCOM needs to promote broadband in a whole variety of ways which move beyond Oftel's ideological and na-­ve faith in the competitive model.

  20.  It would not be appropriate to refer directly and specifically to broadband Britain in the actual Bill. The term ``broadband'' has no precise definition and indeed it will be an evolving concept as envisaged by the Broadband Stakeholder Group.

  21.  In its report to Government in November 2001 the Group suggests that:

    —  Broadband should not be defined in terms of particular bit rates but in terms of delivery of services to the end user.

    —  Broadband should be defined in terms which are technology neutral and represent access to progressively higher bandwidths.

  22.  Consequently the Group offers the following definition of broadband: "Always on access, at work, at home or on the move provided by a range of fixed line, wireless and satellite technologies to progressively higher bandwidths capable of supporting genuinely new and innovative interactive content, applications and services and the delivery of enhanced public services".

  23.  The annual policy statement from Government, referred to earlier, should spell out the Government's broadband objectives and how OFCOM is expected to contribute to them.

  24.  The draft bill should be amended to include within the remit of OFCOM, the responsibility for ensuring the success of the Broadband agenda.


  25.  As a trade union for communications workers, the CWU understandably has a special concern for employment issues. We want to see the maximum sustainable employment in the industry, with secure and quality jobs based on fair terms and conditions and with the best training and development. This in part is why we support so enthusiastically the promotion of Broadband Britain. In turn, Britain will not develop a modern communications infrastructure as rapidly and successfully as its international competitors unless it has a well-trained and motivated workforce.

  26.  In their introduction to "The Draft Communications Bill—The Policy", the Secretaries of State for Trade & Industry and for Culture, Media & Sports state that the proposed changes in the regulatory regime "will be the right conditions for effective competition, increased investment and high levels of employment".

  27.  Therefore it is both surprising and disappointing that the draft Bill—specifically in Clause 3 (1) of the general duties of OFCOM—makes no requirements of the regulator in respect of employment issues. In describing the duties of OFCOM, there is reference to customers and to competition and freedom of expression, but not a word about the hundreds of thousands of people who work for telecommunications and broadcasting enterprises. When Clause (2) spells out the matters to which OFCOM should have regard in performing its duties, it mentions children, the disabled, the elderly, those on low incomes, those living in rural and urban areas, and persons in different parts of the UK, but it says nothing about those who work—or wish to work—in the communications industries.

  28.  Clause 3 (1) should be amended to make it a duty of OFCOM to promote secure employment and Clause 3(2) should be amended to require OFCOM to have regard to the employment consequences of the performance of its duties.

  29.  The only Clause in the current draft of the Bill to make specific reference to employment is Clause 11. This talks of the promotion of training & retraining, of equality of opportunity and of fair treatment of disabled persons. This is all welcome, but the Clause is entitled "Functions relating to employment in broadcasting" and sub-clauses (1), (2) and (3) refer specifically and exclusively to "employment by those providing television and radio services".

  30.  Clause 11 should be amended to refer to all those providing services covered by the ambit of OFCOM.

June 2002

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