Examination of Witnesses (Questions 280-287)|
MONDAY 10 JUNE 2002
280. Not about competition legislation?
(Mr Wickham) I am referring to communications.
281. But not when OFCOM is using its competition
(Mr Wickham) If they can, they can. All I am referring
to is our particular view around what we see in the market right
now. Whether it is enabled through that route I would have to
leave it to others to best advise me.
282. Mr Hargrave, Nortel in its evidence refers
to concurrent powers between OFCOM and the Office of Fair Trading
and the risk of double jeopardy. When the OFT gave evidence to
us they said it cannot happen, it should not happen, there is
no evidence of it happening. What is your evidence that it is
(Mr Hargrave) We wanted to make sure that due consideration
was given to that possibility and care was taken so that the situation
of double jeopardy could not arise. If the agreement between the
OFT and OFCOM is clear-cut and it cannot arise then we are happy.
We just had a concern to make sure that was addressed.
283. You have got no evidence since March 2000?
(Mr Hargrave) We have got no evidence that there is
a problem but there potentially was a problem and we wanted to
make sure it was appropriately addressed.
284. We have talked about broadband and BT and
a general duty in some way, as you say, on OFCOM to take into
consideration innovation and promotion of new technology, but
is there anything pragmatic that this Bill on the face of it should
include or perhaps exclude in relation to broadband that you would
like to see that would be encouraging for its development in the
United Kingdom? Do you have any specific pragmatic proposals?
(Mr Phillips) I do not think we as competitors feel
that you can use a Bill like this to suddenly change the competitive
dynamics of the industry. Local loop unbundling has failed and
it failed because it was frustrated as a process by the monopolist
that owned the assets that were due to be unbundled. I do not
think you can change fundamentally that kind of competitive structure
through this kind of legislation. This makes the best of what
we have got but what we have got also needs to be addressed.
285. What about what we have not got in terms
of future-proofing? Is there anything in this Bill you think is
deficient in that respect or is it the best foot forward at the
(Mr Hargrave) I go back to the comments I made earlier.
It is very hard to articulate but the environment is changing
and broadband is the issue of the moment. Clearly with time one
is going to see faster and faster data rates in the fixed and
mobile environment. We want to make sure that OFCOM bears these
things in mind in doing its regulation. I know I am finding it
harder to articulate that more exactly but broadband is today's
issue of the unknown future. If there was some innovation requirement
to consider matters of that nature it could be addressed in that
way. Clearly I foresee as time goes forward that band widths will
increase in both mobile and fixed activity, and that is the general
direction. We must make sure that happens in the United Kingdom.
Developing band-width is crucial to our economy and we want to
make sure that OFCOM are going to do all they can to stimulate
thatand certainly not inhibit itto make sure that
the UK does take advantage of that and that the regulatory environment
is appropriate for the United Kingdom to get the advantage from
286. You say it will happen in the United Kingdom.
If has happened much faster already in a number of other countries
that seem to be leaping ahead where the take-up as a result is
also leaping ahead because the usage is greater and developing
faster. What is it that has prevented us in coming in at the right
speed and breadth of access in this country? Is it regulatory?
What makes you so confident when we have so obviously failed to
do it so far?
(Mr Hargrave) When I said "will" I should
have said "must". I was trying to emphasise the importance
to the United Kingdom of broadband roll out.
287. We are concerned that it has not happened.
It is happening better in some other countries. I am trying to
discover if there is anything related to this Bill which is more
likely to make it happen here so we catch up instead of falling
further and further behind.
(Mr Hargrave) There are matters outside this Bill
which are due to stimulate the infrastructure. We have had discussions
with the Broadband Stakeholders Group and the Office of the e-Envoy
on these matters. Once again it is important there be an infrastructure
in place, and therefore incentives to help the roll out of the
infrastructure, particularly in rural areas, are going to be important,
but these are probably not matters for this Bill.
(Mr Wickham) I think there is one issue, already alluded
to, which is we have a Consumer Panel, we have a content panel
and it is a case of getting some more expert involvement through
what might be called an economic panel where we are looking at
some of the broader issues and how they might be speeded up with
an expert group looking at it. I have to say, though, that I am
not a proponent of many panels and broader structures within OFCOM
as a whole because one of my concerns is looking at the proposals
for cost. I certainly hope that this Committee and others heavily
scrutinise the draft budget. The draft budget itself struck a
particular chord for me as it proposes costs of some £180
million and that happens to align with the budget for my company's
business in the UK. I happen to run a business on that budget
and I employ twice as many people than is proposed under the OFCOM
proposal. So under that budget I am sure that there is potential
to employ all of the right people to give you the wise decisions
and counsels that are required, but I would scrutinise the level
of expenditure. I absolutely refute the fact that out of a merger
of five no savings can be made and at a time when everybody is
paring cost it seems somewhat unusual to see a cost of that size
Chairman: Thank you very much indeed. Again,
I apologise for keeping you.