Mobile Phone Charges on the EU: Follow-up Report - European Union Committee Contents

Examination of Witnesses (Questions 20-22)

Lord Carter of Barnes, Mr Roger Higginson and Mr Nigel Hickson

17 November 2008

  Q20  Lord Whitty: I was thinking of mobile specifically, but if you would say broadly that would be interesting.

  Lord Carter of Barnes: The mobile industry has definitely moved into the full crosshairs of regulation. That has got to be worrisome. It may be producing beneficial outcomes in the reduction of prices, but if you believe that ultimately markets are the most efficient price-setters—and in truth they should be—then having to have detailed retail and wholesale price caps on a function-by-function basis feels very clunky. To draw an analogy, the telecommunications regulatory community across Europe has spent twenty years trying to get out of that in fixed line regulation. It does not feel like a triumph to have leapt out of retail price controls in fixed line regulation, only to leap into retail price controls in mobile: it seems an odd form of regulatory groundhog day, but that is where we have ended up. In my view, the most significant responsibility for that frankly lies with the industry. The temptation to be avoided by the political classes and the regulatory classes is not just to drive remorselessly ahead with that, but it is to try to find a balance of intervention that can be exited and can provide the necessary avoidance of future mistakes in other new and emerging markets, like data for example. More broadly, it is still the case, largely because broadcasting is a reserved power, that European-wide regulation of communications is not as converged as you would want it to be; it is still the case that we have discussions about audio/visual, about fixed line, about mobile, about content and about standards. They are quite slow discussions, whereas I think most of us know increasing consumer behaviour is that these things are all converging at a far, far more rapid rate than our own domestic structures, let alone than the European structures.

  Q21  Chairman: We are almost at the end of the session. I wondered if I could ask a question about supply of information to you, not only from industry but academic sources and business associations, as to what is really going on and what is likely to happen in terms of competition, innovation and capital investment. To a certain extent one gets the impression—and this is a personal view—that the Commission is flying a bit blind and taking a natural reactive step, which is to control prices without really understanding where we might and should be in five or ten years' time in terms of encouraging a free market, an innovative market and one that is continually investing. Therefore, my question is: what flow of intelligence does the Department have?

  Lord Carter of Barnes: In this instance it is the Department for Business largely. I am quite happy to unashamedly defend my Department here. I think over the years the Department has been well informed on these matters and has been a significant contributor to what you might call the after-the-fact fashioning of what is actually going to happen to solve a problem that has been identified. Going forward there will be a new commission, and as ever there will be new faces and new spaces. I think there is an opportunity for all governments—and we will certainly seize this—and I would say also for the industry to engage. Partly because the mobile industry has found itself in the centre stage of regulation, an awful lot more academic work has been done on this of late. My understanding is that there is going to be a European invitation for academic discussion and debate and for contributions to be made; so I think there will be a reasonably fulsome opportunity there.

  Mr Hickson: I think that is absolutely correct. Lord Freeman, you have rightly said that the pace of these discussions has perhaps somewhat limited the amount of debate in the Council. As the Minister said, the subject is on the table next week for general approach. The European Parliament is yet to have its first reading. They have scheduled fairly widespread hearings to understand exactly the economic case for data regulation and for price controls on text messages, so there is going to be a wider debate. Here, as you know, we have initiated a public consultation, and hopefully we will be getting evidence from that which will enable us to be in a better position to understand some of the economic arguments. As the Minister alluded to, and Lord Walpole mentioned, we are working very closely with the Commission and other Member States to achieve a more sensible approach to bill shock in terms of consumers being able to know when they have used a certain amount of their tariff.

  Mr Higginson: It is my understanding that the European Regulators' Group, which has already produced one study on the mobile roaming market is due to publish a more comprehensive one I believe by Christmas at the end of this calendar year; so that will once again serve to reinforce the evidence base.

  Q22  Chairman: Thank you very much for coming. I understand that next week it will be a general discussion. We will certainly follow the process of further regulations. We are interested in the subject and want to be supportive and helpful; but we also want to elucidate from Government, from your own Department, some of the facts and indeed policy decisions. Thank you very much indeed for coming. Could I ask my colleagues formally—we have to go through the process of voting to lift scrutiny or not lift scrutiny, and we cannot do that in front of the Minister!

  Lord Carter of Barnes: I would not want to try and influence your vote in any way, shape or form, but can I make one observation? Unless I am mistaken, I do not believe there is a similar such level of scrutiny on this question in the Commons. Am I correct? From my observation, this is an extremely worthwhile scrutiny process because this is a very real issue. Being put under scrutiny is valuable; the fact of being put under scrutiny is particularly valuable; and I would encourage as much of it as the Committee is interested to do, because this will become more complex over the next year or so.

  Chairman: We look at the quality of the beef going into the grinder; they eat the sausages!

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