Joint Committee on The Draft Communications Bill Minutes of Evidence


Examination of Witnesses (Questions 806-819)

MS ANNA BRADLEY AND MS LINDA LENNARD

THURSDAY 27 JUNE 2002

Anne Picking

  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 broadband—and 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.

Nick Harvey

  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 is—which 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 with?
  (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 for that.

  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 State—yes, absolutely essential—to 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.

Paul Farrelly

  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 to be.
  (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.

Anne Picking

  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 out altogether.
  (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 broader interest.

  816. From what you have said, the answer to my colleague's question—Would 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.

Chairman

  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 hearing—and I happen to agree with it—is 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 clear—let's go back a step—that 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.


 
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