Joint Committee on the Draft Communications Bill Minutes of Evidence


Examination of Witnesses (Questions 280-287)

MR DAVID WICKHAM, MR CARL GIBSON, MS PENNY HIERON, MR PHILIP HARGRAVE, MR DAVID MCCONNELL AND MR TOM PHILLIPS

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 powers?
  (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 happening?
  (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.

Paul Farrelly

  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 moment?
  (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 that—and certainly not inhibit it—to 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 broadband connections.

Lord Crickhowell

  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 put forward.

  Chairman: Thank you very much indeed. Again, I apologise for keeping you.





 
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