MEMORANDUM SUBMITTED BY BRITISH TELECOMMUNICATIONS
The White Paper A New Future for Communications
raises issues of far more significance than the details of
the organisation of regulatory institutions and the precise nature
of licensing. The underlying issue is how Government and society
responds to the Internet. This is the focus of this note. The
dangers of the Internet have frequently been explained but they
must not be allowed to outweigh the enormous potential. The Internet
has already given citizens greater choice of information and entertainment
than any society has ever imagined. The Internet is generating
a virtuous cycle of innovation, as each element of the delivery
chain has to innovate to meet demand, reflecting the Industrial
Revolution. Above all, the Internet is democratising communications,
making it easier for creative work to be distributed to receptive
audiences, unleashing a ferment of ideas similar to that experienced
in renaissance Florence or England during the Commonwealth. The
White Paper raises the crucial issuewill the UK establish
a framework to fulfil this potentialor, for the best reasons,
This paper addresses the three key issues:
fostering innovation on the Internet;
stimulating a creative renaissance.
2. CONSUMER CHOICE
Consumers want freedom to choosewhich
breaks down into three areas:
having genuine choice between valid
alternatives which may be endangered not only by monopoly, but
by circumstances where all major sources of content reflect the
same attitudes, interests and opinions;
being able to make informed choices
through awareness of material that is available and the type of
content it contains; and
the availability of choices that
reflect their own interests, tastes and preferences.
Underlying all these, however, is a strong concern
to ensure that parents and teachers can protect children from
material that may be harmful to them.
There is a clear difference between the Internet
and traditional media in these areas. Broadcasting in the analogue
age was characterised by scarce spectrum resources that limited
the number of available channels. This meant that a few channels
catered for the interests of mass audiences, exercising significant
power and influence.
In such an environment there was little room
for diversity either in ownership or content. Special rules were
appropriate to safeguard genuine choice by guarding against further
concentration of ownership. Action was necessary to ensure availability
of choices for consumers by rules guaranteeing national and regional
content, and programmes catering for minority interests.
The Internet is different. Traditional broadcasting
is one-way communication from a single channel operator to many
consumers. The Internet need not deal in such large volumesthe
capacity available is so large it can support content for minority
groups and enable small communities to share information with
each other. As the barriers to providing information over the
Internet are significantly lower than those for broadcasting,
there are far more content providers. In short, the problems of
ensuring consumers can make genuine choices, and the availability
of material catering for a wide range of tastes are not a pressing
issue for the Internet. The special broadcasting rules are simply
There are, however, problems with the Internet.
These are to do with illegal content and content that may offend
current social norms. We support the main principle of the Communications
White Paper that the appropriate way to deal with illegal content,
such as child pornography and racist material, is through the
Internet Watch Foundation. This provides a contact point for notifying
illegal material detected on the web, and a process for requesting
the authorities in the country where the server holding the material
is located to have it removed.
The protection of children from content that
may offend the current norms is part of the wider issue of enabling
consumers to exercise informed choices. We believe the solution
is straightforward, but requires Government action. Providers
of content for the Internet should be obliged to rate their material,
so that users can specify the types of content they do and do
not want to access.
Internet Browsers include a facility enabling
users to set limits to the range of content they may access. When
a page is loading, the browser checks its ratingif it is
not within the permitted range it will not be displayed. The browser
may be set not to display pages that have no rating signal.
This is where Government has a role. If a browser
was currently set not to display pages that are not rated, few
pages would be displayed as content providers have been slow to
rate their material. Government can encourage content providers
to rate pages through promoting self regulation, codes of conduct
and similar initiatives. Beyond a minimum threshold, when more
users feel able to reject unrated sites, there will be a natural
incentive to rate. The Government can help the industry reach
Such a rating system will enable citizens to
control the content they receive and to set limits for equipment
used by children. It will enable customers to exercise informed
choice. The conclusion is that the Internet brings with it significant
extensions of consumer choice and that effective mechanisms to
correct abuses can be established without intensive regulation.
The Government has recognised the importance
of the Internet for the prosperity of the UK. Its goal is for
the UK to be the best place to transact e-commerce. The European
Union has launched a similar programme. The success of an economy
in realising the opportunities of the Internet is based on innovation
and the investment that is required to fund it. This relates not
only to the construction of infrastructuresuch as ADSL
services and 3G networksbut to smaller scale activitiescommercial
and not for profitto exploit the potential of the new medium.
BT believes the Communications White Paper represents
an unrepeatable opportunity for the UK to set the right framework
to encourage investment and innovation in the Internet. There
are several key elements in this:
The current approach to broadcasting
and telecommunications is based on the assumption that unless
a licence or other specific authorisation is available, one must
be obtained before anything can be done. The pace of innovation
in the Internet is such that this needs to be reversedso
that for all but the largest scale activities there is a "can
do" presumption. If the UK is to lead in innovation, there
must be a disposition to act, not to delay action until permissions
have been obtained.
There must be rewards for successful
investmentas there will always be penalties for failure.
Telecommunications rules, designed for fixed network carrying
little other than voice telephony, require operators such as BT
to share information about new services with competitors in time
to enable all parties to launch at the same time. This denies
innovators first mover advantages, and discourages innovation.
The companies obliged to share ideas run the risks while being
denied the reward, and the others have little incentive to run
the risks of competitive innovation when they know they will be
able to obtain the means to provide the new services. This is
completely inappropriate for the Internet world.
Regulation should be based on the
Competition Act and address actual cases of anti-competitive behaviour.
Regulators should not intervene unless there is a problem.
Regulation should also be faira
major failing of the Communications White Paper is that it does
not provide a satisfactory appeals mechanism against regulatory
decisions. Although full appeal rights are to be available if
OFCOM exercises its concurrent Competition Act powers, no such
rights are available against exercise of powers under communications
legislation. There, the grounds for appeal are limited to procedure,
fact and lawnot merit. We can see no valid reason for this
The objectives of the regulatory
system should be clear. Those set out in the Communications White
Paper are capable of improvement. The first objective links the
protection of consumers and the promotion of competitive markets.
The first is desirable, the second will be required by European
Union Directives, but their combination creates confusionit
is not clear which has priority or whether consumer benefit may
only be pursued through promotion of competitive markets. It would
be better for them to be separated and OFCOM required to explain
decisions that involved conflict between objectives.
These principles represent the basic features
of a regulatory system that will promote rather than hold back
the investment and innovation needed for the UK to succeed in
the Internet age.
In Section 2 (Consumer Choice) we discussed
the crucial differences between the Internet and traditional broadcasting.
The Internet is used by many small interest groups to communicate
cheaply, quickly and effectively with members, and to promote
their activities to others. It places good quality communications
with near universal reach within the budget of small groups. This
is what is meant by the democratisation of communications.
As the capabilities of the Internet increase,
further activities will be possible. Within a few years it will
be commonplace for the following to happen:
the school play is recorded and downloadable
from the school's web site;
the carol service is webcast live
so the housebound and people in hospital can participate;
school sports are webcast, so absent
parents can see their children compete on the PC in the officeor
over their 3G equipment on a train; and
the choral society's latest concert
is downloadable from its web site.
All these ideas are well within the capabilities
of current technology. The overall effect is to make small scale
communication possiblewhich not only contributes to greater
variety but promotes exchange of ideasintellectual interactivity.
There is, however, a real danger that this vision
could be lost. One of the prices to be paid for regulation is
the need for time and money to be spent dealing with it. This
immediately raises barriers to entry. The fear of infringing rules
frequently kills otherwise promising enterprises. The Internet
has flourished with a minimum of regulation. If regulation is
allowed to develop, the enterprise, initiative and creativity
that have been its distinguishing characteristics will be lost.
We believe that the Communications White Paper
adopts a sensible overall policy towards the Internet. It recognises
that unduly heavy regulation would stifle the enterprise and adventurousness
that has characterised so many activities connected with the Internet.
It proposes, through the Internet Watch Foundation, to build on
the successful self regulatory practices that have characterised
the on-line world rather than building a new tier of regulation.
This approach, with the recommendations we make about ensuring
fairness and clarity in the overall communications regulatory
environment should enable the UK to be among the leaders in innovation
and creativity in the twenty-first century.