Memorandum submitted by the Scottish Advisory
Committee on Telecommunications (SACOT)
1. The Scottish Advisory Committee on Telecommunications
(SACOT) is a statutory body established under the Telecommunications
Act 1984 to advise the Director General of Telecommunications.
Members are appointed by the Secretary of State for Trade and
Industry. SACOT concentrates on issues that affect consumers in
Scotland, especially consumers on low incomes and consumers who
live in remote areas. This submission therefore focuses on the
consumer implications of the draft Bill. It is a preliminary submission,
as there has not yet been an opportunity for a full SACOT discussion.
This will be held on 18 June and is possible that a second submission
will be made after that date.
2. The present regulatory structure for
communications is a patchwork quilt, with overlaps and gaps between
different regulatory bodies. The Government's intention in the
Bill to develop a coherent approach to communications regulation
and to set up a single regulatory body is therefore very welcome
and should bring benefits to the industries concerned as well
as to consumers and citizens.
3. There are various terms used in different
parts of the Bill to encapsulate "the consumer". These
"Customers" defined in
Clause 3(7) and Clause 257 to include an individual who is in
a quasi-contractual (or pre-contractual) relationship with a service
of facility provider, but apparently excluding by default other
members of that individual's household, not to mention people
in hospitals, residential homes and other institutions. It would
seem that all these groups of people are currently excluded from
the consumer protection provision of the Bill;
"Persons" used in Clause
3(2)(d), Clause 16, Clause 97(4) and elsewhere, but not apparently
"Citizens" used in Clause
4(5) in the context of ". . . the interests of persons who
are citizens of the European Union" but not defined;
"Members of the public"
used in Clause 12(1)(a) and (b) but not apparently defined (except
by inference in Clause 109(9));
"Public opinion" used in
Clause 12(1)(a) but not defined;
"End-users" of public electronic
communications services in Clause 38(1)(a), defined in Clause
"Domestic and small business
customer" in Clause 96, defined jointly rather than separately
in Clause 96(8).
It is not immediately apparent why it is necessary
to use all these different terms and, if it is, what significance
there may be in their different use.
OF OFCOM (CLAUSE
4. Clause 3(1)(a) lists seven general duties
of OFCOM. We consider that the first"to further the
interests of the persons who are customers for the services and
facilities in relation to which OFCOM have functions"should
be the over-riding primary duty (subject to our comments in para.
3 above and para. 5 below on the definition of "customer").
Without this duty, none of the other duties would make sense:
indeed, there would be no need to set up OFCOM. However, any of
the other six duties could be dropped without affecting OFCOM's
5. We have indicated in para. 3 that the
use of the word "customers" in the Bill seems to be
very narrowly defined, being limited to those in individuals who
are in a quasi-contractual relationship with providers of service.
It appears to exclude other members of "customers" households
as well as all residents in institutions. If our interpretation
is correct, this is a serious fault: it implies that OFCOM has
no duty to these other citizens and consumers (the majority of
the population) and that the consumer protection provisions of
the Bill do not apply to them. Indeed, Clause 4(5) states that
it is a Community ". . . requirement to promote the interests
of all persons who are citizens of the European Union". The
very narrow definition of "consumer" in the draft Bill
would seem not to fulfil this.
6. Clause 3(2)(b) raises more questions
than it answers. What is meant by "the different interests
of those living in rural and in urban areas"? Are these two
categories intended to cover the entire population of the UK?
Or are some people considered to live in neither urban nor rural
areasfor example, those living in the suburbs or small
towns? Into which category, or neither, does someone living in
Helensburgh, Barnton, Dalkeith or Nairn fall? However, we do consider
that consumers living in remote and deprived inner city areas
should be the subject of OFCOM's regard in the context of this
7. SACOT welcomes the Clause 17(4) provision
that a Content Board member should represent the interest of persons
8. SACOT welcomes the spirit and the letter
of these Clauses. They should provide a secure basis for the improvement
of complaints handling and dispute resolution procedures, and
in particular for the development of an effective Ombudsman scheme.
96 AND 97)
9. SACOT welcomes in principle the proposal
to establish a Consumer Panel. However, we have a number of serious
10. While we can see the intention behind
the exclusion of content matters from the Consumer Panel's remit,
the limitation of the scope of the Consumer Panel in effect to
telecommunications in Clause 92(2)(a) and (b) would seem to negate
the whole objective of building a unified regulatory system. There
are many aspects of broadcasting other than content which should
come within the Consumer Panel's remit. Examples are the delivery
of broadcasting services to consumers, whether television and
radio licence holders meet the terms and conditions of their licences,
and electronic programme guides. Moreover, not only would the
draft Bill preclude the Consumer Panel from dealing with the substance
of these issues, it would also prohibit the Panel from looking
at associated service standards, customer rights, complaints handling
and dispute resolution.
11. It is not clear whether Clause 96(3)(c)
empowering the Panel to "give advice to OFCOM in relation
to any matter referred to the Panel by OFCOM for advice"
would prevent the Panel from taking the initiative in putting
issues on OFCOM's agenda, or whether this would be allowed by
virtue of Clause 96(2).
12. SACOT welcomes the provision that OFCOM
should be under a duty to consider the Panel's advice and research
(Clause (6(4)) and to give reasons publicly if it disregards the
Panel's advice (Clause 96(7)).
13. While it would be valuable for small
businesses to be covered by the Panel's remit, the definition
in Clause 96(8) of a small business as one that employs 50 or
less employees let in far too wide a range of business interests.
Some businesses with 50 employees are very substantial firms with
a multi-million pound turnover. The definition of a small business
should be much more narrowly drawnsay, five or less employees.
14. At present, the Chairmen and Members
of SACOT and the other Statutory Advisory Committees on Telecommunications
(ACTs) are appointed by the Secretary of State for Trade and Industry,
not by the Director General of Telecommunications, and their appointments
may only be terminated by the Secretary of State. These are valuable
safeguards against the ACT Chairmen and Members being the regulator's
tame poodles. The ACTs will cease to exist when the OFCOM Bill
comes into force and it is with some unease that we see in Clause
97(1) and (2) and Clause 97(7) that the powers of termination
and appointment of Panel members will in future lie with OFCOM,
albeit subject to the approval of the Secretary of State. This
represents a dilution of independence from the regulator. There
is not even a provision that Panel members will continue to hold
office quamdiu se bene gesserint and the possibility of
OFCOM seeking to remove "awkward cusses" who disagree
with OFCOM policy must be a real one.
15. While we welcome the provision of Clause
97(3 that the Panel should include members from England, Scotland,
Wales and Northern Ireland, we do not believe that this in itself
deals adequately with the interests of the four countries of the
UK. At present, as we have said above, there are four statutory
ACTS, one for each country, which will cease to exist when the
OFCOM Bill is enacted. It is vitally important that consumer representation
in the new OFCOM framework should at least match the present system
in terms of its effectiveness and we believe that this involves
a separate committee for each of the four countries. So far as
Scotland is concerned, it is a country which has distinct economic,
social and cultural characteristics. For example, it has a notably
higher proportion of households on low incomes, as well as households
living in remote areas, while large swathes of the country are
still subject to an effective BT monopoly so far as fixed line
telephony is concerned. Moreover, Scotland is far from uniform.
This distinctiveness and variety is currently recognised in the
current statutory basis of SACOT. It needs to be recognised in
future in the structure of the OFCOM Consumer Panel. We consider
that it is of the utmost importance that the Consumer Panel should
be required in the Bill to have a Committee for Scotland and for
each of the other countries.
16. Further, there does not even appear
to be any explicit provision in the Bill allowing the Consumer
Panel to establish any committees. It would appear that if the
Consumer Panel wished to set up a committee, it would have to
put the proposal to OFCOM for decision.
17. Clause 97(4) states that in appointing
Consumer Panel members, OFCOM should have regard to the interests
of certain groups of people. We have state above our criticism
of the use of "urban" and "rural", but as
it stands the list is an example of meaningless "tokenism"
which purports to provide a solution to a problem but does not
in fact do so. For example, the interests of disabled and elderly
consumers of telecommunications services are currently represented
by DIEL, an ACT established under the Telecommunications Act to
advise on the particular interest and requirements of consumers
who are older or disabled. The membership of DIEL covers a wide
range of disabilities, including the physically handicapped, the
mentally handicapped, people with impaired vision, those with
hearing loss, and so on. How can a single member of the Consumer
Panel possibly be considered as "representative" of
all these different types of disability? This is another example
of where the Bill should require the Consumer Panel to have a
OFCOM AND DEVOLUTION
18. The Bill is silent on the relationship
between OFCOM and the Scottish Executive and Scottish Parliament,
in spite of this having featured in the White Paper (Section 8.7).
SACOT considers that OFCOM should be required to liaise with the
devolved administration in Scotland on relevant issues. Also,
the Scottish Executive should be at least consulted on the appointment
of persons representing the interests of Scotland on the Content
Board (Clause 17(4)) and the Consumer Paneland, if our
proposal in the paragraph 20 below is accepted, the OFCOM Board
19. OFCOM should be required to establish
an office in Scotland. The Secretary of State for Culture, Media
and Sport gave an assurance on this point in the House of Commons
on 7 May 2002, but this does not go far enough unless it is embodiesdin
the Bill. For example, the Office of Fair Trading used to have
an office in Scotland, but this disappeared in a wave of financial
cuts as there was no statutory safeguard.
20. Finally, we come to the composition
of the OFCOM Board. The draft Bill is silent on this, presumably
because it is dealt with in the Office of Communications Act 2002.
However, the present situation is inherently unsatisfactory, certainly
from Scotland's viewpoint. The distinctive economic, social and
cultural needs of Scotland should be recognised in the composition
of the OFCOM Board. The current regulatory system provides for
statutory members for Scotland on both the ITC and the BSC, a
practical recognition of these distinctive needs. SACOT considers
that in the new regulatory framework there should be statutory
provision for at least one member for Scotland on the OFCOM Board.
A clause to this effect should be added to the Bill.