Ofcom appoints safe pair of hands as new boss and gets new internet censorship role

Establishment figure Dame Melanie Dawes has been announced as the new Chief Exec of UK telecoms regulator Ofcom.

She replaces Sharon White, who was also a senior civil servant before being handed the Ofcom gig. Dawes (pictured) is currently Permanent Secretary at the Ministry of Housing, Communities and Local Government, a position she has held since 2015. Prior to that she was Director General of the Economic and Domestic Affairs Secretariat at the Cabinet Office.

“I am delighted that the Secretary of State has approved Ofcom’s appointment of Dame Melanie Dawes as the next Chief Executive of Ofcom,” said Lord Burns, Ofcom’s Chairman. “The Government’s statement that it is minded to appoint Ofcom as the regulator for online harms is a vote of confidence in Ofcom’s expertise. I know Melanie will do a fantastic job of leading the organisation and maintaining its strengths.

“I look forward to working with her over the months ahead as we prepare for this forthcoming legislation as well as the ongoing tasks of achieving better broadband and mobile coverage and supporting UK broadcasting.”

“I congratulate Dame Melanie Dawes on her appointment as chief executive of Ofcom,” said DCMS Secretary of State Nicky Morgan. “Melanie’s experience leading organisations through change will be vital as the Government today announces it is minded to appoint the organisation as regulator for new online harms laws.”

What’s all this ‘online harms’ stuff they’re all banging on about, I hear you ask. Well the UK government has been having a public consultation on how to protect people from bad stuff on the internet. As a result it has concluded there needs to be some kind of state intervention to make sure those who publish bad stuff are censored, punished and prevented from ever doing so again.

“We will give the regulator the powers it needs to lead the fight for an internet that remains vibrant and open but with the protections, accountability and transparency people deserve,” said Morgan. There’s just so much to unpack in that. Of course things like child abuse, promoting terrorism, etc should be kept off the internet and proponents of them punished, but that stuff is already illegal, so why do we need extra powers to fight it? Proposing the censorship of ‘harmful’ but otherwise legal content creates so many new problems it’s hard to know where to start.

“There are a number of important questions that remain unanswered – especially in a post-Brexit environment – such as how Ofcom will use its new powers, how a regulator would deal with companies not based in the UK and ISP blocking – including how the UK reacts to technical developments such as DNS-over-HTTPS. ISPA will be working with its members on these and other points as we enter the next phase of consultation,” said Andrew Glover, the Chair of ISPA.

It had previously been rumoured that the new UK government would push for a more radical appointment, but maybe this additional internet censorship remit caused it to err on the side of caution. Dawes would have had her hands full without the impossible job of policing the internet, now she’s really got her work cut out.

Vodafone ranks number one in the Ofcom competition no-one wants to win

Ofcom has released data detailing the complaints lodged for each telco in the UK, and Vodafone almost clean sweeps the awards.

Collecting the most complaints for broadband, mobile and landline, only Virgin Media’s TV offering saved Vodafone executives from further embarrassment. At the other end of the scale, Sky, EE and Tesco Mobile collected the prize for best performance.

Service Least complaints Most complaints
Broadband EE/Sky Vodafone
Mobile Tesco Mobile Vodafone
Landline EE Vodafone
TV Sky Virgin Media

“People have never had more choice in the phone and broadband markets,” said Fergal Farragher, Ofcom’s Director of Consumer Policy.

“It’s also never been easier to switch your service. So, companies that don’t prioritise great service could see customers leaving them for ones that do.”

Thanks to new rules being introduced by Ofcom, telcos are being forced into greater transparency when it comes to the conclusion of contracts and what deals are being made available, as well as simplifying the process of leaving a service. Soon enough, a simple text message will be enough to switch providers.

Moving forward, the new rules should filter down to the telcos. One would hope this would not only improve customer services, but also the performance of the networks as pressure ramps.

Interestingly enough, Vodafone at the top of the list might come as a surprise to some. This is a company which has been investing intensely in a new, converged network, as well as introducing a major overhaul of the business processes to recapture the lost fortunes of yesteryear. It is easy to forget that Vodafone was once the market share leader for mobile, though now it sits in third place.

While no-one wants to be awarded these prizes, the trends are heading in the right direction in the UK. Ofcom has previously pointed towards data which suggests telcos are getting better at delivering on the glorious promises make by breakfast-themed brand ambassadors on TV.

For example, in the first quarter of 2011 the number of complaints for broadband, mobile, TV and landline services stood at 40, 13, 5 and 38 per 100,000 customers respectively, though this industry average has fallen to 14, 4, 6 and 10. TV might not be heading the right direction, though the data suggests the reliability of these services is improving.

Another factor to consider is that the telcos might just be more honest with their customers today than they were in 2011, though through no fault of their own.

t seems like a distant irritation, but it wasn’t long ago that the telcos could make use of the ‘up to’ metric. This enabled service providers to mislead customers on the performance of products. The fact that the telcos are being more realistic on the performance of products in advertising might be a prominent contributing factor to the number of complaints; if the customer is getting the service it was promised, there is nothing to complain about.

“Complaints about mobile, broadband and landline to Ofcom have fallen to historic lows over the last decade, so it’s disappointing to see a slight increase this time around,” said Richard Neudegg, Head of Regulation at Uswitch.com.

“We hope this isn’t a sign that telecoms providers have taken their eye off the ball, as there is still room for improvement.”

UK government resists establishment appointment for Ofcom boss

The newly-elected Tory government is reportedly pushing back on Ofcom’s desire to give its top job to another member of the UK establishment.

Departed CEO Sharon White was a senior civil servant before she got the gig a few years ago and now that she’s moving on the opportunity exists to bring a different approach to regulating the UK communications sector. Late last year it was reported that Ofcom wanted another civil servant and apparent ‘safe pair of hands’ Melanie Dawes to get the gig, but the requisite approval from the government has not been forthcoming.

Now the Telegraph reports that the reason for this is the desire of the new administration to get someone who might actually know a thing or two about the telecoms business to run its telecoms regulator. The Johnson government is said to be very keen to shake up the permanent political establishment, with top adviser apparently very keen to have more people with skills other than climbing the political career ladder in key roles.

The report claims the government is going direct to industry to try to persuade grizzled, entrepreneurial types that becoming a regulator is more exciting than it sounds. One of the more fun bits may involve harassing the BBC, which today announced the departure of its Director General to enable a new one to get fully warmed up before they have to start justifying the license fee in a few years’ time.

The Telegraph spoke to a few anonymous industry folk who said they had been approached about the role, but didn’t fancy it because it takes so long to get anything done in the public sector and they reckoned the role would become politicised. It’s hard to argue against that perspective, when you add the intensely political climate around 5G and fibre to the BBC stuff. Finding an industry figure who it competent and driven, but also able to play politics won’t be easy, but it’s good to see a willingness to wait for the right person.

Ofcom promises to ‘supercharge’ fibre with four-point plan

Telecoms regulator Ofcom has proposed a four-point plan to accelerate investment in fibre networks at interest continues to gather momentum in the UK.

In what could turn out to be a catalyst to gather further momentum in the market, Ofcom has revealed a four-point plan to accelerate deployment. Interest in fibre connectivity has certainly increased across the country, though BT and Openreach have called for regulatory reform to further aid aggressive deployment plans. The plan is now open for consultation, with Ofcom set to publish its decision in early 2021 before the current rules expire in April 2021.

Firstly, caps will be placed on wholesale prices to encourage competition from new networks. Secondly, Openreach will be prevented from applying drastic discounts which could stifle competition. More flexibility will be offered in the rural regions to encourage investment however, and finally, Ofcom will deregulate Openreach’s copper products in areas where full fibre is built to help Openreach retire the network.

“These plans will help fuel a full-fibre future for the whole country,” said Jonathan Oxley, Ofcom Interim Chief Executive. “We’re removing the remaining roadblocks to investment and supporting competition, so companies can build the networks that will drive the UK into the digital fast lane.

“Full-fibre broadband is much faster and more reliable. It’s vital that people and businesses everywhere – whether in rural areas, smaller towns or cities – can enjoy these benefits. So, we’re making sure companies have the right incentives to accelerate full fibre to every part of the UK.”

Compared to other nations across the European bloc, the UK is in somewhat of sluggish position. Pointing the finger towards investments in G.Fast broadband upgrades as opposed to the more expensive, but longer-view, fibre products has generally been accepted as the main reason. According to OECD estimates, only 1.92% of total broadband connections in the UK are fibre, which leaves the state in a comparatively unattractive position.

Fibre connections as a percentage of total broadband connections
Country 2018 2016
UK 1.92 0.8
Germany 3.18 1.8
France 16.5 7.8
Poland 20.49 8.2
Portugal 45.2 32.3
Sweden 66.94 55.2

OECD Broadband statistics

“Today’s proposals appear to be a big step in the right direction to give clarity and investment certainty,” an Openreach spokesperson said. “Like the Government and Ofcom, we want to upgrade the UK to faster, more reliable full fibre broadband. We’re getting on with the job, building to 26,000 premises each week and we remain on track to reach 4m homes and businesses by the end of March 2021.

“We’ll consider the range of proposals carefully and will continue to work with Ofcom and industry on getting the conditions right to help achieve the Government’s ambition of rolling out gigabit capable broadband across the UK as soon as possible.”

Although some might question the need for such speed, it won’t be too long before applications emerge which drive data usage through the roof. Let’s not forget, in 2010 average fixed broadband speeds were 5.2 Mbps, satisfactory at the time but horrifying for the consumer of today. Average speeds in 2019 were 22.37 Mbps and it will not be long before these are considered below par.

Aside from speed, it is also worth noting that fibre broadband connectivity also offers a very useful boost to reliability.

“It’s good to see Ofcom using its powers as a regulator to stimulate competition, drive investment and improve outcomes for consumers,” said Ed Dodman, Director of Regulatory Affairs at Ombudsman Services.

“Many of the broadband complaints we handle from consumers and small businesses are to do with issues around speed and reliability, so we support proposals that will lead to improvements in these areas across the UK.”

Although the OECD statistics do not paint the prettiest of connectivity pictures in the UK, momentum has been shifting in the right direction.

From a political perspective, the idea of gigabit speed broadband has taken hold. It might turn out to be nothing more than empty campaign promises, but it has raised the issue of fibre connectivity and the digital divide to the national conversation.

Looking at the consumer, there is certainly more appetite. This will be partly down to the consumer being more educated on the different connectivity options, Ofcom rules killing off dubious and misleading fibre claims from ISPs and the price of fibre connectivity dropping in recent years.

And thanks to increased demand from the consumer, the UK fibre landscape is looking like a more attractive investment. Goldman Sachs purchasing CityFibre is evidence of this, but other financial players are becoming increasing interested in communications infrastructure as a long-term investment. Securing additional funds from third-parties is becoming a critical component of the mix, especially with more alt-nets appearing.

In the short-term, the emergence of ‘alt-nets’ should only be viewed as a good thing. More providers will create more value for the consumer through increased competition and providing the telcos incentive to invest in fibre. However, you have to wonder whether the number of alt-nets in the UK is sustainable in the long-run.

The more providers there are, the more fragmented a market becomes. Fragmentation is the enemy of scale, making it more difficult to aggressively pursue expensive investments. There is of course a risk of over-build in certain markets, though the presence of these alt-nets creates an interesting M&A future for the UK.

CityFibre is a primary example of what happens when a market becomes too fragmented. This is a company which only exists because it was able to acquire several distressed fibre players and merge them into a single business. Some ambitious and cash-rich parties might look at the potentially fragmented market in the UK as another opportunity to consolidate and create another scaled player at some point in the future.

Although this move should not be considered the silver bullet from Ofcom, it is certainly very encouraging. The UK telecoms industry has been calling for regulatory reform for some time in pursuit of greater levels of certainty as well as a more favourable investment climate in the UK.

What we have here is an excellent example of collaboration. For the digital society of tomorrow to be more than a pipe dream, industry will have to come together with the investment community and Government, presenting a united front. This proposal is perhaps evidence the rhetoric is perhaps evolving into reality.

Ofcom proposes ban on selling ‘locked’ devices

Ofcom has proposed new rules which would stop UK telcos from strong-arming customers into renewed or extended contracts.

The new rules would prevent telcos from locking-down devices to a single network. This has been a popular way for telcos to bully customers into remaining customers, and while it has become less commonplace in recent years, EE, Vodafone and Tesco Mobile persist with the ugly strategy.

“Switching mobile provider can be really frustrating,” said Lindsey Fussell, Ofcom’s Consumer Group Director. “By freeing mobile users from locked handsets, our plans would save people time, effort and money – and help them unlock a better deal.”

Quoting its own research, Ofcom suggests more than 50% of people in the UK find it uncomfortably difficult to switch handset providers, will a third have given-up on a switch because it was so much hassle to get the device unlocked.

Although these numbers do seem high, it perhaps should not come as a surprise. All the UK telcos have elected for difficult divorce proceedings as opposed to enhanced customer service to reduce churn. The attitude was never to make themselves more appealing, but to make the process of leaving so distasteful, frustrating and complicated that few would try it. Customer service is better in comparison nowadays, but it is still far from acceptable when set alongside other verticals.

While O2, Sky, Three and Virgin have all decided to drop the ‘locked’ device approach, it seems EE, Vodafone and Tesco Mobile are still drawn to the Mafiosi style of telecoms.

These proposals are now out for public consultation, though there are other efforts being made by the regulator to level the playing field for customers.

In another proposal, Ofcom is hoping to simplify the process of switching home broadband providers also. As it stands, it is simple enough to switch between internet service providers who make use of Openreach’s infrastructure, but the difficulties arise when moving to an ISP on different infrastructure, such as CityFibre or HyperOptic. Once again, BT appears to be employing strong-arm tactics in the pursuit of profit.

As a result of another distasteful, frustrating and complicated process, 43% decided against switching because they are worried about arranging two different services to start and end at the right time, 37% were put off by having to speak to two different companies and 35% were concerned about overlapping bills. If any of these worries become reality, there is no consequence for the telco irrelevant as to where the blame lies.

Under the new rules, service providers would have to compensate customers if things go wrong and they are left without a service for more than one working day. There will of course be small print to prevent abuse of the system, though at least there are some foundations for holding service providers accountable.

UK telecoms consumers seem to be moaning less

The latest telecoms complaints data compiled by UK regulator Ofcom reveals the level of complaints is declining across the board.

Ofcom tracks the level of moaning about landline, broadband, mobile and pay TV services and they’re all heading in the right direction. As you can see from the table below, it’s the fixed line services that have historically vexed their customers the most. Even if we discount the customer experience car crash that was 2011, fewer punters are inclined to grass their provider up to Ofcom with every passing year.

That said, within each category there’s still a fair bit of variation among the providers. In broadband Vodafone is well above the average with 30 complaints per 100,000 customers, with Plusnet and TalkTalk not too far behind.  Perhaps not coincidentally those three are also the worst performers on the landline side of things too.

Mobile has a very low average of three complaints per 100,000 punters, so everyone’s doing pretty well there. Virgin Mobile is the worst performer with eight and once more Vodafone is doing worse than average with six. On the whole it looks like Vodafone is the single company with the most to be concerned about from this latest report, but on the whole it looks like everyone’s putting in a decent effort.

Ofcom reported to have picked another civil servant as new boss

There was a time when some degree of telecoms expertise was considered a desirable quality in a prospective head of Ofcom, but that is long gone.

According to a report from the Guardian, former civil service Permanent Secretary Sharon White will be replaced as Chief Exec by former civil service Permanent Secretary Melanie Dawes if Ofcom has its way. While the appointment is made by the Ofcom board, it needs to be approved by the Secretary of State for Digital, Culture, Media and Sport. Since we’re not sure who that will be by the end of the year, Ofcom would apparently prefer to keep its choice quiet until after the General Election.

We asked Ofcom for comment, but were given the standard line about not responding to rumour and speculation, which was expected. We were pointed towards today’s official announcement that Ofcom board member and Chief Exec of the UK Regulators Network will be keeping the seat warm for Dawes, or whoever, until the UK political dust settles a bit. Oxley has ruled himself out of taking the gig permanently.

The Guardian quoted some random anonymous person who they say knows Dawes as calling her ‘a safe pair of hands’ and we have no reason to doubt this mysterious insider. That’s presumably why senior civil servants are now preferred to people with industry expertise – the government doesn’t want Ofcom getting funny ideas about policy and that sort of thing. Just keep quiet and do what you’re told, there’s a good regulator.

Ofcom announces 700 MHz and 3.6-3.8 GHz auction with no coverage obligations

UK telecoms regulator Ofcom has announced that the next tranche of 5G frequencies will be made available to operators via an auction next year.

The spectrum consists of 80 MHz of 700 MHz band and 120 MHz in 3.6-3.8 GHz band. The 700 MHz is a lot more valuable to operators because it covers much greater distances than the higher frequency spectrum. Thus Ofcom is proposing a reserve price of up to £240 million per 2×5 MHz lot of that, compared to a reserve price of up to £25 million for each 5 MHz lot of 3.6-3.8 GHz spectrum. Four lots of 5 MHz of 700 MHz spectrum will also be auctioned for downlink-only.

The big news within the announcement is that Ofcom isn’t attaching any coverage obligations to any of the spectrum, apparently as a result of the deal struck with operators last week. Were it not for that the 700 MHz spectrum was expected to only be offered on the condition that whoever owned any of it committed to the kinds of arbitrary geographical coverage obligations that have become do politicised in recent years.

“We’re pressing ahead with plans to release vital airwaves to improve mobile services for customers,” said Philip Marnick, Spectrum Group Director at Ofcom. “Together with mobile companies’ commitments to improve coverage, this will help more areas get better services, and help the UK maintain its place as a leader in 5G.”

The mechanics of the auction will be similar to the 2018 one, which brought in an acceptable amount of cash for the government so it presumably felt no need to change it. The 37% cap on spectrum ownership still applies, which means EE can only win a maximum of 120 MHz, Three 185, and Vodafone 190. O2 has so little spectrum that it could buy the lot if it felt like it (see below). The auction will take place sometime next Spring.

Vodafone first to take advantage of spectrum sharing rules

Vodafone has announced it has entered into a three-year agreement with StrattoOpencell to share the use of it 2.6 GHz spectrum assets to deliver connectivity in Devon.

Following adjustments to spectrum license rules by Ofcom earlier this year, Vodafone becomes the first telco to share out the valuable airwaves. As part of the agreement, StrattoOpencell will deploy 4G small cells to deliver connectivity services to a holiday site in Devon.

“Vodafone has a long history of innovation, from sending the first text message to conducting the first 5G holographic call,” said Vodafone UK CEO Nick Jeffery. “We are delighted to become the first mobile company in the UK to share some of our spectrum to extend rural coverage.

“By offering some of our 4G spectrum to StrattoOpencell, we are helping to extend fast and reliable mobile network access for people in rural communities. Mobile connectivity in rural areas is just as important as it is for those in towns and cities, which is why we continue to work with others to help improve rural connectivity for all.”

Earlier this year, Ofcom made some amendments to allow for spectrum assets to be licensed off to third-parties by the telco which owns the airwaves. The changes are designed to more efficiently make use of the valuable assets. Vodafone is currently using the 2.6 GHz spectrum band in urbanised areas, though not in the rural communities. The high-capacity is attractive in the cities, though the shorter-range is less so when dealing with the rural areas.

This looks to be a very good example of proactive and forward-thinking regulation. If Vodafone is not making use of the spectrum in certain areas, why shouldn’t someone else? It is after all an asset which Vodafone is entitled to monetize in any (legal) way it sees fit.

Should a telco find a partner it would like to license its spectrum assets to, it has to seek permission from Ofcom detailing the band, location, bandwidth and power required. The regulator looks at it with a positive outcome in mind, though it will look for potential interference. The applications are dealt with on a case-by-case basis.

“Our new sharing approach aims to help more people access the airwaves they need to create local networks around the UK, including improving connections in rural areas,” said Philip Marnick, Group Director of Spectrum at Ofcom.

“Vodafone and StrattoOpencell are the first to take advantage of this. We look forward to seeing how others use our new spectrum access approach to support innovation and enable local communities to have better connections.”

Although this is only in Devon for the moment, the spectrum policy has been altered to enable more creative connectivity solutions in areas where fixed-connectivity is not an option. This might be difficult to reach places, or areas where permanent connectivity is not required. The success of the idea will be dependent on adoption, so it will be curious to see whether EE, O2 and Three elect to join the sharing scheme.

Vodafone challenges new Ofcom rules on leased line rates

Vodafone has lodged a complaint with the Competition Appeal Tribunal, challenging new rules which it believes will give Openreach too much opportunity to abuse customers.

Following the latest Business Connectivity Market Review rules published in June, Ofcom granted Openreach greater freedoms to charge customers more for leased lines. These leased lines underpin home broadband, cloud hosting and 5G, as well as services offered directly to the citizen, such as banking, healthcare, and local and central government online services.

“Ofcom has now changed its approach and is regulating based on what it hopes will happen in the future, rather than based on the evidence of how the market works now,” Vodafone said in a press release.

The relaxation of rules has been based on various investigations over the last few years, though Vodafone has found issue with a few points.

Firstly, the Business Connectivity Market Review suggests Openreach does not have significant market power in the London region. Vodafone disagrees with this, suggesting market share of between 60% and 70%, exceeding the levels defined as market domination by Europe.

Secondly, Vodafone disagrees about the removal of a cost-based price cap in favour of a flat rate price cap. The cost-based approach was much more fluid, moving with the real cost realised by Openreach. Vodafone suggests Openreach costs are only going down, therefore the wholesaler will benefit significantly from the change.

Finally, in some cities Ofcom expects competition to enter the fray, therefore pricing regulations have been loosened. From Vodafone’s perspective, the facts are simple; competition hasn’t yet entered the market, and the regulations should be kept in place until they actually do.

In some parts of the saga, Ofcom has perhaps acted slightly irresponsibly, though you always have to remember this is a PR assault from Vodafone. Weaponising the press, as Vodafone is trying to do here, is often accompanied by emotive language, exaggeration and quoted figures which push right to (or perhaps beyond) the edge of estimate ranges.

This is not to say they will not prove to be accurate, but it is always worth remembering the presence of massaging and manipulation.