Government to give Ofcom new stick swinging targets

The UK Government has unveiled a new consultation which will explore how it can encourage Ofcom to snap the whip, making sure telcos get their gears churning to meet connectivity targets.

Over the next decade, if the government manages to create a suitable amount of urgency across the telco industry, there will certainly be some progress made. The objectives currently set out are nationwide full fibre broadband coverage by 2033, while also increasing geographic mobile coverage to 95% of the UK by 2022.

Although this sounds very official, this consultation is more of a temperature check from the government. It’s asking the industry to give it feedback on its Statement of Strategic Priorities to reinforce its position and create a framework for Ofcom to work towards, ensuring the aims and objectives of the government and the regulator are on the same page.

In this consultation, the government is presenting its Statement of Strategic Priorities for a legally required 40-day consultation, which will validate and justify the aims, therefore providing a more stable foundation to bring Ofcom’s work in-line with government ambitions. This is a process which is required in other utility verticals and brings the telco industry more in-line with the stricter regulatory scrutiny which is placed on segments such as water and energy.

Aside from meeting the connectivity and coverage ambitions, the consultation will also look at how ‘loyalty penalties’, the price-creep which is placed on contract renewals, can be tackled. The telco industry is one which is geared towards customer acquisition, though many would like to see loyalty rewarded, instead of picking up the slack created by offers to lure customers away from competitors.

“As the UK’s telecoms regulator, Ofcom has a critical role in realising our shared connectivity aspirations for the UK,” said Secretary of State, Jeremy Wright. “As well as ensuring the necessary improvements to broadband and mobile services, consumers must also be protected. I urge Ofcom to tackle harmful business practices and remove barriers to switching.”

The ‘loyalty penalty’ is a highly emotive mission from bureaucrats and consumer champions to stop an age-old practise of the telcos, which is perhaps underhanded. It is effectively taking advantage of those who are not savvy-enough to search for a new deal, or those who might innocently and naively presume loyalty would be rewarded. Unfortunately, this is not the case in the telco space, an industry which has a woeful track record and outlook on customer experience and services.

In terms of improving mobile coverage, the up-coming Ofcom 700 MHz auction has caught the attention of the government. The auction will aim to sell off 80 MHz in the 700 MHz band, spectrum which is well suited for providing mobile coverage over wide areas and indoors. Ofcom is currently clearing this band of transmissions for Digital Terrestrial Television (DTT) and by wireless microphones used in the entertainment industry, though the plans are to have the spectrum free for mobile use by summer 2020.

Elsewhere in the consultation, rural roaming will be covered. Again, this ties back to empowering the consumer with greater connectivity and coverage, tackling the not-spots across the UK. Despite each of the telcos claiming progress in improving coverage, there are still plenty of not-spots across the UK where consumers only have the choice of one operator. Future proposals would aim to improve roaming agreements, to offer greater choice of providers to the consumer.

Finally, the consultation will ask for opinions on the current regulatory landscape. Central to this aspect of the investigation will be the suitability of rules and regulations to ensure the UK attracts investment.

While this might seem like bureaucracy for the sake of bureaucracy, it is a democratic nation ensuring all the boxes are ticked. The government has ambitions and objectives, though it is seeking validation from the community, before presenting a mandate to Ofcom to ensure it is regulating the industry in the way the government feels is most beneficial for society on the whole.

Vodafone’s UK fixed line efforts off to a shaky start

Ofcom has started including Vodafone’s broadband and landline services among its complaints data and they top both categories.

The good news for Vodafone is that, while its nascent fixed line efforts are the most complained about (to Ofcom, at least) the lead isn’t that great. TalkTalk isn’t far behind in each case and there isn’t much of a gap to the chasing pack. Ofcom didn’t have anything to say about Vodafone specifically, contenting itself with the standard, generic fare.

“With so much competition in telecoms and TV services, companies that are falling short need to make service quality and complaints handling their priority,” said Jane Rumble, Ofcom’s Director of Consumer Policy. “Customers who aren’t happy with their provider can shop around and vote with their feet.”

Ernest Doku of uSwitch.com had a bit more to say. “Vodafone will especially be feeling the heat here as, for the first time, the provider has topped the table for receiving the highest number of complaints for its broadband and landline services,” he said. “However, this is the first time the provider has had enough customers – proportionally – to justify its inclusion in these figures.”

It’s not too surprising that a relatively new set of services should have some teething problems and therefore an elevated level of complaints, so we shouldn’t read too much into Vodafone’s performance for now. But if that level remains high for the next few quarters then that could indicate some more profound issues with Vodafone’s UK diversification.

Here are the tables.

Broadband

Ofcom Q3 2018 complaints broadband

Landline

Ofcom Q3 2018 complaints landline

Mobile

Ofcom Q3 2018 complaints mobile

Pay TV

Ofcom Q3 2018 complaints TV

British parents are increasingly worried about the Internet – Ofcom

Research into children’s media consumption published by UK telecoms regulator Ofcom revealed that only 54% of parents agreed the benefits of the internet outweighed its risks, the lowest level since 2011.

The report, “Children and parents: Media use and attitudes report 2018” (and its Annex) and “Life on the small screen: What children are watching and why” were made by Ofcom with analysis of 2,000 British children aged 3-15 years and their parents. Less than half of the parents of 3-4-years agreed that the internet is doing more good than bad.

When prompted with the major concerns parents have about their children’s online life, “companies collecting information about what their child is doing online” came the top with 50% of parents expressing concern. Three other issues have increased in their level of concern from the similar research a year ago: the child damaging their reputation (42% vs. 37%), the pressure on the child to spend money online (41% vs. 35%), and the possibility of the child being radicalised online (29% vs. 25%).

Ofcom 2019 1 parent concerns

Published by Ofcom today, the reports showed that on average, a 5-15-year old child would spend more than four hours a day in front screens, including 2 hours 11 minutes online (same as a year ago) and 1 hour 52 minutes watching TV on the TV sets (8 minutes shorter than 2017).

“Children have told us in their own words why online content captures most of their attention. These insights can help inform parents and policymakers as they consider the role of the internet in children’s lives,” said Yih-Choung Teh, Strategy and Research Group Director at Ofcom. “This research also sheds light on the challenge for UK broadcasters in competing for kids’ attention. But it’s clear that children today still value original TV programmes that reflect their lives, and those primetime TV moments which remain integral to family life.”

There are differences in media consumption patterns between age-groups and between social groups. For example, the older the age group, the more time the children would spend online, from less than nine hours per week for the 3-4-year olds to 20.5 hours for the 12-15-year olds. Or, children of the 3-4-year old group in C2DE households spend more time going online, playing games and watching TV on a TV set, compared to those in ABC1 households.

Ofcom 2019 2 weekly hours

When it comes to device ownership and the devices used for media consumption, the research found that 1% of 3-4-year olds already have their own smartphones, and 19% have their own tablets. The penetration rates go up to 83% and 50% respectively in the 12-15-year old group. Again, there are differences between sub-groups on the devices used to consume media on their devices. While TV sets are still being used by more than 90% of children across all the sub-groups, the percentage of them also watching TV on other devices increased from 30% in the 3-4-year olds to 62% in the 12-15-year group.

The penetration of streaming services including Netflix, Now TV, and Amazon Video is already fairly high among all the sub-groups, with 32% of 3-4-year olds using at least one of them, going up to 58% in the 12-15-year olds. But YouTube is still leading in popularity. 45% of 3-4-year olds have watched YouTube, the penetration would go up to 89% in the 12-15-year olds.

As well as content consumption, content creation is also on the rise among children, with “making a video” one of the most popular online activities. While on average 40% of 5-15-years have made an online video, nearly half of all 12-15-year olds have done so.

Ofcom 2019 3 making video

Time spent on online gaming has remained largely unchanged from a year ago, ranging from a little over 6 hours per week in the 3-4-year group to nearly 14 hours in the 12-15-year group. But gaming is the online activity that demonstrates the biggest gender disparity. While boys in all age groups spent more time on gaming than girls, the difference went up to over 7 hours in the 12-15-year olds. On average girls in this group spent 9 hours 18 minutes playing online games while boys of this age spent 16 hours 42 minutes.

Social networks are another important type of media consumption by children. Facebook remained to be the most popular social media among the 12-15 years group, but its downward trend has continued to the lowest level of 72% penetration since the high of 97% in 2011. Gaining popularity are Instagram (65%, up from 57% in 2017), Snapchat (62%, up from 58%), and WhatsApp (43%, up from 32%). More significantly, when asked to name their “main site or app”, equal number of 12-15-year olds (31%) named Facebook and Snapchat.

Ofcom 2019 4 social networks

Astoundingly, 1% of 3-4-year olds, 4% of 5-7-year olds, and 18% of 8-11-year olds already have social network accounts, despite that most social networks set their minimum age at 13. WhatsApp raised its minimum age for EU users to 16 prior to GDPR came into effect. At the same time, less than a third of parents were aware of Facebook’s age limit, with even less awareness for the age restrictions of Instagram and Snapchat.

Ofcom 2019 5 parent awareness

Ofcom eyes rural coverage for next spectrum auction

With another spectrum auction creeping up on us, Ofcom has started to throw its weight around with the terms and conditions.

While 4G and call coverage is certainly improving in the UK, Ofcom has pointed towards the difference between urban and rural environments as a concern. This is partly to be expected, denser environments are simpler places to improve connectivity and much more commercially attractive, though Ofcom has been banging this drum for a while. We’re not too sure anyone is paying too much attention.

“Mobile coverage has improved across the UK this year, but too many people and businesses are still struggling for a signal,” said Philip Marnick, Ofcom’s Spectrum Group Director. “We’re particularly concerned about mobile reception in rural areas.

“As we release new airwaves for mobile, we’re planning rules that would extend good mobile coverage to where it’s needed. That will help ensure that rural communities have the kind of mobile coverage that people expect in towns and cities, reducing the digital divide.”

Looking at the numbers, the digital divide is no-where near the same problem as faced in other places around the world, but it is present. Almost all homes and offices can get a good, indoor 4G signal from at least one operator; while 77% are covered by all four networks, up from 65% a year earlier. 91% of the UK’s geography has a good 4G mobile internet signal from at least one operator, up from 80% last year, while 66% has ‘complete coverage’ from all four operators.

These numbers are heading in the right direction, though they only tell part of the story. 83% of urban homes and offices have complete 4G coverage, the figure for rural premises is 41%, while there are some remote parts of the country where there is no coverage at all.

The next auction will take place in late 2019 or 2020, auctioning off the 700 MHz and the 3.6 GHz – 3.8 GHz bands. Although the mid-range spectrum will be the 5G prize to chase, the 700 MHz could prove useful for providing good-quality mobile coverage, both indoors and across very wide areas, including the countryside. This is where Ofcom will start throwing its weight around. The winning bids will have to:

  • Extend good, outdoor data coverage to at least 90% of the UK’s entire land area within four years of the award
  • Improve coverage for at least 140,000 homes and offices which they do not already cover
  • Provide coverage from at least 500 new mobile mast stations in rural areas

With telcos revving themselves up for every opportunity to grab as much of the valuable and limited resource as possible, Ofcom can dictate the playing field a bit. Those who want spectrum will have to play by the watchdog’s rules and start offering bufferless cat videos to farmers.

On the broadband side of things, there does also seem to be improvements. The number of homes which cannot receive 10 Mbps, the Ofcom threshold for acceptable broadband, has fallen to 2%. However, this still leaves 677,000 homes and offices without decent broadband, 496,000 of which are in the countryside. The last push for any project is always the hardest, though customers will have the universal broadband service to rely on, forcing telcos to extend their network, should they not be willing to do it themselves. This service will come into play during 2020.

On the opposite end of the scale, ultrafast broadband has improved, it’s now accessible to 50% of British homes and offices, while 1.8 million premises now have access to ‘full-fibre’ broadband. This is still very poor in comparison to other nations across Europe, though it is a step in the right direction.

Ofcom reckons we’re clueless about broadband pricing

UK telecoms regulator Ofcom thinks consumers are ill-informed about the best broadband deals and wants ISPs to help rectify that.

As with many other utilities, UK punters often don’t shop around when it comes to broadband deals and often don’t even get the best service their current ISP offers at the price they’re paying.  Ofcom thinks that’s bang out of order and wants ISPs to be a lot more proactive about communicating this stud to their customers.

It’s kind of depressing that a regulator needs to get involved in this sort of thing at all. How difficult would it be for an ISP to notify their customers of the best deals on offer once their contract comes to an end? Not only is it underhand to conceal such things, but it’s presumably in the ISP’s interest to keep their customers happy so they don’t moan, churn or harm their precious net promoter score.

Yet here we are. Ofcom is proposing new rules that will oblige all UK communications service providers to flag up the best deals to their customers when discounted deals come to an end and also annually regardless of what kind of deal they’re on. “We’re concerned that many loyal broadband customers aren’t getting the best deal they could,” said Ofcom Chief Exec Sharon White. “So we’re reviewing broadband pricing practices and ensuring customers get clear, accurate information from their provider about the best deals they offer.”

The hook in Ofcom’s accompanying press release is a factoid that only half of the country is on ‘superfast’ broadband, while nearly everyone has access to it. What’s that all about? Ofcom puts the blame squarely at the feet of ISPs, as we’ve already explored, and it certainly seems like poor form for them not to even give their customers the best service at a given price point. Surely that should happen automatically.

Having said that it shouldn’t be beyond us to shop around every now and then. “While it’s true that half the battle in finding the most suitable and cost-effective broadband deal for your household is the availability of information, there must also be the will to find a better deal on the part of the customer,” said Dan Howdle of Cable.co.uk. “Thanks to the ‘stickiness’ of bundled TV packages, physical equipment such as dishes, set-top boxes and cable installations, along with no small amount of apathy when it comes to shopping around, too many stick with what they have and as such pay more than they should.”

Just in case CSPs were thinking of brushing this stuff off, Ofcom has thrown in an extra angle around ‘vulnerable’ people to ensure that wouldn’t be a good look. Additionally it’s launching a consumer campaign called Boost Your Broadband, fronted by consumer champion celeb Gloria Hunniford and designed to make it easier for punters to shop around.

Openreach to force feed localised fibre diet

It’s a new week, and therefore time for a new Ofcom consultation. This time the UK watchdog will be trying to understand whether it is feasible to hyper-localise regulations to encourage full-fibre networks.

While it might seem like a logical approach to dealing with an issue which is incredibly varied, the complexities have the potential to be quite staggering. Ofcom has previously commented on the difficulties in trying to force change onto the telcos, but this was a one size fits all approach; nuances depending on individual localities will most certainly test the competence, drive and patience of the team.

“Ofcom’s latest consultation underlines the importance of flexible rules when it comes to fibre infrastructure,” said Adrian Baschnonga, EY’s Telecoms Lead Analyst. “Levels of competition and willingness to invest vary by geography – and a more nuanced appraisal of the UK’s infrastructure landscape will play a key role in the regulation of fibre in years to come.”

In theory, the idea is a simple one. Regions will be placed into three categories, and the level of regulation will depend on the progress which has been made already. Those areas where fibre penetration is seemingly progressing steadily, i.e. the more commercially attractive areas, will feel the grace of deregulation, while on the opposite end of the scale, the more rural areas, rules will be firmed up to encourage investment.

The initial consultation will take place over the next couple of months, timetabled to finish next Spring, with the ambition of outlining the remedies by the Autumn and implementing during 2021.

The idea itself is of course a sensible one, even in a market as small as the UK the demands are quite varied, through implementation might be a lot more difficult. Telcos are anything but flexible in their approach to business, with changes being welcomed like man-flu.

EE and Virgin Media fined for ripping off customers when they leave early

UK telecoms regulator Ofcom has fined EE and Virgin Media millions of pounds for excessive early-exit charges.

Churn (loss of customers) is a constant worry for communications service providers and the best way to reduce it is to provide such a good communications service that subscribers don’t want to leave. Another way is to make it so odious and costly to leave that most people just can’t be bothered with the hassle and it seems EE and VM went a bit too far with the latter strategy.

Ofcom says it’s OK for CSPs to attach conditions to the early exit from contracts, but that those must be ‘clear, comprehensive and easily accessible’. Furthermore Ofcom stipulates “Communications providers shall ensure that conditions or procedure for contract termination do not act as disincentives for end-users against changing their communications provider”. It thinks thinks that’s what happened with EE and VM, which is why it has fined them £6.3 million and £7 million, respectively.

“EE and Virgin Media broke our rules by overcharging people who ended their contracts early,” said Ofcom’s spectacularly-named Director of Investigations and Enforcement, Gaucho Rasmussen. “Those people were left out of pocket, and the charges amounted to millions of pounds. That is unacceptable. These fines send a clear message to all phone and broadband firms that they must play by the rules, in the interests of their customers.”

VM doesn’t see it in quite the same way and is appealing the ruling. “We profoundly disagree with Ofcom’s ruling,” said Tom Mockridge, CEO of Virgin Media. “This decision and fine is not justified, proportionate or reasonable. A small percentage of customers were charged an incorrect amount when they ended one or more of their services early and for that we are very sorry.

“As soon as we became aware of the mistake we apologised and took swift action to put it right by paying refunds, with interest, to everyone affected. For those few people we could not locate, we have made an equivalent donation to charity.  We also reviewed our internal processes and systems, and improved our customer communications to make sure that this does not happen again.

“We wholeheartedly reject the claim by Ofcom that our ETC levels dissuaded customers from switching. This unreasonable decision and excessive fine does not reflect the swift actions we took, the strong evidence we have presented, or our consistent, open and transparent cooperation with the regulator.  We will be appealing Ofcom’s decision.”

EE hadn’t sent us a statement at time of writing, nor had it issued a press release. Read into that what you will but the fact that Ofcom reduced its fine by 30% in return for it not kicking up a fuss would seem to be significant.

Mockridge’s moan can be interpreted in a few ways. Taken at face value it’s easy to feel some sympathy. If indeed it was a small, innocent mistake that VM moved to correct as soon as it was aware of it, then the fine does seem excessive. If, however, VM knew what it was doing and thinks it should be able to get away with it just by saying sorry after it was caught, then it doesn’t.

At the very least the relative fines seem disproportionate. EE over-billed 400,000 of its customers for a total of £13.5 million in early exit charges over a six year period, while VM only rinsed 82,000 of its punters for £2.8 million in less than a year. Surely the scale of EE’s breach was far greater and it looks like it’s being too generously rewarded by Ofcom for its capitulation.

UK telecoms complaints at an all time low

The latest complaints data shared by UK telecoms regulator Ofcom reveals the level of moaning are at their lowest since it started collating them.

Ofcom has been logging consumer complaints about landline, broadband, mobile and pay TV services since 2010. The fact that they are at their lowest level ever would appear to indicate UK CSPs are doing a great job. Of course people could have just given up, or have become steadily more apathetic, or have found more effective ways to punish errant telcos than moaning to Ofcom, but let’s give them the benefit of the doubt.

“Although we’re encouraged that complaints are at their lowest levels since we started shining a light on this, some telecoms and TV companies are still falling short,” said Jane Rumble, Ofcom’s Director of Consumer Policy. “We expect those providers to up their game and deliver better service to all their customers.”

In the tables below you can see first the historical totals for the four categories of complaints and then the most recent ones for broadband, mobile and pay TV. We haven’t bothered with the landline ones because we figure nobody cares anymore. Now that Vodafone has got its act together there are no outstanding poor performers in mobile and similarly BT seems to have sorted out its pay TV operations.

Ofcom Q2 18 complaints historical

Broadband

Ofcom Q2 18 complaints broadband

Mobile

Ofcom Q2 18 complaints mobile

Pay TV

Ofcom Q2 18 complaints pay TV

Ofcom’s competitiveness quest continues with another ducts and poles assault

Ofcom has unveiled its latest edition of its business connectivity market review with an all too familiar feel; how can it force Openreach and BT to play nicer with competitors.

As with any former state-owned monopoly, BT/Openreach is in the enviable position of having the groundwork already laid for future-proof infrastructure. Of course it has not done enough across the years to meet the demands of tomorrow’s fibre-based diet, though one factor behind this is a lack of external pressure on the business. Without competition, the enforced need to invest and innovate is not there. This is ultimately Ofcom’s objective; create an environment which encourages other ISPs to lay their own connectivity foundations, decrease the reliance on Openreach and improve connectivity options for the consumer.

“We want to give companies greater flexibility to lay fibre networks that serve residential or business customers,” Ofcom said in a statement. “So today, we are consulting on proposals to allow access to Openreach’s ducts and poles to companies offering any type of telecoms services including high-speed lines for large businesses, networks carrying data for mobile operators and high capacity lines supporting broadband services. We intend to implement this unrestricted duct access from spring 2019.”

This review focuses on the areas where there is minimised or no competition for BT. Ofcom believes BT currently has almost 5,600 local exchanges, though at roughly 5,000 of these sites there is competition from fewer than two competitors. BT’s position has been deemed unacceptable in these areas.

Starting with the areas where there is evidence of potential competition, but BT still maintains ‘significant market position’, Ofcom will no longer impose a cost-based charge control or quality of service standards on BT’s wholesale services, which combined with access to BT’s ducts and poles, the theory is competitors will have a stronger incentive to build their networks.

In areas where network competition is unlikely to be a reality, Ofcom has proposed a price cap for services at 1 Gbps and below to protect customers and provide certainty and stability over the course of the review. What is worth noting is that this is a relatively short-review, as while the proposals could come into play next spring, 2021 would see a new review and therefore new proposals.

The final proposal comes at the 4,300 exchanges where BT faces no competition from rival operators for inter-exchange connectivity, and Ofcom has deemed opening up the ducts and poles will have little impact. Rival networks are too far from these exchanges to make it economically viable to serve these exchanges, therefore BT is the only choice as a supplier for backhaul. Ofcom is proposing a requirement for dark fibre at cost for inter-exchange circuits that connect to these locations.

This is of course not the first time the dark fibre suggestion has emerged from Ofcom. In April, Openreach officially launched a compromise between full dark fibre access and full managed service after months of bickering and reviews with BT attempting to resist the Ofcom intervention. Ofcom seemingly lost that battle, with fingers being pointed at suspect market definitions, though now it appears ready to restart the assault.

This is of course only the consultation stage of the process, though the plans are to get the new rules in place by next spring. Whether this timetable is realistic with the almost guaranteed legal challenge from BT remains to be seen, but this is just another step in the never ending Ofcom quest to improve connectivity and competition across the UK.