Facebook faces €5mn fine in Italy

The Italian competition authority, Autorita’ Garante della Concorrenza e del Mercato (AGCM) is intending to fine Facebook €5 million for ignoring its previous ruling.

Having already been fined €10 million in December 2018 for violating the country’s consumer code, the AGCM has followed up with another seven figure-fine for ‘non-compliance’. Facebook has seeming not made amends for the violations of yesteryear, by adequately informing the user of data collection, and will face another investigation.

The new investigation, which has been confirmed by the Regional Administrative Court of Lazio, will potentially fine Facebook an additional €5 million.

The issue which is at the crux of this saga for Facebook is ultimately one of transparency. While Facebook does not charge users for its services, the Italian competition regulator does not feel the social media giant is doing enough to make its users aware of how personal data is collected, store and analysed for commercial means.

Although Facebook removed the ‘it’s free and always will be’ tag from the website under orders from the regulator, it is now believed the social media giant failed to ‘adequately and immediately’ inform users on the data collection ambitions. Facebook also failed to publish the amending statement on the platform.

In addition to a €5 million fine, Facebook will have to publish an amending statement on the homepage of its website, the app and the personal page of each registered Italian user, should the proceedings find Facebook guilty.

While it will surprise few Facebook is finding itself in another spot of bother when it comes to transparency and honesty with its users, it is quite surprising the social media simply ignored the demands of the regulator. Although it is far from a good corporate citizen, it seems highly unusual the team simply didn’t pay attention to the Italian regulator in the first place.

Could Iliad Italia be a victim of Corporate Darwinism?

Iliad’s Italian business unit has lodged complaints with Italian and European regulators regarding network sharing deals, but could these objections be effectively ignored?

While network sharing is a proposition which offers great benefits to cash-strapped telcos in pursuit of the eye-wateringly expensive 5G connectivity dream, it is not without its opponents and critics. Some regulators have become very defensive about the progressive idea, while there are telcos being left out of discussions who are objecting also.

In Belgium, Telenet has raised concerns over a tie-up between Orange and Proximus, while the European Commission prevented O2 and T-Mobile from expanding an existing agreement to include 5G in the Czech Republic. Both of these network sharing partnerships have been halted in the pursuit of maintaining attractive levels of competition, but Iliad’s objections might fall on deaf ears.

Iliad is objecting to network sharing agreements between Wind Tre and Fastweb, as well as another between Telecom Italia and Vodafone Italia. Iliad is the only major telco in Italy not to be in a network sharing discussion. If these partnerships bear fruit, efficiencies will be realised, meaning competitor funds can be redirected elsewhere.

If this is a prediction of the future, Iliad will be in a weakened position to compete in the Italian market, and financial pressures could become too much to justify the venture. Iliad could become a victim of Corporate Darwinism.

The competition versus consolidation conundrum

Competition has been somewhat of a difficult topic of conversation between the regulators and telcos in recent years, primarily because of the polar-opposite opinions on market consolidation. The telcos would like to consolidate to achieve scaled economics, while the regulators want to preserve the number of telcos in each of the markets to maintain competition and encourage investment.

There are pros and cons on either side of the fence, though the regulators do not seem to be shifting. This argument has knock-on effects for network sharing agreements.

Ovum’s Dario Talmesio points out, network sharing could be viewed as consolidation through the backdoor. Combined assets reduces the number of independent networks in the market, and potentially reduces investments and competition.

In the Czech O2 and T-Mobile case, the European Commission suggested as there were only three major players in the market, further combination of assets between two of the parties would present too much of a risk of the third being squeezed out. The same case has been presented by Telenet to the national regulator in Belgium.

Regulators are sensitive to any propositions which would negatively impact competition in a market, but what about markets where the number of telcos could actually be reduced?

How much is too much competition?

While there is no official stance on the number of telcos in a market, the European Commission does not generally approve activities which would reduce the number of telcos below four. Vetoing the O2/Three merger in the UK, or Telia/Telenor in Denmark are two examples, but this might not be the case in Italy.

If regulators were to allow the network sharing agreements to proceed, Iliad would certainly be in a very precarious position, though there would still be four mobile service providers in the country; Telecom Italia, Vodafone Italia, Wind Tre and a Fastweb proposition enabled by its agreement with Wind Tre. This might be deemed enough competition in Italy to maintain a healthy market for the consumer and a financially sustainable one for the telcos.

The four telcos named above are venturing into untested waters here. This presents a new question for the regulators to answer on competition. Theoretically, suitable levels of competition are being sustained, and this network sharing dynamic has been approved by regulators in the past.

In the UK, Three and EE have formed MBNL, while Vodafone and O2 have CTIL. These are passive infrastructure sharing joint ventures, focusing on the rural environments. It is a similar situation which would be created in Italy, and the UK does have a sustainable telco industry. It is evidence that the dynamic could work, with or without Iliad in the mix.

Could this be a case of Corporate Darwinism?

Corporate Darwinism occurs when a market evolves to such a degree that players are either irrelevant or uncompetitive, and therefore go out of business.

The best example of this is Blockbusters. Once a dominant player in the movie rental business, as the distribution of content moved online the proposition of Blockbusters was no-longer relevant, therefore the company did not survive. This is an example of a market evolving to such a degree that the business was no-longer relevant.

The Iliad example is perhaps one where the market evolves to such a degree that the business is no-longer competitive.

If the four remaining mobile service providers have network sharing initiatives driving network deployment, investments can be more intelligently spend (a) on the network, or (b) in other areas of the business.

The shared networks might have a greater geographical footprint, have future-proofed technology and higher performance specs. Theoretically, Iliad would churn subscribers to higher quality rivals. Also, as less money is being spent on network deployment, tariffs could be lower, but profitability could be maintained. Or, more cash could be invested in value-add propositions for products. Rival offerings could look more attractive than Iliad products.

If regulators approve the network sharing agreements between Telecom Italia and Vodafone Italia, alongside Wind Tre and Fastweb, Iliad would find itself in a very difficult position. It become difficult to see the telco surviving in the long-term.

Unfortunately for Iliad, there is a coherent argument to approve the partnerships to drive towards a more sustainable telecoms industry, allowing the telcos to realise efficiencies ahead of the vast expenditure of 5G. The consumer would benefit, as would enterprise customers and the Italian economy on the whole. It might be a case of letting Iliad die out for the greater good of the Italian telecoms sector.

It’s déjà vu all over again as Vivendi suffers another Italian defeat

Italian Media company Mediaset wants to merge its Italian and Spanish businesses, something that significant shareholder Vivendi opposes.

The combined company would be called MediaFor Europe and a Mediaset EGM recently voted to go ahead with the merger plan. French conglomerate Vivendi owns around 30% of Mediaset, but two thirds of its stake is held in a trust by a company called Simon Fiduciaria, following a ruling by the Italian telecoms regulator that owning big chunks of both Mediaset and operator group TIM violates media plurality laws.

Subsequently it seems to have been decided that Simon Fiduciaria doesn’t get a vote in Mediaset general meetings, thus greatly diminishing Vivendi’s voice at such events. Vivendi reckons that’s the only reason the Berlusconi family, which owns almost half of Mediaset via its investment vehicle Finnivest, won the recent vote and it’s not happy about it.

Vivendi deplores today’s irregular approval by the Mediaset Extraordinary Shareholders Meeting of the new merger plan regarding MediaForEurope,” said a Vivendi press release. “The new plan has only gained approval because of the unlawful refusal to allow Simon Fiduciaria (which holds 19.9% of Mediaset share capital) to vote, relying on an interpretation of the Italian media law which is contrary to the EU Treaty.

“In addition, the new plan was adopted ignoring Italian law procedures regarding trans-border mergers, including the withdrawal rights for shareholders, and has merely removed some blatantly abusive clauses, without modifying the disproportionate rights granted to Fininvest.

“All recent judicial decisions and opinions, in particular from the Advocate General of the Court of Justice of the European Union in December, have not discouraged Fininvest’s representatives in the Mediaset Board from depriving minority shareholders of their most basic rights. The Mediaset Board has once again placed the company in a situation of serious legal uncertainty.”

All this huffing and puffing from a massive conglomerate that routinely tries to hijack the running of large companies without going to the trouble of buying them is a bit rich. Last year Vivendi’s protracted attempt to do so at TIM failed and history seems to be repeating itself, with Mediaset regarding Vivendi’s interests in the company as hostile. Vivendi’s principle objection to this merger seems to be a dilution of its shareholding in the combined entity, rather than anything to do with the strategy and health of the company as a whole.

Canadian complaints give regulator more ammunition for new telco

The Commission for Complaints for Telecom-television Services (CCTS) has said complaints against the telcos are at an all-time high, just as competition authorities are building evidence.

Usually annual complaints reports do not grab headlines, but this report needs to be placed into context. Earlier this week, the Canadian Competition Bureau has suggested new regulations should be introduced to encourage new entrants in the telco space, breaking the over-arching dominance of the ‘Big Three’; Bell, Telus and Rogers.

Looking at the CCTS report, for the last 12 months the Commission received nearly 19,300 complaints from telecoms customers, an all-time high for the organisation’s history.

The report suggests there is also a 42% increase in the number of service provider violations of the Wireless Code, most notably failure to provide important documentation to customers and to provide proper notice before disconnection of service. Complaints against Rogers increased 26.5% year-on-year, Telus’ jumped 70.6%, while Bell’s increased 24.2%.

Complaint Percentage of total
Billing issue 43.1%
Contract dispute 32%
Service delivery 21.8%
Credit management 3.1%

Looking at the long-term trends, complaints about wireless services have increased 90.6% over the last five years. The number of complaints about wireless on the whole increased year-on-year 53% for 2018/19, and accounts for 41% of all complaints directed towards telecoms and TV service providers.

Telco Number of complaints Percentage of total
Bell Canada 5,879 30.5%
Rogers 1,833 9.5%
Telus 1,610 8.3%
Virgin Mobile 1,253 6.5%
Freedom Mobile 1,253 5.9%

Telcos are traditionally very poor when it comes to customer service and delivering on the promised experience, so the poor performance described in the report will come as little surprise. However, those who are pursuing the introduction of new regulations to encourage additional competition will find the results very helpful.

As mentioned previously, the Canadian Competition Bureau has submitted a report to the Canadian Radio-television and Telecommunications Commission (CRTC) questioning whether the industry is in a healthy position. The report requests additional regulation which would encourage the creation of more MVNOs, as well as follow-ups which would assist these MVNOs in deploying their own, independent, scaled-networks. Ultimately, the Competition Bureau wants more competition across the country.

In general, competition authorities only pursue additional competition in markets when the status quo is deemed unsatisfactory. Introducing new dynamics are a means to ensure the consumer gets a fair price and a satisfactory service.

In the report submitted to the CTRC, the Competition Bureau suggests prices are 35-40% lower in regions where there is additional competition to drive the ‘Big Three’, and this competition only have to grab 5-10% of market share. Add the increased number of complaints into the equation, and the case for a competition shake-up in the Canadian market becomes stronger.

Canadian MNO/MVNO ARPU ($)
Bell Canada 51.05
Rogers 41.57
Telus 49.69
Freedom Mobile 28.47
Videotron 29.66

These are still the early days, but we suspect after a public consultation, efforts might be made to introduce additional competition into the market. This could mean forcing the existing telcos to lower wholesale costs to encourage the creation of new MVNOs in the short-term, it could also mean financial/regulatory assistance for these MVNOs to free-up capital for the deployment of infrastructure.

Another worrying development for the Canadian telcos is the up-coming 3.5 GHz spectrum auction which will take place next year. This is valuable spectrum for future 5G services, and should authorities want to introduce new competition, said competition would want a slice of the 5G airwaves. Perhaps limits will be introduced to the amount of spectrum the ‘Big Three’ can buy, and maybe it will be offered at discounted rates for new-players who commit to aggressive network deployment plans.

Country Price per GB ($) ARPU ($)
Canada 12.02 37.95
United Kingdom 6.66 17.65
United States 12.37 32.38
France 2.99 12.37
Japan 8.34 29.52
Australia 2.47 23.29

These are all guesses for the moment, though we strongly suspect Canada might be heading towards a situation where it wants to create additional competition. Prices are high in Canada in comparison to the rest of the world, $12.02 per GB a month and ARPU of $37.95, which is always a negative sign. Admittedly, the Canadian landscape makes it difficult to deploy networks cost-effectively, but the regulator wants to ensure the consumer’s wallet does not take too much of a beating.

It is unlikely to happen in the short-term, but the signs are not looking good for the status quo. The evidence is starting to point towards the need to introduce more competition in the Canadian telecoms market.

Vodafone Australia and TPG told to wait three months for merger decision

The final arguments have been presented to the Australian courts and now Vodafone Australia and TPG will have to wait until early 2020 for the decision on whether the $15 billion merger will be allowed.

This is a saga which has the potential to cause some long-term friction between the regulator and industry. Wherever you are around the world, best-case scenario would be collaboration between all elements of the ecosystem, but it does appear this is far from the case.

In a court case which has been on-going for just over three weeks, Justice John Middleton will now take into consideration all the arguments which have been presented. Unfortunately for those who are seeking a swift conclusion to the litigious chapter will be disappointed. Justice Middleton has said to expect a decision in January 2020, or potentially February.

Australian Competition and Consumer Commission (ACCC) took the decision to block the merger between Vodafone Australia and TPG on the grounds it would negatively impact competition in the future. The telcos are arguing this decision should be over-turned, suggesting it is the only way to ensure competition in a world which is quickly being defined by convergent operations.

This is a decision which will certainly disappoint someone. As patiently as Justice Middleton could look, there is no middle-ground between the feuding parties. The regulator is effectively accusing TPG of lying and the Vodafone/TPG representatives are suggesting the watchdog is not living in the realms of reality.

Looking at the perspective of the ACCC, the regulator believes the merger would prevent a fourth mobile player from emerging in the country. This is of course presuming TPG still has the appetite to deploy a network, and considering the telco has said it does not, the regulator is making a bold assertion.

Another interesting statement made by Michael Hodge QC, the lawyer representing the watchdog, is that its persistence to block the merger is based on “regulatory paternalism”. This is effectively a more acceptable way of saying ‘we know what better for you than you do’.

On the other side of the aisle, Vodafone and TPG are questioning whether the ACCC is looking at the same conundrum.

TPG did have an interest in diversifying revenues to enter into the mobile space, it was potentially going to do a ‘Jio Job’ to cause chaos, but the Huawei ban effectively put an end to this. Huawei was being touted as TPG’s main supplier of network infrastructure equipment, though the Australian ban for the vendor made financially unviable to pursue the network deployment, according to the telcos.

“Indeed, on the Commission’s evidence, TPG dodged a bullet that the network that they were rolling out would have been one of the great white elephants of Australian telecommunications history,” said Peter Brereton QC, representing Vodafone Australia at the trial.

If you believe the telcos, TPG is no-longer interested in building its own mobile network. It is not a financially attractive. Should the ACCC’s blockage of the merger stand, Australia will continue with three mobile network owners, though Vodafone will be in a weakened position to compete with the likes of Telstra and Optus.

This is the question which Justice Middleton needs to ponder. What is the best course of action for enhanced competition in the future? Three strengthened, converged telcos, or a fingers-crossed situation that TPG will be able to source CAPEX to fuel its own network deployment.

There are of course good and bad arguments on both sides of the aisle. The ACCC is potentially right to push for a disruptive fourth mobile provider, though is it reading the environment correctly? The telcos are of course correct to pursue a more comprehensive converged player, three top-tier telcos is certainly favourable than a duopoly, but there might be some nuanced language over the TPG appetite for network deployment moving forward.

The risk which could emerge is potential animosity. The UK’s connectivity landscape suffered due to friction between BT and regulator Ofcom, and there is potential for the same outcome here. Vodafone Australia and TPG only have one thing on their mind right now; a tie-up to challenge Optus and Telstra. The ACCC has taken somewhat of a patronising and stubborn stance, and seemingly does not want to consider the opportunity for increased competition with three converged operations.

Neither party is willing to budge, and it seems the loser will have to swallow a lot of pride to ensure a smooth relationship in the future.

US lawmakers want to look at private emails from tech execs

Scrutiny of the US tech giants has been taken up another level after members of the US House Judiciary Committee have demanded they expose their internal workings.

The move has been widely reported in the US, including by the Washington Post. It seems there is already a congressional antitrust investigation underway into Amazon, Apple, Facebook and Google, which is presumably related to the actions taken against Google and Facebook earlier this week. They want to know whether the companies have abused their dominant positions to corrupt markets for digital products and services in their favour.

One of the fun things about getting legislators and lawyers involved in scrutinizing the activities of companies is that they have the power to demand access to a bunch of information that would normally be kept locked in a dark cellar, to which only the CEO has a key. The stuff this committee would like financial data about includes their products and services, and private discussions about potential merger targets, we’re told.

Having said that the letters sent apparently don’t have any legal weight behind them right now, so the companies could theoretically refuse. This is a dangerous game to play, however, as they would have to refuse in a way that didn’t imply they had something to hide. Perhaps they could just chuck over some light-hearted Friday afternoon email banter while whistling nonchalantly.

What seems unavoidable is that the state machinery in the US and elsewhere has the tech giants in its sights and seems to have decided the lot of them have far too much power by half. Since they are undeniably dominant their execs and legal departments would be well advised to buckle in for the long haul. They could also do worse than speak to grizzled campaigners from companies like Microsoft and Intel to get some top tips.

Sharon White calls it a day at Ofcom

After four years of running the UK telecoms regulator Sharon White has decided she fancies a go at retail.

Ofcom has announced White will leave her current post as CEO of the regulator towards the end of this year in order to become Chairman of The John Lewis Partnership – a UK retail chain. They don’t have a replacement lined up but have half a year to dig someone up.

“Sharon has been an outstanding Chief Executive for Ofcom and will be missed by the whole organisation,” said Ofcom Chairman Lord Burns. “Under Sharon’s leadership, Ofcom has helped to deliver ultrafast broadband, widespread 4G mobile and now 5G, and became the first independent regulator of the BBC. She leaves Ofcom as a regulator with a relentless focus on the consumer interest; making sure people and businesses can get the best out of their communications services.”

“It’s been a huge privilege to lead Ofcom at a time when reliable, affordable communications have become essential,” said White. “I will leave behind an organisation that is dedicated in its mission to make communications work for everyone.”

On the whole White seems to have done a decent job in her time at Ofcom. She had to deal with things like the Openreach controversy, the 5G spectrum auctions and Three’s constant moaning and has done so with dignity and without any major mistakes. While she has left a solid platform for her successor, that person will have to deal with an industry in the middle of enormous change and in the centre of some of the biggest contemporary geopolitical issues.

German regulator promises light-touch on fibre

In an effort to force German telcos onto a fibre diet, regulator Bundesnetzagentur has promised a light-touch regulatory environment for the last-mile.

In the draft regulations, the German regulator is suggesting it would play a relative hands-off role when it comes to driving fibre deployment in the last mile, assuming market leader Deutsche Telekom plays nice with alternative connectivity providers, providing non-discriminatory access to wholesale services.

“Fiber is the technology for the gigabit world, and the successful regulation of Deutsche Telekom’s existing copper network is not transferable to fiber optic networks, and our analysis lays the foundations for a differentiated regulation of copper and fiber,” said Jochen Homann, President of Bundesnetzagentur, the German Federal Network Agency.

“If the non-discriminatory access of competitors to the fiber is guaranteed, we can confine ourselves to a ‘light’ regulation and the draft was future-proof, also with regard to the EU’s legal framework and the right of veto.”

In short, as long as Deutsche Telekom does not try to milk the profits unfairly, the regulator will allow it to conduct business as it sees fit. There is a slight risk in taking this approach, such is the dominant position of DT, but it seems to have weight this danger against the benefits of an accelerated fibre rollout. Perhaps this is done to progress made thus far.

According to the latest statistics from the Fibre to the Home Council Europe, Germany is currently one of the laggards when it comes to fibre deployment. The Council estimates only 2.3% of subscribers across the country have signed up to a fibre connectivity package, considerably below the 13.2% European wide average, and miles off bloc leader Latvia at 50.3%.

While it might be a leading political and economic voice across the continent, from a connectivity perspective Germany is currently one of the ‘also -ran’ category. With digital offering so much to future societies and economies, it will be hopeful to lose this tag sooner rather than later.

In the market definition presented by the regulator for consultation, distinctions between competitive conditions have been claimed between copper and high-performance fibre optic networks. With this in mind, the Bundesnetzagentur has said it would not be sensible to regulate the fibre market in the same way as it provides pricing conditions with copper.

Keeping regulation in the fibre to an absolute minimum should theoretically provide more incentive for private investment. There are of course risks, corporations on numerous occasions have shown them untrustworthy in a self-regulatory environment, but other nations will eagerly anticipate the mid- to long-term outcome of this move. Balancing the regulatory equation is an incredibly difficult task.

Germany has a swing at Facebook advertising platform

German regulator Bundeskartellamt has made a fresh attempt to curb the powers of the internet giants, this time targeting the data processing capabilities of Facebook.

The case built by Bundeskartellamt is based on what it has deemed market abuses by the dominant social media player in Germany. With Google+ shutting down, the regulator believes Facebook has a dominant position in the market, though it has not effectively informed users about the process of combing third-party data sets with information taken from the core Facebook platform to improve the detail of user profiles for advertising purposes.

This has been deemed inappropriate and Facebook has been ordered to shut down the process. This is not the first time this practise has been criticised by the regulator, but this is the first concrete ruling to for Facebook to desist.

“With regard to Facebook’s future data processing policy, we are carrying out what can be seen as an internal divestiture of Facebook’s data,” said Andreas Mundt, President of the Bundeskartellamt. “In future, Facebook will no longer be allowed to force its users to agree to the practically unrestricted collection and assigning of non-Facebook data to their Facebook user accounts.

“In future, consumers can prevent Facebook from unrestrictedly collecting and using their data. The previous practice of combining all data in a Facebook user account, practically without any restriction, will now be subject to the voluntary consent given by the users. If users do not consent, Facebook may not exclude them from its services and must refrain from collecting and merging data from different sources.”

Facebook has already stated it will appeal the decision with the Düsseldorf Higher Regional Court, though this should come as little surprise considering the attack on the foundations of the social media giants business model. The reason companies like Facebook and Google have been so successful in the early days of the data-sharing economy is because of the accuracy of advertising. This ruling could have a notable impact.

Not only does Facebook collect information about you from its core platform, but by supplementing this picture with more detail from third-party sources, a hyper-targeted advertising platform can be created. It’s seemingly one of the reasons advertisers have stuck by Facebook despite numerous scandals over the last couple of years; there are very few other platforms or businesses which can offer advertising services on par.

Although it is now common knowledge platforms such as Facebook sell ‘you’ to advertisers to fuel the spreadsheets, Bundeskartellamt believes the firm should obtain consent from the user should it want to use additional information to create a more detailed user profile. This data could be taken from sister platforms such as Instagram or WhatsApp, or third-party websites and applications which have ‘like’ or ‘share’ buttons embedded.

“By combining data from its own website, company-owned services and the analysis of third-party websites, Facebook obtains very detailed profiles of its users and knows what they are doing online,” said Mundt.

The practise becomes a bit more nefarious however. Even if there is no Facebook symbols or embedded buttons on the page or application a user is viewing, data might still be flowing back to the social media giant. This is not what anyone would consider transparent and should be addressed in all markets, not just Germany.

Overall, the Bundeskartellamt believes Facebook is abusing its dominant market position to the detriment of the other side of the equation, the user. While this will be escalated to higher courts, should the regulator win favour from the judges Facebook would have to obtain consent from every single one of its 32 million German users. It certainly will be able to obtain consent from many, but it would be a dent to the increasing under-fire advertising machine.

This is of course not the first time Germany has taken a run up at the internet giants. Germany has consistently been one of the leading nations attempting to tackle the power and influence of the internet players, creating a more tightknit regulatory framework which you would naturally expect in business. However, the social giants and their slippery lawyers are doing their best to resist.

Back in 2016, Facebook was told to stop collecting WhatsApp data from users and delete all the information it has already collected, due to the fact proper consent had not been obtained. It has also been investigating whether the Google+ data breach during the latter months of 2018 violates GDPR. Germany has also been one of the leading voices in the prolonged battle to ensure the internet giants pay fair and reasonable taxes across the European bloc.

What we are seeing in this case is another example of a regulator cracking down on the freedoms granted to Silicon Valley. For years, the internet players have been sliding between rules designed to parallel industries, exposing the grey and unregulated areas, as rule makers consistently struggle to keep pace with technological progress. There are numerous governments attempting to create more accountability, though it has been an uphill struggle so far.

The next couple of months will certainly be an interesting period in Germany. With judges considering the Facebook appeal, a win for the Bundeskartellamt could at as a springboard to wrap up the OTTs in more red-tape. We hope there is enough wiggle room left to innovate, but the last two years of scandals have shown the dire need to more strictly regulate Silicon Valley.

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.