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Ofcom: calling for a cultural change in the telecoms industry

Fixing broadband

Does the telecoms market work for you, or should providers be upping their game? Sharon White, Chief Executive of Ofcom, joins us to outline a view of the current telecoms market and a vision for change.

I joined Ofcom two years ago, and Which? was generous enough to host my first speech. My aim then, as now, was to explain how consumers lie at the heart of everything Ofcom does.

Essential services

Two years ago we said that broadband and mobile had become essential services. As much a necessity as gas, water or electricity.

We even found that young people would happily do without hot water than be without Facebook (!). Yet around 5% of homes and offices can’t get decent broadband of 10Mbps.

And while mobile broadband is being rolled out, 28% of UK homes and offices can’t get a good indoor 4G signal from every operator.

The government has set out a clear policy objective to widen broadband and mobile coverage across the UK. The Digital Economy Bill includes a new ‘universal service obligation’ (USO) for broadband. The USO complements the government’s pre-existing commitments to make superfast broadband available to 95% of homes and offices by the end of 2017, and to ensure that 90% of the UK has a mobile signal over the same timeframe.

These sit alongside Ofcom rules to ensure that 98% of homes and offices get a good indoor 4G signal from at least one mobile operator, also by the end of this year.

The government has said it will go further, setting out its policy objectives for the whole of the telecoms sector; which I very much welcome.

Regulation in telecoms

Ofcom also has a supporting role through regulation to ensure that people in the UK get the best from their communications services.

Competition brings greater choice, innovation and lower bills. And some in the industry argue that in furthering the interests of consumers, we should limit our activity to promoting competition.

But promoting competition can’t be the sum of our activity, and that’s because competition has its limits.

Firstly, competition is generally lower in rural areas, simply because fewer customers make it hard for operators to turn a profit.

Secondly, while people tend to shop around on price, or for a particular product they like, they don’t tend to make choices based on customer service – allowing operators to get away with poor service.

Thirdly, millions of consumers, particularly vulnerable and elderly people, don’t shop around at all.

This has created a widening gulf between expectations and what the industry is actually delivering.

Which? has found that certain telecoms providers dominate the list of worst-rated companies for customer service – behind even some banks. This should be a concern for us all.

Which?’s new campaign, Fix Bad Broadband, rightly highlights one particular failure – the mismatch between the speeds people think they are buying, and what they actually end up getting.

Moving forward

Ofcom has three important roles beyond competition:

  • empowering people so they can make informed decisions;
  • protecting consumers, especially those who are vulnerable;
  • and taking firm action when providers fail their customers.

We will empower consumers with better information, protect those who are failed by the market and take action against companies who fail their customers.

But ultimately, we want to see a cultural change in the telecoms industry. We want all operators consistently to put customers at the heart of their businesses.

A successful telecoms market should mean Openreach, not Ofcom, setting its own stretching service standards. Automatic compensation should rarely be necessary, because there are few failures in the first place. And fewer fines issued, because companies routinely put their customers first.

I appreciate that there’s a long way to go. But with commitment from the industry – and appropriate action from the government and the regulator – things can get better.

This guest contribution is from Sharon White, Chief Executive of Ofcom, and taken from her speech at an event with Which? on 12 April 2017. All views expressed here are Sharon’s own and not necessarily those shared by Which?.

Comments
Member

About a year ago I moved home and my main reservations were the very poor broadband and mobile services. It would be no great problem to switch mobile network to one that might work, albeit poorly, but from speaking to the locals, the broadband was a greater problem. Fibre was coming at some stage in the future, which surprised me because this was a small hamlet on the outskirts of a village that did not enjoy decent broadband or mobile services.

Even before I moved in I found that I had a 4G service on my existing mobile, thanks to a newly commissioned mast and a card was pushed through the door inviting me to put myself on the waiting list for fibre broadband. I did this and while I was waiting I used tethering to get online. I was delighted to find out that the new service was FTTP broadband and did not make use of copper phone lines from a cabinet.

If this can be done for a small residential development two or three miles from a town, I wonder if more could be done for others with poor services. I wonder if the cost quoted for rolling out fibre broadband is as expensive as quoted or if large profits are being made.

Member
paul rawlinson says:
26 April 2017

IF your fibre broadband is anything like we get here in South Wales, I would rather spend the excessive service charge on raising carrier pigeons, at least they are reliable !! our service “WAS” twice as fast & a hell of a lot more reliable 10 years ago than it is now !!

Member

A lot more people have started using the internet over the last ten years, Paul. and the content has also become a lot more complex in line with the higher speeds notionally available, so network congestion is the problem. The initial installation of fibre broadband had to compromise between (a) covering most urban areas with adequate capacity and (b) providing high capacity in selected areas but reduced coverage elsewhere. With hindsight I think we can say that was shortsighted, but it was probably the only realistic option at the time.

Member

One very big problem with Broadband is the contention ratio. That refers to how many users are sharing the data capacity on a provider’s line. To put it even simpler, it’s a count of how many households are using the same main broadband line as you.

If your contention ratio is 20:1, for instance, that means twenty households are using one line.

Standard contention ratios used to be around 50:1 for home broadband, and 20:1 for business broadband – but BT says these figures are no longer completely accurate, but they don’t say why they’re not. One guess might be that with a lot of new housing being built your CR might well be far greater than 50:1.

Member

Wavechange the cost of rolling out FTTP has already been available on websites and I have quoted FoD -ie- the real cost for somebody paying for fibre-exchange to premises , it isnt cheap. Having worked for BT I know exactly whats involved and it isnt a “5 minute job ” just because somebody gets it vin easily doesn’t mean others will get it as easily . I have been asking on the many convo,s relating to this who is going to pay -obviously not HMG , so I asked without anybody giving me a practical-down to earth- honest- re;liable costed detailed listing of how this will be provided .I have put many ways of doing so-ALL rejected except -make BT pay – which is impossible as I know it could cost up to £50billion for 100 % coverage of the British islands for FTTP . As I said it seems all to be aimed at BT while Virgin Media et-al- say live in the country in a remote location ?-tough -not our problem and ALL the others agree -our shareholders will not pay for it . So , will somebody who is an honest accountant with no political ties/ no shares in USA conglomerates , no connection with HMG etc supply me with how this is going to be achieved otherwise , to me its a – lets –remove BT and put in the Americans , who will not run FTTP but supply microwave , as I know happens in the States to remote locations , OR — like Scotland PAY BT through taxes which the Scottish government is doing along with the EDF . You voted to privatise BT , you jumped for joy when it was sold off _NOW you are complaining ? Not one of you envisaged what would happen , I and other forward thinking employees (at the time ) knew this was going to happen . instead of sniping at BT tell me anybody with a overall plan in England and there must be many wise people -HOW are we going to do this financially ? I was hoping as Which is bringing this subject up constantly they would have enough moral fibre to ask for a BT spokesperson to lay the costs on the line for Which posters , did you at any time ask BT for comments on this ?, as it seems you can get other commercial organisation spokespersons to introduce a convo and make comments all the way through the convo related to their organisations. I am left fighting alone for a British company that this country want to demolish -one way or another , even though it is a good provider of jobs and takes in many apprentices , have none of you seen how hard-nosed US firms operate ? you must do as you complain constantly to Which about US owned companies.

Member

I’m simply wondering if the actual costs need to be as high as quoted, Duncan. I’m always wary of published figures. With the interest in film and TV services via broadband it seems that there is plenty of opportunity to seek funding from the companies involved.

One of the reasons I’m keen on the roll out of fibre broadband is that the telephone service was not built with data transmission in mind. I’ve helped friends diagnose problems with internal extension wiring and I’m surprised that we don’t have more faults.

I do not understand the economics of providing the isolated housing development with FTTP broadband. It was built within the last 20 years so the phone wiring is not ancient and overdue for replacement. I appreciate that other solutions are needed for very rural locations, and you have mentioned possibilities in other Conversations. Patrick Taylor drew our attention to Broadband for the Rural North Ltd.

Member

Wavechange did you click on the URL that I posted on BT,s announcement (2014) of the cost of installing FoD ?, it is published by a well respected British internet information website. I will repeat it , even if you dont believe them , it certainly gives you some idea of the cost involved . : http://www.ispreview.co.uk/index.php/2014/04/breaking-costs-330mbps-fttp-demand-broadband.html I have watched teams of men laying cable/poles /cabinets etc in all sorts of weather , needing to wait for access permission from the land owners (Wayleave ) without it they are snookered in many cases especially on land owned by overseas investors which has held up installation in Wales where large areas are owned by all sorts of foreigners who want money or refuse access , just ask the Welsh government. Scotland , although in the same situation is a bit more forceful in the Scottish government actions.

Member

I did look at the website, Duncan. The wayleave issue is relevant to a charity I’m a member of because we need to bring some heavy equipment across a farmer’s field. It’s time to put an end to these unreasonable payments when installing and maintaining public services is involved.

Member

It is all very well defending BT as you seem to be doing, although it does appear that you go around in circles while doing it!! My experience with BT is, I suspect, like many; a greedy, grab all conglomerate who care little for the general public. I made a complaint to BT a few years ago about my Broadband, while complaining about something else, but I wrote to the CEO; Customer Services (so called) are a waste of time! Basically, the reply I got was that there was no intention of installing Fast Broadband in the village where I live, because there were insufficient clients – a large village, 3 miles from a town – so I contacted Virgin, who installed their Broadband very quickly and I have not looked back since – current download speed 163mbps – in the last month, BT have installed a grotesque box, which stand about 4′ tall to supply Super Fast Broadband, whilst doing so the contractor dug up the entrance to the cul de sac I live on – with no notice – when I complained the contractor said “BT don’t have to warn you!” What arrogance and if BT think I will ever use their “services” in the future, they can think on!!

Member

I take it you are referring to me David Marks ? I never go round in circles I tread a straight path , that speaking the truth upsets many people shows what British society has come to . Its a media driven circus just like you get in a real circus or even a Punch+Judy show . I can see right through it and the motives behind it ,as well as the people behind it (know who I am talking about ? ) . Its contrived to serve one purpose get rid of BT which is still basically a British company -one of the few left employing 10,s of 1000,s of British employees and apprentices and turn it into a big sweat-shop of contracted out personnel paid third world wages while the bankers + off-shore City types move more money out of this country . Wasn’t the Yuppie era bad enough ? now we have the neo-con generation and “con ” being the operative word . I make no bones about it I am for Britain and although I voted for “the Donald ” I put this country first and want what he wants -re-investment in the UK not shipped out 1000,s of miles to countries where the workers are paid a pittance and then the products including fish etc shipped back in again . This country is becoming a satrap of the USA more and more as time goes on and if I have to stand up in defence of one of the last British companies to the ire of those who have shares/ money invested abroad or in the NYSE then so be it . Tell me David what US company would you like to take over the UK telephone network ? and I will tell you how they treat remote/ rural customers . Many countries would never sell their telephone network to a foreign country , so is it one law others and a different one for Britain?, what we need is more loyalty or this country will become just like a third world country , but maybe thats the long term aim -is it ?

Member
Tina Adams says:
26 April 2017

I agree with every sentiment you have expressed about BT. Every quarter when my bill is due my connection starts to play up worse than any other time. My contract run out about 2 years ago (new estate so BT have the monopoly more or less). The blighters tried telling me last quarter that my router must be broken therefore a new one can be sent to me for the price of £10.00 + VAT and postage & packaging costs, other than than would I consider a new contract whereby I could then have their fast broadband… My IT specialist friend was listening to the conversation and put the operator right, hey ho 24 hours later my broadband was up & running and I received a text (still have) stating they found the problem at their end. If it hadn’t been for my friend I could have ended up being in a contract that would not be fit for purpose or out of pocket for purchasing another router. Oh & before I finish, BT did offer to come out and inspect equipment and if they felt I had tampered or no problem detected I would be charge around £100!

Member

I would like to see a ban on monthly allowances and bundles that have both a time limit and usage limit, i.e. most monthly plans.

Imagine if we had to buy electricity and gas in this way – either guess how much you will consume in a month which wastes any units that you don’t use by the end of the month, or otherwise be stung with a unit price that is many times the usual price. For example, let’s assume that electricity costs around 10p to 25p per kWh, depending on supplier. Instead of charging you 12p/kWh, your supplier lets you buy a monthly bundle of 500kWh for £60 or otherwise you pay an inflated price of £1/kWh for incremental usage. If you don’t use up the full 500kWh, you lose the unused units and if you use more than 500kWh, then you pay £1/kWh. Neither Ofgem nor consumers would tolerate this with energy, so why do Ofcom and consumers tolerate it with mobile phone services?

The only purpose of monthly allowances and bundles is to charge the consumer in full for usage that isn’t fully consumed and to charge prohibitively high rates for any usage over or outside the monthly allowance or bundle. This practice favours the mobile networks without giving any advantages to consumers. I’m not suggesting that consumers shouldn’t be able to bulk-buy their future consumption, but it is unreasonable to impose a monthly expiry on that purchased consumption. The consumer has paid for the consumption in full and should be able to use it in full or otherwise receive a refund of any unused consumption. It would be much simpler and fairer to charge for mobile phone service in the same incremental way as energy – just simple incremental usage prices at competitive prices, similar to Three’s 3-2-1 prices. Of course, mobile networks could offer volume discounts as well as period-based usage (e.g. a fixed fee for unlimited usage in a particular period), but it is an unfair commercial practice to charge consumers for usage that isn’t actually used. It is worth mentioning that the mobile networks offer simple usage-based postpaid tariffs to large corporate customers. That’s because large corporate customers don’t tolerate the ridiculous system of having to guess in advance how much each user will consume. Why can’t all consumers benefit from simple and fair incremental tariffs?

Member

I think many users like to control their costs by means of monthly bundles and data allowances, so the move towards them becoming the norm has been driven by consumer demand.

A lot of us attempt to do the same for energy costs too – by paying a fixed amount every month and then having an annual adjustment of that amount.

Member

Derek, monthly bundles and allowances don’t allow you to control costs. They sting you with a much higher rate if you go over the allowance. Only a minority of networks stop the service when you use up your allowance.

Member

NFH you are correct, but only in some cases.

In my case, I almost never exceed any of my monthly allowances – and if I do it is only when I have to make short but very important calls to “out of bundle numbers”, so I don’t mind that.

Also, for anyone using PAYG, costs are controlled by the amount of credit bought. In this case, bundles tend to offer much better value than the standard incremental rates.

Finally, as you acknowledge, a few contract providers, notably Tesco, allow both bundles and expenditure caps to be used, so even with a contract, costs can be tightly controlled.

Hence, from my own experiences, I argue that many (but not all) users do actually prefer the system of bundles to the alternative of varying unpredictable and uncontrolled bills.

The system you are advocating seems to me to be effectively how landlines and mobiles were charged out in the 1990s. I think the industry has moved away from that as a result of consumers voting with their wallets,

Member
Laraine Ward says:
26 April 2017

I never exceed my monthly quota allowed but I would like to carry my unused portion forward as I have paid for it. Why they stopped doing this is obvious because at certain times of the year…. I do need more i.e. New Year and my Birthday but it’s a question of their greed as I did carry any unused portion onwards for a long time…. not in today’s money grabbing climate though.

Member
Patricia Marchand says:
13 April 2017

I am fed up in fighting with large companies such as broadband and the like. The problem is the lack of help we get when faced with problems. Thanks to BT open reach (they still part of BT) my landline stop working last year and again this year (probably because I do not use it so often) and it was then slam yes slam! how this possible in 2017? well because openreach plugs anything anywhere, they have no competition so they do as they please and, like Barclays, dare you moaning they will punishing you as they did me, still no landline though my broadband is working…. and paying landline charges!

Member

Patricia , if copper is any part of your landline then you have a cable fault – 1 wire disconnected , or if all fibre -FTTP then its a different fault . Your landline is used for broadband so you pay for its upkeep unless you use broadband via your smart phone (tethering ) .Have you not been told what the fault is ? and what is “slam ?? do you mean DSLAM fibre cabinet ? if so its your street cabinet thats faulty.

Member
Susan says:
13 April 2017

“And while mobile broadband is being rolled out, 28% of UK homes and offices can’t get a good indoor 4G signal from every operator.”

Plenty of homes, including mine, can’t get any mobile signal at all. I accept that bringing a signal to where I live might not be commercially viable, but I also think that this should have some government support. Lack of a signal is causing people and businesses to leave rural areas. I also think that it’s a safety issue for residents and tourists, for example if somebody is taken ill or has an accident outside. We are far enough from other services for this perhaps to be the difference between life and death.

Organizations such as banks that we deal with just expect us to have a mobile signal for texts etc. And I could go on for hours about delivery men just assuming they can get a signal near the house.

We were in the Australian outback last year. The coverage was better there.

Member

Susan the government admit that this country is not up to speed with cell-net 4G but what is not said is that many companies with cell-net masts REFUSE to share them with others so many companies have to install their own . This is why you should test the area you are going to move to to see what provider provides a signal or not . In the cell-net business BT are a minority player the big boys are companies like Vodaphone.

Member

Err . . . Isn’t EE [the biggest mobile phone operator in the UK] part of BT Group?

Member
Susan says:
16 April 2017

Thank you. This is helpful. But I think it only partly answers my point. I do think it’s an area where the government could step in. Also plenty of people have been living in areas that don’t have a signal for many years and have their livelihoods there. We knew there was no mobile signal when we moved here 5 years ago. Perhaps we were naive in thinking it might be upgraded, but the broadband wasn’t wonderful then either. It’s much better now as it’s beamed wirelessly from the nearest fibre.

I’m also thinking of people who are out and about. Not only delivery men, but tourists and visitors. There are plenty of hikers and cyclists around here.

Member

Susan you are a living example of what I have been trying to say to many posters with zero luck , if your broadband line is so far from the cabinet that you only get 1Mbps then instead of complaining of lack of FTTP then microwave broadband is the answer in many South American countries that is how broadband is achieved . Downloaded by satellite to main stations -fibre to smaller ones and microwave to outlying areas . I blame the government for building up the hopes of the British population to a high expectation and then using the lack of a finished product to beat BT over the head with . As I keep repeating , if the US took over our network , do you honestly think they will supply -FTTP for 100 % of Brits when the certainly dont do that for American citizens ???? . I agree with you the government should pressurise ALL the cell-net companies to allow their masts to be used by all , they arent scared of BT so its must be the other cell-net giants that are against it.

Member
Alan G says:
16 April 2017

EE are owned by BT so, from a corporate/legal point of view, they are “part of” the group. Technology wise, EE’s network is still separate and it will likely take several years before the technologies are merged. And that will not even be an option if Openreach are busy
separating themselves from BT since I suspect EE will be owned by BT Wholesale not Openreach. And OR will have all their investment tied down in building a whole new corporate infrastructure – payroll, HR, internal comms, etc, etc. – all shared with BT group currently. There isn’t likely to be much new in the way of service improvement from OR over the next year or two IMHO.

Member

Considering for a moment just the question raised by Susan of the lack of mobile telephone signals in remote areas, it seems to me that the policy has been framed by the fact that, for many decades now, almost everywhere in the UK has been able to have a landline service so the urgent need for better connectivity has not been given the weight it deserves. The landline is no longer capable of providing the speed and accessibility to services that are now regarded as essential. People want to be able to get into contact with the emergency services wherever they roam and also want to be able to pick up the internet wherever they are. The emergency services can still be reached by landline but this is not satisfactory for people on the move, and with rural telephone boxes being removed urgent communication facilities are required. I consider that providing a basic infrastructure should be a publicly-funded investment. There will come a point when maintenance of the obsolete landline infrastructure can cease.

It is interesting to learn from Sharon White’s article that Ofcom intends that 98% of homes and offices will get a good indoor 4G signal from at least one mobile operator by the end of 2017. An ambitious target and I am a bit sceptical that it can be achieved on time so it will be good to have a progress report..

On the question of access to superfast broadband, it would seem that 5% of the population will not be getting this by 2017 at the expense of the taxpayer, but who they are and where they live remains a mystery. We don’t even know how the 95% superfast broadband accessibility target is being calculated, nor whether it is just a question of timing [by 2020 perhaps?] or whether there will ever be an advanced service level to that 5% at all. It is urgently necessary that these notspots are identified so that the residents can make their own plans for a privately funded superfast service if they want one or consider other options. I have a feeling that the real implications of this policy are being concealed because it will be highly controversial to isolate a substantial number of users while leaving in place an extensive and costly-to-maintain landline infrastructure when it is technically possible to provide even the remotest outpost with a fast broadband and combined telecom service.

Member

I think that is right, Alan, and casts further doubt on the ability of Openreach to complete the delivery of superfast broadband to 95% of UK homes and offices by the end of 2017, and on the ability of EE and the others to achieve 98% 4G mobile coverage by the same date.

Member
Laraine Ward says:
26 April 2017

Vodaphone has the worst customer service ever….. they promise the earth but are incapable of delivering I would go without a mobile phone at all rather than dealing with those idiots again…. they must pay peanuts so what we get is monkeys with a script which they can’t deviate from. Even BT try harder to please (even if they don’t succeed) than Vodaphone…. google the worst service provider if you don’t believe this. I know as I was with them for over 20 years on monthly contract until they got too big to deliver on their promises. If you value your sanity stay clear.

Member

I wish Ofcom would do something about Exchange Only lines how long must we wait for fibre broadband when our neighbours have it?

Member

As Which has so many convo,s on broadband I will have to answer this question many times Anthony . The problem with EO lines is that they are direct connections to the exchange, as such no cabinet exists .Upgrading EO lines is a lot more work and money than upgrading a cabinet to FTTC , there being no cabinet there is no brake point /interconnection point to connect a DSLAM (fibre cabinet) to , therefore two new cabinets have to be installed with all the attendant land/council permission (Wayleave ) having to be granted /paid for and then they have to be powered as those cabinets aren’t passive but active cabinets so power sources have to be obtained as well as digging up roads and avoiding other utilities (plus permissions ) , then road safety issues come into it. Even then because of no existing cabinets it is only when the new cabinets are connected up will ANY company know which properties will actually benefit , this raises issues about letting people know if they can get fast fibre . Short answer- very big job with no idea if all customers will benefit . I hope I dont have to post this too many times as I see it has been brought up elsewhere.

Member

I would like to see the mobile operators required to share networks, which would mean fewer blackspots. Network sharing has been in place for emergency calls for years.