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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.