Ofcom (UK super-regulator) – Page 3

Sky Probed Over ITV Share Holding

Sky Probed Over ITV Share Holding The UK Department of Trade and Industry has referred Rupert Murdoch’s Sky purchase of nearly 18% share holding in major UK broadcaster ITV.

In the words of Alistair Darling, the Secretary of State for Trade and Industry, “My decision reflects consideration of the reports I have received from both the Office of Fair Trading and Ofcom and of other representations I have received about this matter.”

This action won’t be unexpected at Sky, Ofcom and the Office of Fair Trading recommended this back on 27 April this year.

Sky has released the following statementSky notes today’s announcement by the Secretary of State for Trade and Industry. We look forward to engaging with the Competition Commission as the ongoing regulatory process enters its next phase.Translation: Bring it on.

Backgrounder on Local Loop Unbundling in the UK Pt 2

With all of these moves towards digital delivery in entertainment, we thought it would be worthwhile understanding one of the key items in this process – how to get the digital content to UK households.

Steve Kennedy is an acknowledged expert in the telecoms and data networks field, so it was an obvious choice for us to ask him to write an overview of how other IP operators can compete with BT – by creating their own data network. To do this, they need to put their own equipment into the telephone exchanges that connect to peoples houses. That process is Local Loop Unbundling (LLU).

Over three days we’ll give you a full background in LLU in the UK.

Yesterdays piece gave an overview of LLU and which companies are players in the UK.

LLU Penetration
All the large operators are going into around 1,000 DLEs (those being the most densely populated), since there are only around 1,200 of them, all the operators are targeting the same DLEs and there’s a lot of overlap.

Backgrounder on Local Loop Unbundling in the UK Pt 2 Since the operators all want to get into the same exchanges, there’s overcrowding and BT have to install new hostel space (the space where operators can put their own equipment into) which causes delays. It can take more than 6 months from when an operator puts an order in to being granted access to an exchange.

LLU (un)Economics
When LLU was announced it was prohibitively expensive, mainly due to Ofcom (or Oftel as it was then) allowing BT to set the pricing models.

Over time the economics have become fairer to operators, with BT being forced to set-up BT Openreach which looks after the physical infrastructure. If they hadn’t formed Openreach, it’s likely Ofcom would have pushed for a split of BT.

Ofcom then made BT not reduce wholesale pricing for their broadband services to give LLU operators a chance to gain a foothold. BT would have to maintain their pricing until April 2007 or 1.5m unbundled lines, whichever came first.

In Dec 2006 there were 1,000,000 unbundled lines and last week Ofcom announced that 1,700,000 unbundled lines had been reached (there was no distinction between Option 2 and 4). BT Wholesale has over 9m broadband customers.

Also Carphone Warehouse (CPW) released their interim results showing they had 2.31m broadband customers, 700,000 utilising LLU.

So out of the 1.7m unbundled lines, CPW have .7m which means there’s 1m split between the rest (mainly the big players, Wanadoo, C&W, Easynet Pipex and Tiscali).

As a rough model that’s 1.7m lines, spread over 1,000 DLEs which makes 1,700 lines unbundled per DLE. There’s 6 big players which means around 280 customers per operator per exchange.

Backgrounder on Local Loop Unbundling in the UK Pt 2 Unfortunately the economics of LLU only work if there’s a lot of customers per exchange i.e. massive scale.

Now that the milestone of 1.5m unbundled lines has been reached, BT Wholesale will be allowed to reduce their pricing (which they’ve said they want to do) which will make the economics even worse.

To get the scale, further consolidation will occur which means fewer LLU operators in the future (Pipex has already put itself up for sale with CPW rumoured to be the front-runner for buying them). They need to do this in order to get the customer penetration per exchange.

The next and final section will cover the possibility of competition to BT and what could happen in the future

Images are courtesy of wb-internet and the BBC, respectively.

Over Half Of UK Adults Have Home Broadband

Industry body Ofcom has published its Digital Progress Report, the result of taking a long goosey gander at current trends in the UK broadband industry up until the end of last year.

Over Half Of UK Adults Have Home Broadband The report found that half of all UK adults live in broadband-connected households, up 11% from 12 months ago and a hefty seven times increase from 2002.

Folks connected to broadband lines are getting good use of it too, with 63% of adults using it daily, while 30% went online at least once a week.

Video content was viewed by 51% of adults with broadband at home, with 26% watching video clips every week.

Over two thirds (70%) of broadband-connected adults bought products or services online, and over half had carried out banking transactions.

Broadband users were found to spend on average 9.1 hours online per week, over double the amount of people still connecting via screechy modems in dial-up.

Over Half Of UK Adults Have Home Broadband Although just under half of users had no idea how fast they were connecting to the Internet, the report put the average headline connection speed at 3.8Mbps (up from 1.6Mbps in 2005).

Voice over IP (VoIP) services like Skype have seen an increased take up, with one in ten adults making calls over the Internet, double the amount compared to the end of 2005. Of those using VoIP, 14% said they were making calls daily with a further 30% making calls several times per week.

Bundling
Bundling was found to be an important factor for consumers choosing their ISP, with 40% of all adults with broadband at home using other communications services from the same provider.

Wi-Fi
Ofcom found that just over a fifth (21%) of of all UK adults owned a Wi-Fi enabled laptop in February 2007, with a third of that total using public hotspots to access the internet. The amount of available public hotspots was counted at around 12,000 in September 2006, up 32% from the previous year.

Mobile Internet
The report found that despite one in three UK adults saying that they owned an Internet-enabled mobile phone in February 2007; only half had ever actually used the thing to go online.

It seems that a ‘lack of need or interest’ put off the majority of users (43%), with cost the second reason (31%).

Ofcom

Ofcom To Regulate VoIP In UK

Ofcom To Regulate VoIP In UK Ofcom have just announced a new regulatory code for Voice over Internet Protocol (VoIP) service providers operating in the UK.

With predictions estimating that there could be as many as three million VoIP users in the UK by the end of this year, Ofcom clearly felt it was time to set some base rules for the industry to adhere to.

They’re broadly divided in two – prescribed information to tell the consumer before they sign up and once they have signed up, making them aware of the limitation of their access to the emergency services.

For a long time the lack of solid emergency (999) number access has been used by the incumbent telecos to try and stem the growth of VoIP. Their argument? If someone calls 999, there is no assured way of telling if that person is calling from Basildon, Birmingham, or Beijing, as the handset just needs to be on an IP connection, to attached to the end of a specific piece of wire, like a landline is.

Ofcom To Regulate VoIP In UK Before June 2007, all VoIP providers will be required to make it clear :-

whether or not the service includes access to emergency services (some operators may choose not to provide any support at all);
the extent to which the service depends on the user’s home power supply (Standard telephones are powered by the phone line itself, where as Broadband services require external power to a number of different boxes to function);
whether directory assistance, directory listings, access to the operator or the itemisation of calls are available; and
whether consumers will be able to keep their telephone number if they choose to switch providers at a later date. (This is known as number portability, and would seem reasonable to offer, given it is standard throughout the rest of the telecoms markets).

If a customer decides to sign up for a VoIP service, the provider has additional obligations around emergency calls:-

secure the customer’s positive acknowledgement of this at point of sale (by ticking a box, for example);
label the capability of the service, either in the form of a physical label for equipment or via information on the computer screen; and
play an announcement each time a call to emergency services is attempted, reminding the caller that access is unavailable.

Ofcom Announces Premium Rate TV Inquiry

There’s been three weeks of hoo-har in the UK about television stations using Premium Rate Telephone Services (PRS) to extract income from the phone-willing programme viewer. Whole TV channels have been stopped in the process.

Ofcom Announces Premium Rate TV Inquiry Ofcom has just announced that it will be carrying out an inquiry into the whole area.

It sounds like there’s going to be a few feathers ruffled. Viewers and a range of other stakeholders have raised serious concerns with Ofcom regarding apparent systematic compliance failure on the part of a number of broadcasters, whose actions appear to contravene existing consumer protection rules.

Hearing how serious this is, does give clues as to why the TV stations acted so swiftly in suspending the availability of their PRS.

Many have criticised some UK broadcasters for creating programs whose sole driver appears to be collecting as much money as possible from the viewers.

The inquiry will be led by Richard Ayre, a former Deputy Chief Executive of BBC News. He is expected to receive extensive input from the premium rate services regulator, ICSTIS, who are already investigating a number of individual cases.

The fragile relationship between TV viewer and the TV stations appears to have been damaged further by the PRS announcements over the recent weeks.

Ofcom Chief Executive, Ed Richards said: “Widespread concern about the use of premium rate telephone lines by broadcasters and editorial standards in those programmes has raised serious questions about trust between broadcasters and viewers.”

The scope of the inquiry includes

Consumer protection issues and audiences’ attitudes to the use of PRS in television programmes;
The benefits and risks to broadcasters in the use of PRS in programmes;
The respective compliance and editorial responsibilities of broadcasters, producers and telecoms network operators and others involved in those programmes;
The effectiveness of broadcasters’ and telecoms operators’ internal compliance procedures, guidelines and arrangements to ensure compliance with Ofcom and ICSTIS codes;
The inquiry will also propose recommendations on actions necessary to restore confidence and trust.

Ayre expects to report his findings to the Ofcom Board and the Content Board by early summer.

HDForAll Pressure Ofcom on HD Freeview

On the day after news of the date of the first English town to start to go full digital on the delivery of TV, we’re reminded by HDforAll that Ofcom currently doesn’t have plans to set aside any of the freed up frequencies for HDTV usage.

Despite a successful trial run in London during 2006, where HD was delivered over Freeview, the only available ways currently to watch HDTV is via Sky satellite or cable.

One of the major reasons that the UK Government, and in turn, Ofcom is so keen for transferring everyone from the current analogue TV service to digital, is that it will free up large swathes of frequency. Ofcom’s plans are to auction this, and other frequencies off to the highest bidder, as we’ve covered a couple of times.

Not wishing to be left out of the HD world, the BBC are also keen to not just rely on Freeview delivering HD and to this end the BBC Trust have been given a provisional Yes for a FreeSat service capable to deliver their HD.

HDForAll are a pressure group made up of TV manufacturers, retailers and public service broadcasters including DSGI, Samsung, Sony and Toshiba and BBC, ITV, Channel 4 and Five. They’re keen to remind people that there’s only a limited amount of time left to contact Ofcom to make their views known on auctioning off spectrum to the highest bidder. Background on this and how to respond are available on Ofcom’s site.

The public appear to be behind having HDTV on Freeview, nearly 5,000 have signed an e-petition (now closed) and there’s another one urging that
spectrum be made available for citizen and community uses – a la open access cable in the US.

A survey carried out at the end of last year, also found that the vast majority of people, no matter what platform they use, want HD to be available on Freeview – 96% of Freeview, 91% satellite and 92% cable users.

HDforAll
Ofcom’s Digital Dividend Review

Nearly Half Of All UK TVs Digital-ised: Ofcom

The number of UK TVs connected to digital devices – ones that can receive digital TV signals – has increased to 48.5% reports Ofcom.

Nearly Half Of All UK TVs Digital-ised: Ofcom The quarterly report snappily titled, Communications Market: Digital Television Progress Report, covering the fourth quarter of 2006 (October-December), shows the figures are up from 39% in the same period the previous year, and also from 44.7% in the Q3 2006.

The run up to Xmas is traditionally a time where many more new TVs are bought, in a desperate attempt to increase the ‘enjoyment’ of Xmas by numbing their brains watching ‘entertainment’ on TV. It appears no different this year as a further one million UK homes acquired digital televisions for the first time.

Previously, Ofcom used to highlight the number of UK households that were digital-TV-enabled, which has now reached 77.2%. This figure received a fair degree of criticism as, although it sounded impressive, didn’t give a true reflection of what the impact of switching off analogue would be for UK TV watchers.

There’s been an interesting announcement in the US, where the American households will be offered up to two $40 vouchers to switch to digital TV. The UK government has actively discouraged thinking like this in the UK.

As ever, there’s a huge pile of numbers that will be poured over by those in the industry who get quite excited about this type of thing. We’re normally in this category, but for some reason were not too excited about this quarter.

Communications Market: Digital Television
Progress Report, Q4 2006

BT Try To Vary Payphone Pricing

In their constant pursuit for higher profits, BT have put a request into the UK uber-regulator Ofcom, to allow them to charge different prices for phone calls depending on where the phonebox is located, claim TelecomTV.

BT Try To Vary Payphone Pricing BT is under a legal obligation to provide phone boxes up and down the length of the UK, which they claim numbers 63,795. BT say that 40,500 of these phone boxes are unprofitable.

BT is attempting to negotiate a three-year deal that would let BT “determine the acceptable pricing of pay-phone calls.”

Try to get out of their obligations is not really playing the game is it? It’s not like their obligation to payphones is news to them.

It’s got the ring about it along the lines of charging for directory enquiries. When BT was allowed to start charging for calls to directory enquiries, it was only ‘normal’ landlines that were effected. Calls to find out phone numbers were free from Payphone, as BT removed the printed telephone directories from them. A few years later BT had the rules changed and started charging from payphone, despite not returning the printed directories.

BT claim that calls from payphones have dropped off by 40% in the last four years, no doubt due to the considerable rise in uptake of mobile phones.

Digital-Lifestyles thinks this doesn’t make it right that people who live in remote locations should have to pay inflated prices for using the same payphone and connecting to the same phone network as everyone else, just because BT wants to make more profit.

(via)

New Media Classification System For UK

New Media Classification System For UK Gordon Brown has announced that a new labelling system for media content is in the works, designed to help parents protect their children from dodgy digital content.

The idea is that a system similar to cinema classifications would be introduced to classify content on websites, video games, TV shows and other media content.

Backed by industry regulator Ofcom, Brown intoned that the system would offer practical help to parents concerned about their little darlings being exposed to new media outlets seemingly stuffed to the brim with violent imagery, drugs and hot, hot sex.

Commenting on the veritable torrent of filth that virtually seeps out of every child’s PC as soon as they connect to the web, Brown said that it is an “issue we must address with practical proposals to address the challenges we face.”

“We want to promote a culture which favours responsibility and establishes boundaries: limits of what is acceptable and unacceptable.”

“We can’t and shouldn’t seek to turn the clock back on technology and change. Rather we need to harness new technology and use it to enable parents to exercise the control they want over the new influences on their children,” he added.

New Media Classification System For UK As part of the scheme, Ofcom will introduce common labelling standards covering cinema, TV, radio, computer games and the internet.

These will be backed up by an awareness campaign advising parents about content filtering software for PCs, and information about TV set top boxes which can limit what can and cannot be seen by little Timmy and Tabatha.

Brown added that they’ll also be looking at persuading technology manufacturers to provide better information on software to block content unsuitable for children, as well as investigating new methods to restrict access to saucy and violent content shared over the t’web.

Brown recognised that it’s a fat look of good trying to implement restrictions on just a national scale, pointing out that agreements need to be struck at the international level.

“We need to support all those broadcasters and providers doing a huge amount and of course we need to recognise there are global markets where we need international agreement,” he said, somewhat understating the importance of worldwide standards.

Of course, many companies and public institutions already use web filtering software but their methods can often resemble a 300 ton sledgehammer cracking a dwarf-sized peanut.

Scunthorpe. Arsenal. And Sex

The denizens of Scunthorpe and fans of Arsenal football club have already famously fallen foul of none-too-smart naughty word blockers, and many sites have complained about being blocked for the most spurious of reasons, with very little chance of retribution.

Some sites about UK counties have also found themselves banned from libraries and internet cafes because the word ‘sex’ has appeared in their domain name – even though the sites are about subjects as unerotic as Sussex, Essex and Wessex.

More about word filtering mistakes here: The Scunthorpe Problem

[From: Brown unveils classification system for new media]

Vodafone And Orange 3G RAN Share: Examined

As has been mentioned on Digital-Lifestyles, Orange and Vodafone have entered into an agreement to share their 3G Radio Access Network (or RAN). We thought you’d appreciate some more depth … and who better to give it than Steve Kennedy, our telco guru.

Currently Vodafone have a bigger network than Orange, so Orange would gain more than Vodafone from the deal, but in future it means that new cell sites will be used by both operators.

The agreement could have covered 2G (GSM) too, but as Vodafone use 900MHz systems and Orange use different systems operating in the 1800MHz band, it just not possible. That said, it’s likely future technology would allow both sets of frequencies to operate within the same radio equipment.

There will still be interesting problems to sort out for 3G sharing, as Vodafone exclusively use equipment from Ericsson, while Orange use equipment from Nortel, Siemens, Nokia and Alcatel.

Once the network is in place, each network will be responsible for enabling their own network services and ensuring quality of service, etc. As competition for customers increases this is a sensible way for operators to reduce cost, share the infrastructure and compete on service. It’s a shame the fixed networks don’t take this view, as has been pointed out before, the LLU operators could join forces and build a joint LLU network and then compete on service. This might give them a larger network, which would be of a size and scale to compete with BT’s upcoming 21CN.

Why the rush to build?
With a 3G license comes obligations and one of these was to reach 80% of the population by the 1st Dec, 2007. Though the GSM network coverage hit that a while ago, 3G expansion has been slower with few customers really wanting 3G services so the operators have built 3G networks in densely populated areas where they can make revenue from those customers. That means big cities have been covered, but elsewhere 3G coverage is patchy to say the least.

Hutchinson 3G (or 3 the new entrant into the mobile world) has been rapidly building its customer base and building a network to match. In June 2004, Ofcom tried rules that 3 had SMP (significant market power) in the 3G world, which meant it would be regulated by Ofcom much in the same way BT is for fixed networks. The other 3G operators happily supported Ofcom in this view. 3 didn’t want the increased regulatory burden and disagreed with Ofcom’s ruling, so appealed to the Competition Appeal Tribunal. They won their appeal in November 2005. This was the first time any network has successfully appealed against a SMP designation.

3 wasn’t happy about having SMP forced upon it and therefore made noises to Ofcom about coverage obligations, which the other networks weren’t meeting. They’ve got 10 months to hit that 80% figure.

Though city centres might have a demand for 3G (for data services, no one cares about 3G voice – a voice call sounds the same whether it’s 3G or GSM), as you leave dense urban areas the appeal of 3G is less. Well maybe not less, but there are less people to use it and less of a reason for the networks to install 3G infrastructure and sites.

The cost of a 3G cell is probably not much different in terms of equipment from that of a 2G cell, one major difference is the amount of bandwidth needed for the cell, as data volumes are significantly higher (maybe 40Kb/s using GPRS data compared to maybe 2Mb/s for 3G, multiply that by 10 users and it’s 400Kb/s compared to 200Mb/s).

UK backhaul (i.e. the pipes used to connect cells) are expensive. The more rural the cell site is. the less chance there is that anyone (except maybe BT) has got any kind of high bandwidth connectivity. Therefore, the costs of the backhaul may well exceed that of the cell site itself.

Sharing makes economic sense
Orange and Vodafone have to hit that 80% figure or Ofcom can impose fines which could be significant. Therefore the build out of a shared new network makes economic sense. It’s half of what they’d each have to pay.

In this climate of everyone’s customers wanting everything for nothing, being able to reduce your build costs may well be the straw that doesn’t break the camel’s back.