Ofcom: A New Regulatory Approach For Fixed Telecoms

Ofcom: A New Regulatory Approach For Fixed TelecomsUK Super-regulator Ofcom have today published details of a new regulatory approach for the UK’s fixed line telecommunications market.

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A new regulatory approach for fixed telecommunications

Ofcom today published details of a new regulatory approach for the UK’s fixed line telecommunications market.

Ofcom has concluded that a new approach is necessary for the longer term, based on real equality of access to those parts of the fixed telecoms network which BT’s competitors cannot fairly replicate.

This new approach to regulation has six objectives:

  1. to drive down the price of calls, connections and services for consumers and businesses;
  2. to support more innovation through the growth of competitive products and services, such as faster broadband, television and voice over the internet and video-on-demand, from a range of credible companies;
  3. to provide regulatory certainty for providers and investors so that they commit to developing, marketing and extending these products and services for UK consumers and businesses;
  4. to re-focus regulation where it is truly needed, with swifter remedies to tackle anti-competitive behaviour and a structure which delivers equivalence to a timetable with real penalties and incentives;
  5. to remove regulation wherever competition is effective and the effect of open markets – rather than regulatory intervention – ensures the delivery of choice, value and quality for consumers; and
  6. ensure the necessary level of consumer protection through a combination of codes, sanctions and effective consumer information.
Ofcom Chairman David Currie said: “We believe these proposals have the potential to encourage more sustainable competition, more services, lower prices and greater consumer choice.”

Ofcom Chief Executive Stephen Carter said: “Effective regulation for the telecommunications industry needs to be forward looking, needs to encourage competition in the right places and needs to deliver tangible benefits for customers.”

He added: “These proposals are substantially different to traditional telecommunications regulation. They demand significant changes in key areas, and recognise that in other areas regulation can be rolled back.”

Proposed Undertakings

On Tuesday 21 June the Board of BT Group plc agreed in principle to offer to the Ofcom Board legally binding undertakings in lieu of a reference under the Enterprise Act. On Wednesday 22 June 2005 the Ofcom Board accepted this offer.

The proposed undertakings commit the company to substantive changes in organisation and behaviour; full detail of the proposed undertakings will be published on 30 June 2005.

A more detailed Ofcom Statement can be found online at www.ofcom.org.uk/consult/condocs/telecoms_p2/statement/

This news release should be read in conjunction with that statement. The full undertakings – which will be subject to final consultation – will be published on 30 June, together with a number of other proposals relevant to securing greater competition in the fixed line market, the details of which follow later in this news release.

  1. Enforceability. The final undertakings to be offered by the Board of BT Group plc will be in lieu of a reference to the Competition Commission under Section 155(1) of the Enterprise Act 2002. They will be legally binding and enforceable, and will mean that:
    • in the event of a breach, Ofcom could take the matter to the High Court. The Board of BT Group plc would then be responsible for ensuring compliance with the order of the Court;
    • third-parties affected by a breach could also seek damages via the Court to recover losses incurred; and
    • these undertakings will sit alongside Ofcom’s existing competition and regulatory power.

Ofcom will publish the final undertakings for a six week consultation on 30 June 2005.

  1. Branding and identity. The proposed undertakings offered by BT will stipulate the setting up of a new – and operationally separate – business unit, provisionally entitled Access Services, but with a distinct new brand and identity to be devised in the coming weeks. The new business unit will be staffed by around 30,000 employees presently responsible for the operation and development of BT’s local access networks. It will have:
    • separate physical locations for management teams;
    • separate bonus schemes; whilst the new business unit’s staff will remain BT Group plc employees, their long-term incentive plans will be changed to a new scheme which reflects the objectives of the new business unit, not those of the BT Group plc; and
    • over time, new branding on uniforms and vehicles which emphasises its operational separation from BT Group plc.
    • given the limited size of the market in Northern Ireland (and, as a consequence, BT’s current operational structure in Northern Ireland), BT has proposed – and Ofcom has accepted – that the three operational changes above will not apply to Northern Ireland. However, all other aspects of the proposed undertakings will apply equally across the whole of the UK; and
    • separate operating and trading systems.
  2. Product equivalence. The new business unit will be required, through a set of formal rules on governance and separation, to support all providers’ retail activities (including those of BT Retail) on a precisely equivalent basis, which Ofcom terms “Equivalence of Input”. Equivalence of Input will mean that all providers will benefit from:
    • the same products, with equal opportunity to contribute to the development of new products;
    • the same prices, offered to all providers equally; and
    • the same processes, to ensure all providers are able to order, install, maintain and migrate connections for their customers on equal terms.
  3. Products and services. The new business unit will offer a universally available product and service set:
    • Local Loop Unbundling (LLU) products, including fully unbundled loops (where a provider takes full responsibility for all of the customer’s voice and broadband services) and shared loops (where BT Retail continues to provide voice services and another provider is responsible for broadband).
    • All forms of Wholesale Line Rental (WLR), where a provider takes responsibility for all voice services and provides a single bill for both line rental and calls.
    • Backhaul products, which are used to connect the local access network to the core network. Some providers have built out their own backhaul networks; however many others are dependent on BT for wholesale backhaul services.

Equivalence of Input will also apply to IPStream – BT’s wholesale internet products used by many Internet Service Providers (ISPs) to provide broadband connections for their customers.

Detail of the timescales under which Equivalence of Input will apply to these services are set out in the accompanying Statement, which can be found online at;


  1. Next Generation Networks. The proposed undertakings will also set out a number of clear principles which BT Group plc should follow in the design, procurement and build of its next generation 21st Century Network. These principles will help ensure that other providers who will depend upon interconnection with BT’s 21CN do not suffer competitive disadvantage.
  2. Board and governance. BT Group plc and the new business unit’s compliance with the proposed undertakings will be monitored by a new Equality of Access Board (EAB), which will also oversee the delivery of other legacy regulated products not directly delivered by the new business unit. The proposed undertakings from the Board of BT Group plc require BT Group plc to act swiftly upon the recommendations of the EAB.
    • The EAB will be a compliance Board, not an operating management Board;
    • The EAB will be chaired by Carl Symon, a Non-Executive Director on the Board of BT Group plc, with four other members, three of whom will be independent of BT Group plc and will be appointed in consultation with Ofcom;
    • The EAB will meet between six and ten times during the first year of operation;
    • The EAB will produce a regular summary report of its activities, which will be published; and
    • The EAB will have extensive powers to seek access to information from wherever in BT Group plc it deems necessary to do its work.
Ofcom Chief Executive Stephen Carter said: “The Ofcom Board proposes to accept BT Group plc’s proposed undertakings on the critical assumption that BT Group plc does not merely deliver the letter of the undertakings, but also the spirit.”

Other regulatory policy initiatives

Ofcom has also been developing a series of regulatory policy initiatives under its sectoral powers which, in their impact on the competitive market, will complement the proposed Enterprise Act undertakings offered by BT Group plc.
Cost of capital Separately, Ofcom has today also published a further consultation document on the Weighted Average Cost of Capital it will apply in assessing the rate of return on BT’s regulated products.

The consultation document can be found online at www.ofcom.org.uk/consult/condocs/cost_capital2/

Establishing the relationship between risk and return is an important aspect of Ofcom’s work. The more high-risk a company’s investment, particularly in terms of the volatility of returns compared to the volatility of returns on equity investments generally, the more expensive it becomes to raise capital in the markets, as investors expect a higher rate of return to acknowledge the degree of risk involved.

Where Ofcom is required to set a limit on the price a company can charge for its regulated products and services, it is important that those limits allow the company to make enough of a return on its investments to reflect the costs it incurs in raising capital.

In line with its preliminary consultation, Ofcom will propose separate levels for the traditional copper access network which differ from the overall cost of capital for BT Group as a whole. Ofcom believes that this approach will provide a fairer pricing regime for competitors using BT’s access network whilst allowing BT an appropriately higher return on higher-risk investments.

In the coming weeks Ofcom will also publish four further documents. These are:
Undue Discrimination Guidelines Ofcom has imposed regulation on some companies requiring them not to discriminate unduly to prevent then from using their dominance to the detriment of competition and consumers.

Ofcom is reviewing the guidelines that describe how it will investigate potential cases of undue discrimination. The present approach was designed by Ofcom’s predecessor Oftel before the Communications Act 2003 came into effect. The new approach proposed in the consultation, to be published on 30 June, will tighten the requirements and in Ofcom’s view will help increase effective competition.

The consultation will also include, by way of illustration, a number of examples of the kind of behaviour which may lead to undue discrimination. Those examples are included to help foster understanding of the new approach.
Wholesale Broadband BT Group plc has today announced that it will cut the price for full LLU by 24% per cent from £105 to £80 per year, with effect from August. BT Group plc has also committed to deliver stability on IPStream pricing until there are 1.5 million unbundled lines in the UK to encourage competition.

Ofcom believes that these voluntary measures from BT Group plc will help to stimulate greater competition in broadband markets by providing reassurance for LLU operators investing in deep level infrastructure.

Ofcom welcomes these initiatives from BT. It will publish a short statement on 30 June outlining its future plans for regulation of Wholesale Broadband. Ofcom is intent on fostering competition in the LLU market and will be quick to use its regulatory powers if required.
Next Generation Networks Ofcom will consult on the detailed practical steps to ensure that the development and deployment of BT Group plc’s Next Generation Network – 21CN – offers all providers the same products, prices and processes on equal terms and does not inhibit reasonable developments by alternative network operators.

The consultation, also to be published on 30 June 2005, will propose that BT Group plc should not simply inform its competitors what it is doing, but instead share details of deployment and interconnection with its competitors via a genuinely cooperative new NGN forum.
Universal Service Obligation Ofcom will consult on the outcome of its analysis of the Universal Service Obligation – the statutory safeguards which provide important citizen and consumer protection measures, including tariffs for people on low incomes, obligations to install new lines upon request and commitments to provide and maintain the public payphone service. The consultation will be published on 30 June 2005.
Deregulatory measures Ofcom is seeking to withdraw from the regulation of competitive markets wherever feasible and appropriate. Ofcom has previously consulted on deregulating in two narrowband wholesale markets. In July 2005 Ofcom intends to consult on possible deregulation in the leased lines and large business markets.


Ofcom Freedom Of Information Act (FOIA) Midyear Figures

Ofcom Freedom Of Information Act (FOIA) Midyear FiguresA number of people have raised concerns as to how open an organisation Ofcom is. It’s a public corporation, set up in many ways like the BBC, but it was setup with the knowledge that the UK Freedom Of Information Act (FOIA) would take effect in January 2005. This has led it to define the accessibility of the information that it produces, as it generates it.

We’ve heard many people have applied for information and have been turned down, with the frequently cited reasons being; Not in the public interest (how broad a brush would you like sir); or Commercially sensitive (also pretty broad). Others, who have had their request granted, are nearly always pointed to Ofcom’s extensive Web site, which isn’t always the known as the quickest to locate what you want.

We’ve heard that many applications take the statutory maximum number of days (20) to respond with a reply – even when it’s a refusal. This causes us some confusion – does it really take that long for Ofcom to deduce that it is going to be refused, especially as all information is graded on creation? Ofcom’s response is that if it comes back as a refusal, they will pass it through “internal procedures” to re-examine if they can release it.

Ofcomwatch have been keeping an eye on this for some time. We spoke to Luke Gibbs from Ofcomwatch about their FOIA findings, “This is something we’ve been looking at over the last year. It appears to us that Ofcom is following the letter of the FIOA, rather than the spirit. We’ll be doing further research into this later in the year.”

Ofcom Freedom Of Information Act (FOIA) Midyear FiguresRuss Taylor, Ofcomwatch co-founder reveals their finding …

Ofcom was kind enough to provide OfcomWatch with some brief midyear statistics on how it is progressing with the Freedom of Information Act (FOIA), implemented in the U.K. on January 1, 2005. For previous Ofcomwatch posts on this issue, check Ofcomwatch’s Brief Guide to The Freedom of Information Act and its continuation.

* Ofcom is averaging about 130 FOIA requests per month ~ about 800 so far.

* About 70% of FOIA requests are granted. Common reasons for denying a FOIA request: (i) the data is commercially confidential and (ii) the request is overly-broad and could not be completed within the 18 hour / 450 GBP limit.

* 98.5% of FOIA requests are processed within the statutory time limit. Interesting point: Grants are reportedly swifter than denials, because Ofcom internally review proposed denials to determine whether they can be partially granted.

* Ofcom do not categorise FOIA requests because that would lead to prioritisation, which would be ‘wrong and unfair’.

* Overall, Ofcom commented that the FOIA — in ‘philosophical terms’ — is ‘both welcome and in line with our view of the public’s right to expect transparency and accessibility from public bodies’. However, Ofcom noted that FOIA is something of an operational burden because of the volume of requests received.

* * *

Ofcom Freedom Of Information Act (FOIA) Midyear FiguresSo, that’s Ofcom’s take (and progress) on FOIA so far. FOIA is of course a new area of U.K. law and we expect all public bodies–not just Ofcom–to struggle with implementation. OfcomWatch will take a closer look at FOIA in January 2006, as the first-year of the FOIA’s applicability to Ofcom draws to a close.

But, overall (and interim) statistics only tell part of the story:

* We’ve heard some interesting stories about FOIA from some of you, and we’ve filed less than a handful ourselves. Keep sharing your FOIA stories (mail to: blog@ofcomwatch.co.uk).

* I suppose we’ll also receive legal clarifications on just how powerful a tool FOIA is as some denials (whether by Ofcom or by others) are tested on appeal.

* Finally, FOIA is only one element of ‘better regulation’ that is being implemented across the U.K. Better regulation means that FOIA requests should be minimised because public bodies otherwise maintain useful websites and publication schemes, always with an eye toward satisfying their ultimate boss: the citizen-consumer. So, we always want your comments on how Ofcom can function better in this regard.

Stay tuned…

Ofcom UK Home Office, FOIA

OfCom Response To DCMS Green Paper on BBC Royal Charter: Comment

OfCom Response To DCMS Green Paper on BBC Royal Charter: CommentOfcom’s press release accompanying their response to the DCMS green paper on BBC Royal charter was my first point for comment. It initially indicated to me Ofcom were sticking to:

* An institutional model of PSB (BBC fully-funded, cornerstone of PSB, key role in digital switchover, all things to all people, etc.);

* The much-derided PSP concept; and

* ‘The BBC is independent’ myth (Note the irony – this statement is otherwise contained in a document related to how the government will establish the funding, governance and remit of the BBC).

I wondered if I was being a little too hard on Ofcom. If there was original, evidence-based thinking in the document?

Once I’d had the opportunity of read through the whole document, combined with the benefit of reflection, my views changed slightly, leading me to the following conclusions.

1. Ofcom have produced more original thinking than I gave them credit for, initially, perhaps because the introduction and summary to the document are not as robust as its contents. Read on…

2. That being said, Ofcom in its response still embarrassingly clings to the discredited notion that PSB must be fostered by significant and prolonged state intervention in the form of subsidy. I agree with the Financial Times on that point. Will there always be a need for a multi-billion pound state subsidy to this sector?

3. Much of Ofcom’s thinking stems from a very questionable line of logic. Ofcom posit that PSB is in danger of becoming a BBC monopoly because the ‘implicit’ subsidy given to ITV and Channel Five is disappearing as the move to digital is underway. This line of argument is contained in Sections 2.4 through 2.11 of Ofcom’s response. I’ve never been convinced by this argument for two reasons: (i) recent empirical research by the Satellite and Cable Broadcasters Group (SCBG) demonstrated that PSB is being provided in abundance in the digital world without any subsidy and (ii) Channel 4 provides PSB and makes money. Ofcom’s statements–actually they are more like predictions–on this point have simply been unconvincing.

4. Someone should actually listen to what the SCBG has to say. These providers don’t receive scarce spectrum, don’t have must-carry status, and don’t receive public funds. Yet SCBG say their members produce 14,000 hours of PSB programming per month—more than all the terrestrial channels combined. The SCBG say:

[I]n the majority of programme genres that Ofcom defines as “public service broadcasting”, channels other than the BBC’s now provide most of the UK output: more than 60% of news and current affairs, more than 90% of documentaries, more than 80% of arts and music programmes. It follows that publicly funded broadcasting should now be limited to services, or to a quality of service, that the private economy cannot provide or would not provide in the absence of competing public subsidy.

OfCom Response To DCMS Green Paper on BBC Royal Charter: CommentThis reflects the EU rules governing the use of State Aid, which require that publicly funded services such as the BBC’s must complement rather than substitute or duplicate provision by the market. Furthermore, where market developments supersede publicly funded provision, the BBC should withdraw from those services or activities and re-direct its valuable public resources to areas of activity where there is a proven market failure. While market failure should not be the only test applied to BBC services, it should provide the underpinning for all publicly funded BBC services. The absence of a market failure analysis raises significant questions as to the compatibility of the BBC’s publicly funded status with European State Aid rules.

5. Give Ofcom some credit – if the SCBG is wrong and instead Ofcom’s thinking is correct and PSB does require massive public subsidy, at least they have it right that the public subsidy should not all go to the BBC. Ofcom also propose a responsible structure to apportion that subsidy.

6. Give Ofcom more credit – they are keen to point out that the BBC’s role in the digital switchover process should not mean a government preference for Freeview over other digital platforms. Ofcom say the switchover should be platform neutral. Amen. Freeview stinks – I recently heard an influential observer charitably call it a ‘transitional technology’, and that’s really about the best you can say for it. Its capacity is limited; it’s not two-way; it has no worthwhile gaming applications, etc.

7. One more area where Ofcom deserve credit – suggesting to DCMS that it consider moving the review date for PSB funding to 2010 instead of post-digital switchover. Ofcom rightly realise that this is a fast-changing area and an earlier review will serve the public interest.

8. Finally, Ofcom say they want an ‘enhanced’ license fee for British viewers. An ‘enhanced fee’ – that can’t be a good thing, right? How much more will that cost us?

Russ Taylor is a co-founder of ofcomwatch.

Review of the BBC’s Royal Charter – Ofcom response to the Green Paper
Ofcom publishes response to Government Green Paper on BBC Royal Charter Press Release
BBC Charter Review

Freeview Breaks 5m Barrier. UK Digital TV Now ~62%

Freeview Breaks 5m Barrier. UK Digital TV Now ~62%Ofcom has today reported its quarterly figures on the rate of take-up of digital TV in the UK.

The number of homes that are connected to a digital TV service through some means has increased 2.5% to just short of 62% (61.9%). No big surprise there as this has been gradually increasing over the previous quarters.

The bigger news, we feel, is Freeview, the UK’s Digital Terrestrial Television (DTT) service reaching 5,059,350 homes – breaking the significant barrier of five million homes.

Freeview Breaks 5m Barrier. UK Digital TV Now ~62%This is bad news for Sky, as it’s starting to get close to the around 7.5m homes that they have. What’s worse news for them is in the detail of the report. Sky’s all-important ARPU (Average Revenue Per User) has dropped from £386 in Q4 2004 to £382 in Q1 2005. This might not sound huge, but for an organisation that is trying to constantly increase their ARPU, it’s not encouraging. Another figure of note is their rate of churn, that’s up to 11.1% form 9.6% in the previous quarter.

Xmas has previously been a strong time for Sky as people with little imagination and less conversation buy in Sky to keep them happy over the Turkey dinner.

Freeview Breaks 5m Barrier. UK Digital TV Now ~62%The growth of aerial-delivered Freeview has been gaining more momentum of late, still spearheaded by the BBC using the Freeview channels to first-show a lot of its content.

For the fact spotters, a minor point of interest is the number of old ITV Digital STB’s that are in use in the UK. This is in steadily decline since they went bust and is now running at 290,000, down 60,000 from 350,000 in the previous quarter.

I actually run one of these and have increasingly found problems with it as the ‘digital rust’ sets in – box freezes, etc. (I’m not looking for sympathy. The problems with the box are significantly offset by the fact that I paid the princely sum of 1p for it, timing its purchase, as I did, during the week of uncertainly before ITV Digital went bust).

Freeview Breaks 5m Barrier. UK Digital TV Now ~62%The breakdown of the figures is as follows

Sky Subscribers – 7,349,000 Freeview & free satellite – 5,504,350 Digital cable – ~2,500,00

Ofcom Digital Television Update – Q1 2005

Ofcom R18 Ban: Comment

Ofcom R18 Ban: OpinionFollowing Ofcom publishing its new broadcasting code earlier this week, Russ Taylor of ofcomwatch outlines his reasons for disliking the R18 ban. He makes good points about the difference between IP delivered content and that which is broadcast. Simon

I’m going to stop banging-on about the Ofcom R18 ban (eventually), but I thought I would share a few thoughts about the decision:

1. The reaction to the R18 ban (or lack of reaction) says alot about the British system of content regulation. The decision–from an economic standpoint–is a significant and highly intrusive market intervention by Ofcom that creates winners (licensed sex shops, internet porn sites, future IPTV players) and losers (cable and Sky). Adult content flows through the UK. Ofcom’s decision has not stopped that flow–it has redirected the flow. So, while I use the term ‘ban’, that doesn’t quite capture the economic reality of what happened as a result of Ofcom’s decision.

2. The decision also has a social impact: There was straight, uncritical reporting of the ban in the trade press. Privately, some people have told me that they thought the Ofcom research was shoddy. In fact, one former content regulator told me he was ‘angry’ with the decision. But, there seems to be a general intellectual consensus that there is a difference between ‘freedom of expression’, championed by British academia and the likes of the Guardian, and ‘porn-campaigning’ which is some lower form of freedom.

3. Ofcom’s reputation was going to be damaged no matter what it did on this issue. If the regulator permitted R18 content, there would have been a firestorm. If the regulator banned it, the flimsy reasoning used for the ban would be attacked. One decision (a lift of the ban) would have been evidence-based, the contrary decision (maintaining the ban) would have been political. Ofcom is a utility-maximiser and went with the route with the least amount of pain. That’s how I see it. I’m willing to be convinced otherwise – by Ofcom or others… so feel free to write us and share an alternative opinion.

4. Speaking of flimsy reasoning, the ‘PIN protection’ argument advanced by Ofcom has been universally castigated–by those willing to speak out–as weak and illogical. Of course it is. Many adult activities, such as driving, voting and the viewing of adult content, are restricted to minors, and those restrictions are sometimes porous. Underage minors have always done things that they are not supposed to. That possibility, however, has never been used to restrict the freedom of adults. Until now.

5. In any case, minors will still access R18 over the internet or by raiding their parents DVD collection. God forbid, they will probably also create their own R18 content! So, the regulation is mostly ineffective. The regulation is also not platform or technology neutral. I suspect Ofcom will be successfully challenged on this extremely weak (and non-converged) justification for its decision. But going back to my point no. 3, above, it is a better political route for Ofcom to have a judge tell them the ban cannot stand. It is also a better political route for Ofcom to maintain a ban that is ineffective.

6. I’m concerned that the LSE research on R18 harms and the YORG research on PIN protection were held and not released until the day that the code was released. Matt Peacock of Ofcom previously posted on OfcomWatch and stridently indicated that Ofcom does not tactically time the release of documents. But I was told by LSE that there research was completed in early March. Why was it not made available to the public until May 25th — too late to attack the flimsy reasoning behind the R18 ban? Perhaps Ofcom can shed light on this.

Russ Taylor is a co-founder of ofcomwatch.

IF… TV Goes Down The Tube – The Media 2016

I was asked to be lead technical advisor to a TV show, that was originally called IF … Media 2012. Over the last six months of script alterations and shooting the direction has changed, but finally the docu-drama is airing at 11:20pm BBC2.

It’s part of the highly respected BBC’s IF … series and it examines where TV may go in the next seven years. The piece is designed to give you some further background.

There’s little doubt that the media is changing significantly … and we haven’t even reached 2012.

Computers turned office life upside down. Now they’re focused on changing entertainment.

Each stage of the process – creation, distribution, and consumption is being altered, apparently inextricably leading us to the realisation of the long-held digital mantra (repeat after me) – What You Want, When You Want, Where You Want or WYW3 as it’s may become known as.

For those of you who haven’t downloaded and faithfully listened to the podcast of this chant on your media player, let me clarify – you will be able to access/consume any piece of media (text/audio/video/etc), on what ever device you have handy, no matter where you are.

Sadly the dream starts to falls apart at this point, because your commercial music or videos will only play on equipment approved by the owner of the content (more on that later).

Change is Afoot – High Definition

The Consumer Electronics companies have been spending a huge amount of effort promoting High Definition TV (HDTV) around the content production industries. They’re telling everyone that 2005/2006 is the year that HD will start to become a major driver for buying new TV equipment.

For those who haven’t watched HDTV on a large screen – let me tell you, it’s impressive. It looks far more real that Standard Definition (SD) and makes a return to watching SD difficult.

Will the dazzle of HD blind the buying public to the loss of control they will have over what they previously thought of as “their media”?

What do I mean, loss of control? Well, there are changes underway which mean that what you previously did without thinking (eg. recording a TV show, backing up a DVD) will become difficult, and in a lot of cases illegal.

Encrypted to the Eyeball

The companies that produce/own audio recordings, video, TV shows and films don’t trust the general public (a director of a large film distributor used those very words to me). Because they don’t trust you, they want to ensure that throughout the value chain (their words – meaning from production, to you watching it), the content will remain encrypted. The only time it’s not encrypted, is when it leaves the screen or speakers and hits your eyes/ears.

This way of locking the content, called Digital Rights Management (DRM), can also restrict other factors such as, whether you can record or how long a recording can be kept for.

DRM protection is intrinsically flawed. It can be broken and traversed. Aware of this, Governments have been lobbied and they‘re making it illegal to examine how a DRM scheme might work.

In Europe this legislation is called the EU Copyright Directive (EUCD), and in the US, it’s the DMCA (Digital Millennium Copyright Act ).

Given this, it will be illegal and you will be open to prosecution, if you use a program to take a copy of disc if it has copy protection on it., unless you use an approved application. What you can do with your media will be directly controlled by its rights holder.

If you want to watch films in HD resolution in the future, you will need to ensure that your equipment (Set Top Box, screen, etc) all have a HDMI interface and are able to support HDCP (High-bandwidth Digital Content Protection).

After 1 July this year, it will be against US law to manufacture or sell equipment that is capable of handling/recording HD material, if they do not recognise what is referred to as the Broadcast Flag – a copyright flag that is controlled by the broadcaster. Indeed to qualify for a European “HD Ready” label equipment must support HDCP.

Old equipment might have problems. All those who have bought their dream 42” plasma screen, had better check around the back. If you don’t have full HDMI/DHCP support, your £5,000 screen will be of no use for HD content.

The Content Explosion

While content created by the current commercial entities, like studios, will become more restricted, the good news is that the places that we’ll be able to source media from will increase substantially. It won’t just be from what are currently thought of as “normal” sources.

With a TV connected to a broadband connection (and they will be broad by 2012), you will be able to access the content from around the connected world. Any subject you imagine will have content available about it.

If you’re finding it hard to visualise, think WH Smiths in 1970. Back then the whole range of magazines available to you would have been about 20. These days the groaning shelves take up half of the shop and there are 100’s of regular magazines available to you.

User Generated Content

We are in a period of an explosion of User generated content. It’s no news that this type of content is going to be huge, but it will also be diverse, plentiful and importantly, quite well indexed.

The first few rungs on the Bandwidth Ladder have been reached. Blogging tools, essentially word processors for the Web (they print Web pages not paper), have enabled people to simply generate huge amounts of content online.

Audio content is currently seeing a lot of increase through Podcasting. Already the breadth and depth of the programming available is impressive.

Video is less prevalent and some way off. The delivery and receipt of it are all possible. It’s the generation of original content that is very time consuming, as it is currently cumbersome.

The public creating programming by using pre-made segments of content, is far more achievable. But where do the segments come from?

The BBC Creative Archive is important

The Creative Archive – started as an inspirational idea. The BBC has thousands of hours of content (audio & video) in its archive, This content has already been produced and paid for by the licence payers of the UK.

The inspiration of pioneers of the project was to make this archive content available for people to be able to download, watch, re-edit and create new programming from, to share with the UK. Ideal.

Since the project was floated the BBC has been very good at making the right sounds about it – and have generated interest in the idea around the world.

I hope that the loss of Paula LeDieu a joint- head of the project will not be too big a blow. I also hope the BBC delivers what it has spoken about – a wide range of free programming, which can be freely edited.

To maintain its highly regarded position in the world, the BBC must not continue to make bold new media statements, only to not deliver them. Failure to do so will reflect badly on the whole of the BBC.

Ofcom – Hands off the Internet

Given the restrictions that will be hoisted on to users of media, it is all the more important that there is no restriction on flow of information that can come down your Internet connection. By 2012 this will include your radio and TV.

Having been technical supervisor for the show, seeing the script going through the twists and turns before coming to life – the decision to bring the dark side of IPTV (Internet delivered TV) to centre stage disappointed me.

I felt the programme helps the argument of those who want to control and restrict the Internet and the video/audio it could provide, missing the opportunity to highlight the many great advantages about having a free IP-based media.

I feel it’s important that the limitation of what people can access over the Internet is decided by the individual or household, not an external, overseeing Quango like OfCom.


As with any massive change, there are going to be advantages and disadvantages. I think the advantages of a new form of media, where everyone is able to contribute is a good thing. Any objectionable programmes like The Cage, while they may generate a lot of headlines, are ultimately insignificant when weighed against the advantages against a freer media.

It is vital to a healthy society that expressions are freely available to all, without restriction.

If you see the show, it would be great to hear your thoughts simon(at)Digital-Lifestyles.info.


UK LLU – OTA Say, “Could do Better”

OTA: Local Loop Unbundling Lagging BehindThe Independent Office of the Telecoms Adjudicator (OTA) has issued an update on their progress of ‘local loop unbundling’ (LLU – the process of opening BT’s exchanges to competitors).

The speed of unbundling, or in this case lack of it has a direct effect on the range of competitive broadband providers, and therefore the speed of services that can be provided and their cost.

To date, some 31,000 lines have been unbundled, but the OTA update reads: “Good. But could do better.”

There are reports of variable performance in some operational areas, with performance lagging behind the OTA Key Performance Indicator, ‘Right First Time’. This snappily monikered indicator checks to see if services are being delivered in time to meet customers’ expectations.

The OTA has set a target of 75% with actual delivery being variable at 50-60%. This target rises to 85% in the near future.

The number of lines unbundled has grown from 12,000 in May 2004 to 31,000 lines unbundled by 31 January 2005.

Once again, this falls behind the OTA target, which had specified 50,000 unbundled lines by February 2005.

The Telecoms Adjudicator Scheme is successfully underway, with 14 companies signed up, and encouraging noises about investment commitment, have been heard.

LLU price reductions were implemented from 1 January 2005, and there are more price reductions on the horizon.

Despite all this, LLU operators continue to experience operational problems and variable delivery performance isn’t doing wonders for the operators’ marketing plans.

The Adjudicator’s update tells it like it is: as the orders keep rolling in, operational performance is the key to success for LLU.

Independent Office of the Telecoms Adjudicator
Ofcomwatch comments on it.

Ofcom Strategic Review of Telecommunications Gets UK Parliament Inquiry

The UK House of Commons launched an inquiry into Ofcom’s Strategic Review of Telecommunications (SRT) yesterday.

Ofcom, the uber-regulator that among other things, oversees telecoms in the UK, started its SRT in January 2004. It was long overdue in the eyes of many, as it was the first comprehensive strategic review of the UK telecommunications sector for 13 years.

Now the UK House of Commons, Trade and Industry Committee will be looking into the workings and results of the SRT, in particular how it relates to the “extensiveness and competitiveness” of broadband in the UK.

The SRT is divided in to three phases; Current position and prospects for the telecommunications sector; Options for Ofcom’s strategic approach to telecommunications regulation; and Proposals; the first phase was published at the end of April.

Ofcom identified two key problems in Phase One; an unstable market structure in fixed telecoms, dominated by BT and with alternative providers that are, in the main, fragmented and of limited scale; BT’s control of the UK-wide access network hadn’t been addressed to date. They then posed some questions; primarily about the future of BT.

Phase Two was published in November 04 and used some relatively strong language (pretty diplomatic in the normal, non-Quango world), which we summarised as “Ofcom to BT: Equivalence or else”. It’s still open for public consultation until 3 February 2005.

Yesterdays announcement from the Trade and Industry Committee, said in the light of the Committee’s Report on the UK Broadband Market, the inquiry will be looking into OfCom’s STR process to date, the interim conclusions reached in the Phase Two document, and the direction of the remainder of the Review. They’ll be paying particular attention how it relates to the competitiveness of the broadband market in the UK, including local loop unbundling, and the “functional separation of British Telecom”.

A spokeperson at OfCom told us that they “had already briefed the Committee” and “welcomed their interest” in the SRT. When we asked about the previously expected Spring delivery of SRT Phase 3, we were told that they “still planned” to meet it. Frankly they were playing their cards pretty close to their chest.

We called the office of the Committee, but given the 21 enquiries they have on currently, no one was available for comment at the time of publishing the story.

If you have any view on the area covered by the Committee, they’re asking for written evidence on these or any other related issues by Friday 18 February 2005 via email (tradeindcom@parliament.uk). If you do write please CC (contact@Digital-Lifestyles.Info) us in, we’d be interested in see the issues raised.

Alerted by OfcomWatch
Trade and Industry Select Committee
Ofcom – Strategic Review of Telecommunications

Ofcom Release Ultra Wideband (UWB) Document

Ofcom released a consultation document today on ultra wideband (UWB) in the UK.

Given Ofcom’s statutory duties under the Communications Act 2003 to ensure the optimal use of the radio spectrum under its management, they should be keen on UWB.

The strength of UWB also causes its problems. By simultaneously transmitting over a wide range of frequencies (around 3.1 – 10.6GHz, if you’re interested), UWB is able to achieve higher data transfer rate than other wireless technologies.

By spreading over these frequencies it has the possibility of interfering with services that currently operate in or around these services, such as 3G, broadband fixed wireless access and radio astronomy.

Back in May 2004, Ofcom commissioned Mason Communications and DotEcon to produce an independent report in to UWB. Delivered in December 2004 (Read the final report, all 218 pages of PDF fun), it looked at the advantages to the UK economy of allowing UWB applications and the disadvantages of increased interference to existing radio spectrum users.

The report focuses on the use of UWB to create a Personal Area Network (PAN) with examples of usage being; providing wireless connections between DVD players, displays and speakers; and using them for high speed wireless links between digital cameras and computers.

While acknowledging interference is likely, it’s clear that Ofcom feels this should be weighed carefully against UWB’s potential benefits. To check this interference, the suggestion is to use a technical ‘mask’, controlling the amount of power that could be used at different frequencies, in an attempt to reduce the impact of interference.

The US regulator has already authorised UWB on a licence-exempt basis, but Ofcom consider the US specification to be inappropriate for the UK. Their proposal is that if UWB is allowed, it should be on a licence-exempt basis, but be limited to the same in-band power levels as permitted in the US, but have tighter out-of-band limits.

Ofcom point out that there is a need to come to a decision soon, fearing US-built UWB devices could be imported in to the UK.

All of these add up to a big pressure on the frequency users that would be affected. It will be interesting to see what their reaction will be during the consultation period which closes 24 March 2005.

Ofcom Ultra Wideband consultation document
Mason Communications and DotEcon final report

UK Households Buying Second Digital TV, Ofcom

In Ofcom’s morning release of its third quarter figures for digital TV (dTV) penetration in the UK, they’re reporting an estimated 55.9% of UK households now have dTV in some form.

The dominant provider of dTV in the UK is still Sky, with over 7m subscribers, although they have only added 53,000 more in the quarter.

With just short of 4m households is Freeview (the UK Free-To-Air Digital Terrestrial Television service), which exceeds the combined analogue and digital services of UK cable TV providers NTL & Telewest. Pure digital cable is running at 2.5m subscribers.

One of the big concerns with digital switch off has been going beyond the first dTV set in the house. It was fine to say that over 50% of UK households had digital TV, _but_ given that the UK average is 2.5 sets per household, what was going to happen to the analogue sets that were left? There might be a lot of unhappy people not able to watch TV the day after analogue switch off.

The latest figures bring good news to those worried about this. Around a quarter of new sales of Freeview went to homes that already have one digital TV. With the pricing of the Freeview Set Top Boxes (STB) starting from as little as £49 (~$95, ~€71), households must be finding the content on Freeview compelling enough to want also have it in the kitchen, bedroom or child’s room.

What isn’t clear from the figures, is if the original dTV set was Freeview, Sky or cable. We contacted Ofcom to dig a little deeper, only to find that they “don’t dig that deep” into the figures. One thing that did become clear during the chat, was that Sky household’s that purchase a second box are not broken out at all, but are just added to their overall subscriber base numbers.

Full Ofcom Digital Television Update – Q3 2004