Ofcom

What is Ofcom?

The Office of Communications (Ofcom) is the independent regulatory body overseeing the 'communications industry', including the distinct areas of telecommunications and broadcasting.

Ofcom was established by the Office of Communications Act 2002 and empowered under the Communications Act 2003 to take over the functions of the Broadcasting Standards Commission, the Independent Television Commission, the Office for Telecommunications, the Radio Authority and the Radiocommunications Agency, along with a range of new functions.

Ofcom is a statutory corporation. It is required to report annually to Parliament. Although independent of Government, Ofcom has links to the Department for Culture, Media and Sport (DCMS) and to the Department for Business, Innovation and Skills (BIS), and the Secretary of State is required to lay Ofcom's annual report before Parliament. Ofcom is also subject to inspection by the National Audit Office and accountable to the Public Accounts Committee for propriety and value for money.

Lord (David) Currie of Marylebone was the first chairman of the new Office of Communications. He was replaced in March 2009 by economist Dr Colette Bowe who will serve a five year term.

Background

The Labour Government set out its plans for telecoms and broadcasting regulation in the Communications White Paper of December 2000, in response to the dramatic acceleration of telecommunications and broadcasting technology, increased competition and diversity in those industries, and their increasing convergence in new media.

The Communications Act gave Ofcom powers to regulate telecoms licensing (under a completely new system), radio spectrum allocation, the development of new broadcasting technologies and the switch from analogue to digital broadcasting, the content of broadcast media programmes, the economic conduct of both industries, and mergers and acquisitions in the media, including newspapers.

Ofcom has two general duties set out in the Communications Act: to further the interests of citizens, and to further consumer interests in relevant markets, by promoting competition where appropriate.

The Communications Act completely restructured the nature of the telecoms industry in the UK, replacing the old licensing system with one where companies operate under 'general conditions of entitlement' detailed in the provisions of the Act.

The move towards deregulation was spurred by the supranational guidance of the EU, which adopted four new directives in 2002 on framework, authorisation, access and interconnection, and universal services.

The EU's Audiovisual Media Services Directive required content on Video on Demand (VOD) services to be regulated from December 2009. The AVMS Directive, which replaced the 1989 Television Without Frontiers (TWF) Directive, was formally adopted on 11th December, 2007, and member states were given two years from that date to transpose the new Directive into national law.

Ofcom published a consultation on the future regulation of VOD services in September 2009, with the proposal that two bodies carry out most aspects of the regulation on Ofcom's behalf. Subsequently Ofcom formally designated the Association for Television On Demand (ATVOD) as the co-regulator for editorial content, and the Advertising Standards Authority (ASA) as the co-regulator for advertising content, effective from March 2010.

In February 2011, Ofcom carried out an internal review and reorganisation with the aim of making significant reductions in expenditure "in response to the challenge facing the whole of the public sector."

The review resulted in the creation of new groups within Ofcom.  The organisation today comprises: Competition Group; Content, International & Regulatory Development; Consumer Group; Legal; Operations; Spectrum Policy Group; Strategy, Chief Economist and Technology.

The Local Digital Television Programme Services Order passed in 2012 provided new powers to Ofcom to award local TV and spectrum licences.  The DCMS announced that it had created a local TV framework to enable over 20 local TV services to emerge across the UK. 

In September 2012, Ofcom awarded the first two licences to run local TV services on digital terrestrial TV (DTT) in Brighton (Channel name: Latest TV) and Grimsby (Channel name: Lincolnshire Living.). According to the DCMS, the channels will broadcast on a specific ‘multiplex’, a discrete amount of spectrum reserved for local TV broadcasting on DTT.

Licences are awarded for a period of up to 12 years and the first local TV services are expected to be on air before the end of 2013.

Controversies

Ofcom has been labelled a 'super regulator' because it carries out the work previously done by five separate bodies, as well as exercising some functions previously reserved to the Secretary of State.

During pre-legislative scrutiny and the passage of the Communications Bill, the size of the Office was a major source of debate. Concerns were voiced that the range and diversity of duties invested in Ofcom would lead to a decline in the quality of regulation. What supporters of the Bill saw as duplications of functions between the old regulators, opponents saw as critical reservoirs of sector-specific expertise.

Today, Ofcom is responsible for regulating widely different subject areas: ranging from the economic regulation of telecoms, based partly on competition law and partly on sector-specific rules, through to taste and decency in TV broadcasting.

It was repeatedly promised during the Bill's passage that Ofcom's regulation in all areas would be 'light touch', and that Ofcom would act far more rapidly than its predecessors - something critical in industries as rapidly moving as telecoms and broadcasting.

Another source of controversy was the virtual exclusion of the BBC from the regulatory control of Ofcom. The independent broadcast media were outraged at this perceived special treatment, which would see the BBC continue to be regulated by the Board of Governors for its non-commercial operations.

Today the BBC's licence fee and grant-in-aid funded television and radio services are subject to the regulation of Ofcom in the following six areas: protecting the under eighteens; harm and offence; crime; religion; fairness; privacy. The BBC's Commercial Services, whether broadcasting to the UK, or from the UK to international audiences, must comply with the whole of the Ofcom Broadcasting Code and the regulator can impose a variety of sanctions on the BBC for breaches of the code.

New legislation has expanded Ofcom's role even further. The Digital Economy Act which received Royal Assent in April 2010 requires Ofcom to report on communications infrastructure and media content and also provides Ofcom with additional powers in relation to electromagnetic spectrum access. 

The Postal Services Act passed in June 2011 transferred the regulation of postal services from the previous regulator, Postcomm, to Ofcom, making Ofcom responsible for safeguarding the UK's Universal Service Obligation on postal services.

However, the role of Ofcom is under constant review. The Conservative leader David Cameron, prior to becoming Prime Minister in May 2010, stated that under a Conservative government "Ofcom as we know it will cease to exist", with its policy-making functions, such as deciding the future of regional news or Channel 4, handed back to ministers and Ofcom's remit restricted to "narrow technical and enforcement roles."

A review published in October 2010 outlined the Government's plans to substantially reform hundreds of Public Bodies. This included proposals for several of Ofcom's duties to be "removed or modified".  The Public Bodies Act which received Royal Assent in December 2011 enables implementation of the proposals.

Statistics

INTERNET:

Number of fixed residential broadband connections in the UK  - 18.8m (End 2011)
Proportion of adults with broadband in the UK (fixed + mobile)  -  76% (Q1 2012)
Proportion of adults with mobile broadband in the UK  - 13% (Q1 2012)

Market shares of fixed broadband providers in the UK: - BT 29.3%; Virgin Media 20.2%; TalkTalk 18.5%; Sky 17.9%; Others 14.2% (End 2011)

Average broadband speed in the UK  - 7.6Mbit/s (Nov 2011)

Proportion of adults who use social networking sites at home - 50% (Q1 2012)
Proportion of people who use their mobile handset to access the internet - 39% (Q1 2012)
Number of mobile broadband (Dongles/PC datacard) subscriptions  - 5.1m (Q4 2011)

LANDLINE/MOBILE PHONES:

Number of residential fixed landlines in the UK -  23.9m (End 2011)
Number of fixed landlines in the UK (including ISDN channels) - 33.2m (End 2011)

Market shares of fixed line providers in the UK BT: - 36%; Virgin Media 12%; Others 52% (End 2011)

Proportion of adults who personally own/use a mobile phone in the UK -  92% (Q1 2012)
Proportion of adults who live in a home that has a mobile phone but no landline phone in the UK  - 15% (Q1 2012)
Number of mobile subscriptions in the UK  - 81.6m (Q4 2011)
Percentage of mobile subscriptions in the UK that are postpaid/contract  - 49% (Q4 2011)

Number of SMS and MMS sent per person per month  - 200 (Q4 2011)

TELEVISION:

Number of UK homes with digital TV - 96.2% (Q1 2012)
Number of TVs in the UK  - 60m (End 2011)
Claimed take-up of HD TV service -  42% (Q1 2012)
Number of minutes of TV people aged 4+ watch each day  - 242 (2011 average)
Proportion of UK homes with Freeview on their main set  - 37% (Q1 2012)

RADIO:

Proportion of households with access to a DAB Digital Radio -  42.6% (Q1 2012)
Proportion of listener hours through a digital platform (DAB, online, DTV)  - 29.2% (Q1 2012)
Number of local radio stations (excluding community stations)  - 342 (May 2012)
Number of national radio stations (Analogue and DAB) - 27 (May 2012)

POST:

Mail market revenue  - £6.7bn (2011)
Addressed mail volume - 16.6bn items (2011)
Approximate number of letters and cards received by residential consumers each week - 8.5 (2011 average)

Source: Ofcom - 2012
 

Quotes

"..... we should have an eye to simplicity and clarity in the overall regulatory system – an objective that will serve the public well, but also serve a wider interest in offering a positive environment for investment, innovation and creative businesses.

"Above all, and whatever approach is taken, the acid test will remain the ability of the system and its individual elements to build and sustain public trust."


Ofcom chief executive Ed Richards; speech to the Oxford Media Convention - 2012