I am really delighted to see the publication today of the research commissioned from ICM by Virgin Media into consumer attitudes to the way broadband speeds fall far short of what is advertised. For some time now the Panel has been very concerned by the claims made by broadband providers about the speeds that may be achieved through their networks.
In July 2009 Ofcom published research showing the very considerable gap between what was advertised and what was experienced by most consumers. On average the speeds experienced by consumers are now shown by Ofcom's July 2010 research to be less than half what is claimed - even worse that the July 2009 result. What is the point of quoting a theoretical 'up-to' maximum when in practice no-one actually achieves it?
Ofcom's introduction of a new voluntary code of practice commits providers to giving consumers more accurate information about the speed they are likely to achieve in practice. The ASA is also reviewing the way that broadband is advertised, and the Panel has had discussions with both to ensure the consumer perspective is taken into account.
The Panel Chair Anna Bradley also wrote to Ed Vaizey, the Culture Minister, highlighting this issue and seeking a more consumer-friendly solution along the lines of paying for what you get rather than paying for hollow promises which the providers know are unachievable.
It was obvious to the Panel that consumers were very unhappy about the gap between the promise and the reality, but the Virgin-ICM research gives us a solid research-based foundation for just how irritated and confused consumers actually are, which gives us a platform for applying further pressure. Although the publication is primarily commercially motivated, it has nevertheless helped to highlight a ridiculous situation.
We now have proof that consumers mistrust the claims made, are confused about what the claims mean, have inadequate information to make informed choices, and have a very low degree of confidence in the whole industry. This should be a wake-up call to all providers.
I would like to see the dreaded words 'Up to' to be consigned to history, and for more honest advertising to be used, indicating the typical speed that a consumer might experience on average. There may some difficulties in agreeing the definition of the words 'typical' and 'average', but providers now have a commercial imperative, as well as a moral one, to work through these difficulties, agree a new approach, and try to restore a degree of consumer confidence in the industry.
Recently Communications Minister Ed Vaizey announced the Government's intention to auction the 2.6GHz and 800MHz frequencies - potentially paving the way for next generation mobile broadband services using 3G and 4G technology. The auction is likely to take place in late 2011, which means new services could launch in 2012.
The proposals are really quite different from the proposals put forward by Kip Meek, the Independent Spectrum Broker, which were very detailed. This announcement gives Ofcom much more scope to decide how the auctions should be conducted.
It will also mean that Ofcom will need to do the hard work of assessing the impacts on competition and finding a way forward that will be acceptable to all the mobile operators. A tough call!
The Panel will be keeping a close eye on progress to make sure that the consumer perspective is right at the heart of this debate.
Today three members of the Panel attended a briefing session organised by Digital UK to report on the current state of the digital switchover programme. The headline message is that the programme announced in 2005 is on time and on budget. About a third of transmitters (around 500 out of 1,150) have been switched and around a fifth of households (around 5M out of 25M) have been switched.
New research has shown that 64% of those that did not take digital television until their region switched over have now said that they wish to try other digital technologies - 28% of them the Internet. A Panel member asked about the trial in the Granada region of the scope to use the switchover to digital TV to encourage those currently not online to become so. He was advised that the report on the trial has just been delivered to BIS and Ofcom and that it suggests that the model developed by Digital Outreach could be used to get more people online.
You can read the Digital UK Annual Report here.
Last year research by the Panel found that the public believed access to the internet was at a tipping point, moving from being a nice to have to an essential commodity, particularly for households with children or for individuals who are physically isolated. Research published today by the Joseph Rowntree Foundation supports that research, illustrating that for many people the scales have already tipped.
The latest Minimum Income Standard report, which gauges what members of the public think people need to achieve a "socially acceptable standard of living", found that a computer and an internet connection at home are no longer viewed as luxuries but as essentials. They are vital for all working-age households to enable people "to participate in society", both to access job opportunities and to get discounts on services, and everyone should be able to afford them.
This trend is only likely to increase as more, and more vital, services are delivered solely online, or provided offline in a way that penalises users through higher cost or lower quality. Already some of the best deals in areas like shopping, banking and insurance are only available online, and it is likely that online delivery of public services will also be on the agenda - moving transactions online has the potential to deliver considerable cost savings for a cash-strapped government.
Look in a bit more detail at those who are not online though and the picture is more complicated. Financial barriers are rarely the only - or indeed the main - reason people don't get the internet at home. Many fail to see how the benefits of the internet would make a difference to their lives. Even those who do are likely to need considerable support to get online and get the most from the internet, including help to choose and set up equipment, learn how to use the internet and possibly also a computer, and to keep themselves safe once they are online.
We have recently published a consumer framework for digital participation, supported by considerable consumer research, which brings together all the different things people need. We hope this will be a useful resource for all of those who agree, as we do, with the findings of the Joseph Rowntree Foundation research and want everyone to have access to the benefits the internet can bring.
A couple of weeks ago I attended the Consumer Forum for Communications, hosted by Ofcom and attended by a wide range of consumer groups. One of the items was a discussion about spectrum, including how it works, the history and some of the current issues. There has been an explosion of services in the past 20 years which have placed huge new demands on spectrum, including the increasing popularity of 3G. In just over 2 years over 4m mobile dongles* have been sold, and in 2009 mobile data traffic increased 200%. The popularity of these and other technologies is putting increasing pressure on the quality of service some consumers receive. So, while it may sound like something to leave to the geeks, spectrum has important implications for consumers.
Under the previous government, a deal was brokered by the Independent Spectrum Broker Kip Meek, designed to free up capacity on the networks. The deal is sitting on the new Government's books as a statutory instrument, which means it could be ready to go. However, it is controversial, with BT and a number of the mobile operators unhappy with the terms of the deal. The problems aren't going to go away though, and while there is no perfect solution the status quo is clearly not in the interests of consumers.
In last week's budget George Osbourne announced that a decision on spectrum would be made before Summer recess on 21 July, so hopefully we will soon have some answers. The hope is that whatever decision the new coalition government takes, they will make sure that the interests of consumers as well as industry are central. And, while it is likely to be a difficult task, the prospect of a little extra revenue for the treasury from any future spectrum auctions may provide some motivation - especially given all the talk of austerity and cuts.
*Dongles are also sometimes called USB modems. They are a small piece of hardware that connects to a laptop or desktop computer and plugs the user in to a wireless network.