The European Commission has published its summary of the responses to its net neutrality consultation. Among the main findings were concerns about privacy, innovation and freedom of expression, and about a lack of transparency for consumers.
There was also a widespread view that transparency by itself would not allay all net neutrality concerns, particularly where there are barriers to switching between internet service providers. This was one of the areas the Panel highlighted in its response and we are pleased to see it has been noted by the Commission.
Transparency is about ensuring that consumers have the right information about the traffic management policies employed by internet service providers. But this information is complicated and difficult for even the most tech-savvy consumers to understand. It also relies on consumers making a decision to switch package or provider on the basis of traffic management policies. However, traffic management is just one of a range of factors consumers consider when choosing provider. There are also barriers to switching that need to be overcome, including lack of choice for some, particularly rural, consumers and the increasing prevalence of bundling.
So to get transparency right we need to know more about how consumers use information, and the role of information about traffic management as one of a wide range of factors consumers may consider when making a decision about broadband.
We also need to make sure that information is presented in a way that is meaningful and comparable - possibly in terms of positive commitments about what services consumers will be able to access and when, rather than the kind of ‘up to' model adopted in advertising of broadband speeds. We look forward to seeing these issues explored in more detail as the Commission continues its net neutrality debate.
We were also pleased to see that some of the citizen issues had been highlighted, including privacy and freedom of expression. However, we would like to see a more comprehensive assessment of the potential implications for citizens as well as consumers, including the impact on provision of online public services.
Getting effective redress when you have a consumer complaint is one of the basic consumer rights - so important that it is written into the United Nations Guidelines for Consumer Protection.
And we all intuitively understand why that is: we have all got our own experience of how frustrating it is when your complaint is not taken seriously, when your service continues to be disrupted, when your charges are incorrect etc...
However consumer complaints in the communications area is an area that still leaves a lot to be desired. I think there are two main areas that need to be resolved.
Firstly, with the complexity of current telecommunications contracts and bundles, it is very difficult for any consumer to make an informed choice about what the best option is for them. In this context, it makes sense to ensure that consumers have an overall picture of how individual companies are performing by giving them a straightforward comparator that we are all familiar with from e-bay: other consumers' level of satisfaction with their provider and the level of complaints other consumers have about sellers?
Unfortunately there is no way of knowing how individual telecommunications companies perform on this issue, because they do not have to publish their complaints/total customer accounts ratio and there is no agreed definition of a complaint. Both problems can be overcome if there is the will do tackle them. An article in Broadcast Magazine on 11 October pointed out that "TV licence fee staff have been issued with a manual advising that customers who use the words "idiots", "shambles" or "useless" are likely to be making a complaint.. The article also says that "Staff are advised to look out for particular "keywords" suggesting a customer is protesting about some aspect [....]. These include: "compensation", "complaint", "disgraceful", "disgusted", "incompetent", "appalling", "furious", "intimidation", "mistakes", "harassment", "rude", "threatening", "outrageous", "upsetting", "unacceptable" and swear words. So maybe this BBC staff document can help solve the problem? A solution would benefit both consumers as well as those telecommunications providers who take customer service and complaints handling very seriously and who would be able to show a good track record in this area.
Secondly, if a telecommunications provider does not resolve your complaint, you have the right to take it to the next level, where it can be independently resolved, the ADR Scheme. Every telecoms company has to sign up with a provider of this independent service, and because of historical reasons, there are two...the Office of the Telecommunications Ombudsman (Otelo), and the Communications and Internet Services Adjudication Scheme (CISAS). Both systems have different operating modes, both have their strengths and weaknesses. For example, one provides consumers with assistance in formulating their complaint whilst the other one does not. Do consumers get the same justice or different justice depending on which ADR provider their case goes to? Nobody seems to know for sure, and nobody has evidence that that a system with two redress companies is beneficial for consumers.
Ofcom published its consultation " Review of Alternative Dispute Resolution Schemes" on 20 October 2010. I hope that consumer representatives are writing in - this is an area that is too important for consumers to lose sight of and this consultation presents an opportunity to address the issues outlined above. If this opportunity is not used, than there won't be another one for quite a few years to come....
On behalf of the Panel, I recently addressed an Industry Workshop on switching. In my presentation, I suggested the following key principles which should guide decision-making in this area:
There should be protection against slamming
Customers should be well-informed on implications
The processes should be quick and reliable
Continuity of service should be assured
The processes should promote retail competition
The processes should work across sales channels
I explained that, utilising these principles, the Panel generally favours gaining provider-processes for switching rather than losing-provider processes.
Understandably there were different views from the companies represented on the relative advantages of gaining provider-led and losing provider-led processes with BT concerned that the Panel should weigh the benefits to consumers of the ability of a company to offer bespoke offers to departing customers.
More generally, there was a view that the current Ofcom consultation on switching focuses too narrowly on GPL vs LPL processes instead of looking at wider migration issues.
The Government's decision not to charge consumers who appeal against a notification for online copyright infringement is good news. Any system that accuses people of illegal online activity must be fair and clear, and must be based on sound evidence of wrongdoing before any action is taken. The notification should also make it very clear that people have the right to appeal, and not bury it in the small print. The Panel does have concerns, though, about how consumer-friendly the appeals process will be. We believe that it has to be simple and easy to access for anyone to use. An independent third party to advise consumers on the process, and how to gather evidence to support their appeal will also be essential. And what happens if someone is successful in winning their appeal? Some level of compensation would seem reasonable in the circumstances.
All the talk last week was about net neutrality, what with the closing date for Ofcom's consultation on the issue, the Panel's own seminar that we held in partnership with Polis (the LSE media think tank), and a day-long BSG conference on the topic.
The buzz word in the UK debate is transparency. Consumers are using increasing amounts of data, lots of it time sensitive. So Internet Service Providers (ISPs) take steps to manage the data flow - or traffic - across their networks. They might prioritise or delay certain types of traffic, or cap the amount of data consumers can use at a certain time. They might even decide to prioritise their own content - particularly those ISPs who are starting to offer TV services over the internet - or ask content providers to pay to have their content prioritised.
Many argue that this is ok as long as the process is transparent - in other words that consumers are told about the particularly techniques the ISPs use and can decide to switch if they aren't happy. But this is complicated information, even for the more tech-savvy consumers. Will people really be able to make meaningful comparisons using this kind of information? Also, for transparency to work consumers have to be able to switch. A tall order if, in common with many rural consumers, you only have a choice of one provider. Difficult too for all those people whose broadband package is part of a bundle or whose ISP changes the terms and conditions mid-way through a contract.
We also think transparency misses out some of the important citizen dimensions of the problem. While enabling consumer choice is important, it won't necessarily protect the things we consider important to society as a whole. Public services are a good example. There are two ways in which public services could be negatively affected by traffic management. They could suffer from being in the shadows of more appealing commercial services that take advantage of paid-for, prioritised service. Thus public services become less attractive - for instance, NHS eHealth versus private eHealth. They could also be actively discriminated against - particularly if those services are high bandwidth, like iPlayer or future eHealth services.
Getting to the bottom of these issues will be complicated. Different people will have different needs at different times, and what is good for the individual may end up having a negative impact on things we all value. To get to the bottom of it we need to have the debate based on a real understanding of the views and experiences of consumers and citizens. There won't be any easy answers, but this approach will allow us to really understand the nature of the problem.
Ofcom has joined The US regulator the FCC, Arcep in France and the European Commission among others around the world in leading a public consultation about 'Net Neutrality'. For the uninitiated the term tries to capture the range of issues that arise when network operators -including ISPs and Mobile operators for example - try to shape, restrict or in some way manage the content that flows over the network. I won't go into the detail - the consultation documents do that very well, but it is heartening that the document does appear to be sensitive to many of the consumer and citizen issues that arise. Whether adverse impacts on consumers need to be addressed will of course depend on whether we can assume that consumers themselves have the tools and ability to understand traffic management, and its potentially large impact on their access to services. As the document, in common with the other regulators' recent statements, recognises, these could become important issues for consumers and citizens, in addition to any adverse impact they may have on competition between operators.
The extent to which regulators have a legal basis to intervene in these matters has been controversial both sides of the pond, but in Europe the new EC framework does provide some tools for Ofcom to use, for example in providing guarantees that consumers should have a certain level of quality of service, or that there should be transparency requirements to ensure that every consumer has the information needed to choose between rival network providers. Whether these powers will be used, as the document is at pains to describe, is a matter for government and legislators.
Will the debate get beyond a narrow clique and demand the attention of a broader public, thus making Government action likely? not on the current evidence: There are almost no complaints about traffic shaping. This may mean we should all relax about the issues, but equally this could simply mean that they are fiendishly complex and ill-understood by consumers, who therefore need protecting. Either way, we can expect this bundle of issues to preoccupy more people - and generate more complaints - as people become more aware of the issues. (Paradoxically perhaps, since awareness is part of the solution). During the summer a separate EC consultation is expected and the issue will gradually come to a wider public.
Prediction: if consumers' enjoyment of football is impacted by traffic management, we can expect a much more vigourous debate. But we are a way off that yet, and those of us dragged away from television coverage of World Cup 2010 to read this stuff will remain a very small minority.
The Consumer Panel has consistently tracked the progress of BT Basic, the new low user scheme launched by the company at the beginning of October 2008 to replace the previous Low User Scheme (LUS) and In Contact Plus (ICP).
BT agreed with Ofcom in the review of the universal service obligation published in March 2006 that, once the new scheme reached 600,000 customers, it could formally close the other two schemes. We are advised that BT Basic now has 602,000 users.
Therefore the In Contact Plus (ICP) scheme has now been closed. BT intends to close the Light User Scheme (LUS) once the last few customers have been moved onto BT Basic or another calls package.
So it's taken four years but at last there is a single, new, more targeted low user scheme in operation. When the idea of BT Basic was first conceived, BT's previous low user schemes had over 1M users between them. So the introduction of BT Basic has almost halved the number.
You can find out more about BT Basic here.
As the Member for England on the Panel, I attended this week's meeting of Ofcom's Advisory Committee for England which goes by the delightful acronym ACE. As usual, we had a wide-ranging agenda and some thoughtful discussions with Ofcom staffers.
Ofcom's England Team provided a comprehensive report on their meetings and activities since the last meeting which covered such subject areas as pay television, local commercial radio, provision of local TV news, and Ofcom's work on digital participation including the pilot in the Granada television region to see whether one could build digital inclusion efforts into the programme of digital switchover of television..
We had a political up-date when we were advised on what was and wasn't in the Digital Economy Act and what the various political parties are saying about communications issues; we had a visit from members of Ofcom's Consumer Affairs Team who briefed us on their priority areas of work on consumer empowerment & protection and on access & inclusion; we had an up-date on the roll-out of next generation broadband and a presentation from the Managing Director of Rutland Telecom - a six-person company - which has just delivered super-fast broadband to 200 homes in the village of Lyddington; and there was detailed presentation on the differences between urban and rural communities in the delivery, price and quality of fixed, mobile and broadband services.
On behalf of the Panel, I reported on our most recent discussions, noting particularly our entry into the complicated debate on net neutrality or - to use a less emotive term - traffic management.
"The Panel believes that silent and abandoned calls continue to cause significant harm to consumers. For this reason, we believe that the penalty threshold should be increased and are calling for the maximum penalty for persistent misuse of an electronic communications network or service to be raised to £2 million. We support the maximum level of increase to ensure that Ofcom is able to penalise the greatest number of offenders in a manner proportionate to their size."
Extract from the Communications Consumer Panel submission to BIS on the Government consultation on raising the level of fines for silent calls.
On Tuesday I attended the Westminster Media Forum seminar Children, the Commercial World and the Media. The event was chaired by Lord Clement Jones, Liberal Democrat Spokesman for Culture, Media and Sport and Judy Mallaber MP, Chair, PLP Departmental Committee for Education and Skills. Speakers included James Thickett, Ofcom's Director of Market Research and Intelligence who was presenting the latest data from Ofcom's research on young people's use of social networking and other internet sites, and Howard Litton, Managing Director of Nickelodeon UK, who talked about the future of children's television in a multi-platform age.
Much of the discussion was focused on content, but there were also some interesting points for those of us who are interested in digital participation more widely. In particular, the importance of going beyond traditional approaches to media literacy. This is partly because the line between content and advertising is becoming increasingly blurred, which affects the way children learn to understand when and how they are being advertised too. But it is also because people, particularly children and young people, are increasingly using the internet for socialising and communication. This raises real issues about the sorts of skills that people need. The ability to differentiate between and analyse different types of content isn't enough. People also need to be taught social skills that will equip them to manage relationships and social situations online, including the fall-out from things like online bullying and rejection.
This reinforces the importance of the change in emphasis in the Digital Britain from media literacy to digital participation, emphasising the need to focus on the range of different skills that people need to fully participate in a digital society.
On Wednesday 11th March I attended an OFT event titled Business Leadership in Consumer Protection. The event focused on the role that self regulation has to play in protecting consumers. The OFT has launched a consultation on self regulation, which can be found here:
http://www.oft.gov.uk/advice_and_resources/resource_base/consultations/current/self-regulation
What makes self regulation work? The ASA was clear that self regulation was successful in its sector (except in broadcasting where it has co-regulatory powers with Ofcom) because the industry knows that as well as being signatories to the ASA advertising codes, the UK has consumer protection laws that the OFT can utilise to take action against misleading advertising. This acts as a strong deterrent, as does the knowledge that the sector is under scrutiny by politicians. There are also good economic incentives for the industry to coalesce around self regulation. That being: they can spread the cost of self regulation across the sector rather than end up as an individual company in court facing costly litigation. The ASA did give the OFT a cautionary note: that if it does not sanction and sanction transgressors quickly the effect of it being a deterrent is greatly weakened.
From an international perspective, Mary Engle, Acting Deputy Director, of the US Bureau of Consumer Protection, said she is in favour of self regulation because: it is flexible; quick to implement; it did not consume large amounts of budgetary resource; and importantly had the buy-in of industry. This last fact is particularly important because it removes the need for a long consultation process and the time required to introduce legislation. The success of self regulation in the US can be seen in the changes to fast food advertising, and the decline in sales of adult rated games, to minors. In both instances politicians and the Bureau of Consumer Protection waived the big stick and industry came together to avoid formal legislation.
So what of Ofcom's self regulatory work? Kristina Glushkova explained how Ofcom looks to identify the most appropriate approach to address specific issues in the communications market. It doesn't favour one approach over another but looks to identify whether self, co, or formal regulation is most likely to succeed. In December 2008 Ofcom published a statement that sets out this approach, which can be found here: http://www.ofcom.org.uk/consult/condocs/coregulation/statement/. The following steps are what Ofcom takes to understand what the industry incentives and the market conditions are for a given situation and therefore what approach should be taken:
1. Collective incentives to solve the problem?
2. Likely solution in the best interests of citizens and consumers?
3. Individual incentives not to participate?
4. Likelihood of "free-riding"?
5. Can clear objectives be established?
Ofcom pointed to the success of the Independent Mobile Classification Body (IMCB) as a self regulatory scheme, and that self regulation for mobile mis-selling was inappropriate due to a conflict of incentives on companies to comply with such a scheme.
But there are other businesses who are interested in seeing self regulation succeed. The Carpet Foundation represents over a 1000 independent carpet retailers in a market that is not dominated by a small number of competitors but by many. By joining and adhering to the Foundation's scheme - part of the OFT's Consumer Codes Approval Scheme (ACCAS) - retailers are allowed to use an OFT logo that acts as a hallmark of customer quality helping people purchase with confidence.
Presenting a consumer perspective Steve Brooker of Consumer Focus was clear that self regulation only works in certain markets and taking a historical perspective its use is declining. He pointed to the end of self regulation for solicitors and medical staff and to the failure of self regulation in the second-hand car market. In this last instance self regulation was inappropriate in this sector because there are numerous retailers that are unable to be corralled together - there was also a failure of enforcement. Where he believed self regulation can work is when an industry is made up of a ‘smallish' number of players and when Government or regulators threaten more draconian measures.
UK consumers and citizens stand to gain an enormous amount - or lose an enormous amount - as a result of communications and media policy decisions that will be made in the coming months. If there was a point of agreement at the Oxford Media Convention, this was it.
The seventh annual convention came at a time - between the publication of Ofcom's Public Service Broadcasting (PSB) Review and the Digital Britain report - when push is coming to shove on two key issues: the sustainability of commercial PSBs such as Channel Four, and the issue of broadband policy. Whilst Ofcom delivered some solutions on the former, we will have to wait until the publication of Digital Britain's interim report next week for a steer on the latter. Unconfirmed rumour has it the report, expected Monday 26th, may not now be out until Thursday.
Whilst there is plenty of agreement that something needs to be done for ad-funded PSB, there is still no confirmation of exactly what will be done. According to Ed Richards, ‘public service broadcasting will be an anachronism. But public service content will not be'. In an attempt to protect the news, domestically produced entertainment and minority programming it provides, Channel Four is being prepared for a variety of partnerships and new funding streams, including some kind of venture with BBC worldwide which will help Four to distribute their content. ‘Top-slicing' the BBC license fee, whilst not being excluded, is looking a more remote possibility. Channel Four speakers such as Anne Bulford indicated that they are actively negotiating on the details for partnerships, and Secretary of State Andy Burnham was keen to encourage such partnerships- particularly with BBC Worldwide. His speech, and Ed Richards' are available on the Ofcom website.
Of course the policy timetable is dependent on the political cycle so it was enlightening to have Ed. Vaizey MP outlining the Conservative position. Shadow broadcasting minister Vaizey indicated that there would be no radical changes of direction in media policy if he was part of an incoming administration, and that the Conservatives remained committed to PSB, Channel Four and the license fee. Vaizey was probably not quite as gung ho about getting Channel Four into bed with the BBC, and couldn't resist scoring a few political points by criticizing the Government's handling of communications policy, with the PSB Review and the Convergence Think Tank in his view taking far too long to deliver decisions.
In a forum like Oxford, which is very much a stakeholder event and beyond the budgets of many consumer groups, academics and citizens, what are the consumer-citizen implications which arise from these policy discussions?
The issues are too many to mention: for example the session I chaired on how ISPs are working with the music industry to combat illegal file sharing raised a number of consumer protection issues. Any selection is always going to be subjective, but how about this for a starting point:
Consumer-Citizen issues:
Universal service in broadband. This phrase is no longer spoken only in hushed wonder by wild eyed wonks: people are starting to wonder what it might actually mean. Broadband for all is a familiar and appealing slogan, but as Anna Bradley pointed out, for consumers, broadband is really only a means to an end: the end of accessing services (including public services) and other people. A question: does ‘broadband' include the next generation of Freeview Boxes which could be enabled to receive on-demand services? Freeview is increasingly being seen as a platform for access to broadband for the hard-to-reach last 40% of consumers. This is all very well, but only if the functionality is there to reach all online public services, rather than a walled garden of content provided over IPTV. So we watch Project Canvas - which involves the BBC, BT, and ITV with interest. Interestingly, Ed Vaizey noted but didn't elaborate a Conservative Party commitment to ‘Near Universal Broadband' indicating that Digital Britain proposals on Universal Broadband might be carried over by an incoming Conservative government.
And another interesting proposal put by John Kingsbury from NESTA was that those on income support should be offered free broadband. The proposal, which NESTA have costed at £1.175 billion was not much discussed at the Convention, but captures the mood of these recession-rocked times.
Next Generation Broadband. This is a separate issue which shouldn't be confused with the debate about current generation broadband. But as Anna Bradley pointed out we can learn a lot about the future rollout of super-fast broadband by looking at how a competition-driven rollout of current broadband has progressed. It is clear that the issue with NGB will be what Bradley called ‘the not-spots, and the not-a-lot spots'. We know from the experience of the rollout of current generation BB that there will be communities and sections of society that will not be served, or will not be served for some time, by the market. A review of the research and the Consumer Panel's consumer research tells us that these people - including those in isolated rural communities, and the elderly and housebound - are likely to be precisely those that stand to benefit most from broadband and - to a certain extent - also super fast services such as telemedicine. The obvious thing to do with such a new technology is wait and see- but given that there is likely to be a clear consumer detriment and a new digital divide, why not predict and prevent. As Roger Darlington's consumer panel research showed, the public sector is already investing a lot in NGA: why not work with Ofcom on a strategy for targeting that local investment on the areas where the need is greatest and the market is likely to fail for longest?
Public Service Broadcasting
As ever, Oxford provided a fascinating window on the thoughts of the top brass of the media industry, government and associated wonks and observers like myself.
As Ed Richard pointed out in his speech, the conference came at the precise moment when Ofcom passes the policy baton to Government. The regulator has conducted exhaustive research and come up with the options published Wednesday, but it is the Government that will chose between them. It now seems universally agreed that citizens and consumers' interests are served by public service competition to the BBC, but there is less consensus on how this is likely to be achieved and funded. The issues of real urgency, which has been underlined by Ofcom research in both its PSB reviews relate to news, and particularly local news. These are highly valued by citizens and consumers, and expensive to produce. Plenty of new ideas on news, such as Secretary of State Andy Burnham's idea to encourage local consortia of news providers, but little flesh on the bones of policy in this area yet. We need more research and a practical look at how local communities are being effected by the economic downturn, the downturn in local press advertising and ITVs restructure.
Finally Privacy and Security. Consumer Panel research found that trust and security concerns are a real barrier to take-up of broadband. But there is a wide body of opinion arguing that new models for content distribution will depend on content owners gathering more and smarter information about media users. Peter Bazalgette outlined his view on this again at Oxford, underlining the importance of this issue. Deployment of advertising services such as Phorm - which caused great controversy when it was used by BT last year, would arguably undermine rather than help secure that trust, and may deter users. We need more work and sensible debate on this issue. Is it really necessary to permit more invasive tracking technologies if we are to fund UK originated content and making it freely available to consumers as Baz proposes? What advertising model is being contemplated for Project Canvas?