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.
On 26 March I attended a roundtable discussion hosted by the BBC Trust unit on the accessibility and usability of Project Canvas. Other attendees included representatives from disability organisations and a colleague from Ofcom's Advisory Committee on Older and Disabled People.
The BBC Executive has asked the Trust for permission to develop a joint venture to promote a standards based open environment for internet connected television devices - Project Canvas.
If approved by the BBC Trust, Canvas would enable consumers to view a range of subscription free content on their TV sets, including on-demand television services and other internet-based content (such as the BBC iPlayer) from public service broadcasters. It would allow access to the digital channels available via Freeview or Freesat but could also allow access to internet content from Directgov, NHS Direct and other sites. It is not envisaged that Canvas would allow full internet browser capability or the ability to use email.
Viewers would need a set top box or other device which would include the Canvas standard to allow access to online content.
These devices are also expected to include local storage, eg a personal video recorder, an Ethernet port for internet connection and an electronic programme guide (EPG). Set top boxes are expected to retail at between £100-200.
Viewers would also need a suitable broadband package.
The discussion focussed on issues that need to be considered if people with a disability are going to be able to take full advantage of the Canvas proposition, including where required the ability to make use of access services like audio description and subtitling; the importance of a ‘design for all' approach to Canvas from the outset; issues for people with a learning disability; and the cost implications for consumers.
The current Canvas consultation closes on 17 April - see http://www.bbc.co.uk/bbctrust/consult/open_consultations/canvas.html
There will be a further consultation on the Trust's emerging conclusion, opening on 8 June and closing on 22 June. The Trust will publish a final decision on 24 July.
The Panel will be watching developments with interest.
Mobile termination rates have been the subject of two Competition Commission Enquiries, much self interested argument between fixed and mobile operators and grandstanding by politicians and the media about ‘rip off prices'. The rates are under review by both Ofcom and the European Commission. The Communications Consumer Panel has sought to cut through the technicalities and highlight the consumer issues involved.
Briefly, a ‘mobile termination rate' is the price paid by the operator of the network from which a call to a mobile is made, to the network operator of the person who receives the call. It is intended to compensate the second (mobile) operator for the cost of carrying the call to the person being called. The cost to the first operator is recovered in the cost that is charged to the person making the call. It sounds esoteric and technical.... and it is, but major changes could have implications for some groups of consumers.
The Panel therefore commissioned a paper from Antelope Consulting, which gives an objective review of the arguments around mobile termination rates, with an emphasis on how the various alternatives would affect consumers.
We do not wish to get into the detailed methodological debates, but will expect to see the final proposals reflecting the consumer and citizen interests in the following ways:
We welcome the long term review of the future of mobile termination rates being conducted by Ofcom, but ask that, in the arguments between operators, economists, accountants and politicians, the effect on consumers and citizens be paramount.
The Panel submitted its response to the interim Digital Britain report last week, along with numerous other organisations. The response focussed on a few issues we think are of particular importance: the proposed universal service commitment; next-generation broadband access; media literacy; digital television; and digital rights and distribution. You can find the detail here: http://www.communicationsconsumerpanel.org.uk/smartweb/digital-inclusion/digital-britain. The first three are issues we will be following particularly closely during the year as part of our new work plan: http://www.communicationsconsumerpanel.org.uk/smartweb/about-us/panel-work-programme. We have great hopes for the final report from Digital Britain, but we are conscious this will mark just the beginning of what we hope will be significant developments.
Perhaps even more important than any of the specifics though, is the ambition that consumers and citizens should be central to the creation of Digital Britain. We noted at the outset that there was no one on the Digital Britain Steering Group with specific expertise in understanding and speaking up for the interests of consumers and citizens, and suggested the Government should redress this in some way. We have subsequently heard concern about this omission from others too.
We understand that the Government is working to a tight timetable and that a fast pace is a useful way of focusing minds on resolving key issues, such as 2G liberalisation and the future of Channel 4. But at the same time, the Panel believes that it would be helpful for the Government to take some steps to show how they are taking consumer and citizen interests into account.
One thing that could help give reassurance to interested stakeholders would be to make the process more transparent by setting out clearly, in relation to each policy area, the evidence and analysis that relate to the options under consideration. The Panel would particularly like the Government to present its analysis of how particular policy options would affect the interests of consumers and citizens, including sub-groups such as older people, people in rural areas, disadvantaged people, people with disabilities, people with low incomes and small businesses. The Panel's consumer interest toolkit could be a helpful guide.
Providing this degree of transparency would reduce the risk of unintended consequences and make the successful implementation of the Government’s decisions more likely. It would also give other groups representing consumers and citizens some reassurance that their concerns about lack of representation are undfounded.
Over the next few months, the Community Broadband Network (CBN) is organising a series of six conferences around the country to discuss the contribution that local authorities, Regional Development Agencies, and private companies can play in developing local schemes for the provision of next generation access (NGA) or super fast broadband. The first of these events was held today in Gateshead.
On behalf of the Communications Consumer Panel, I gave a presentation about a survey we have conducted mapping as many as possible of the various local NGA schemes which are taking place throughout the UK. The total comes to almost 40, covering every nation in the UK and every region in England.
Four of these are in the North East region. One of them is in Gateshead itself in the Baltic Business Quarter where Alcatel-Lucent is providing optical fibre in a scheme called Gateshead Technology Innovation or G-ti.
It was clear from the day-long proceedings that there is growing interest by local authorities in promoting next generation broadband in their communities and some frustration at the relatively slow roll-out of NGA in the UK by big players like BT compared to what is happening in so many other countries.
On Friday, March 6th, I attended the Inclusive Digital Economy Network Event. The network comprises of a large group of researchers working to identify and address the challenges of older and disabled people within the Digital Economy. Their website presentations from the day can be found here: http://www.iden.org.uk/.
It is clear there is a lot of very good research being undertaken in the UK on older people and people with disabilities. The Engineering and Physical Sciences Research Council (EPSRC) gave a presentation on it plans for their £120m research fund (out of an annual budget of £740m) to look at the digital economy and next-generation healthcare. Their website can be found here: http://www.epsrc.ac.uk/default.htm . One take-away from the day is we need to find a way to ensure that all the research carried out by these organisations is utilised by policy makers.
The keynote speech was delivered by Wayne David MP, Deputy Minister for Digital Inclusion, who talked about the Governments Digital Inclusion Action Plan and its priorities. The plan can be found here: http://www.communities.gov.uk/publications/communities/deliveringdigitalinclusion
and our response to the plan here: http://www.communicationsconsumerpanel.org.uk/smartweb/digital-inclusion/digital-inclusion-action-plan
The Minister also talked about the importance of assistive living and usability of equipment. He pointed out that 11.3 million people in the UK are of pensionable age and this number is only going to rise. Yet people's needs and wants are not being thought about by designers and manufacturers. Some stark research findings from the day revealed that for people offered assistive technology - 56% quickly abandon it; 15% never use it and overall 90% of assistive technology is discarded within two years. Clearly some scope for greater used involvement in design!
But there are other issues that need to be addressed to help people engage with technology. One example is people's learning strategies. An excellent presentation by Professor Andrew Monk from the University of York revealed that depending on which cohort you belong to impacts on how you learn about new products or services - if pre 1985 when Windows and Apple were launched you are likely to learn by rote or using the instruction manual, post 1985 you are likely to learn by exploration and experimentation - this fact has implications on how services and technologies should be designed for the mainstream.
We watched a short film, Relatively PC, where two actors played Jack and Maureen, who are older consumers trying to grapple with modern technology. After watching the film we ‘met' Jack and Maureen as part of a Q&A session on their experiences. They had really worked on their character profile and were able to bring the barriers and enablers to new technology to life in a fun, imaginative, and light-hearted way.
Overall, whilst much of the research centred on usability and assistive technology the issues they touched on have much wider implications and ones the Panel is working to help resolve; just some of these are: take-up of the internet; media literacy; and consumer empowerment.
Last week Roger Darlington wrote on the Blog about the Consumer Focus report Rating Regulators. This praised Ofcom for the way it has made consumers' interests central to its decision-making. The report also recognised the role of the Consumer Interest Toolkit (developed by the Panel) in encouraging Ofcom in this direction.
There is now interest around Europe in the Toolkit and way that the Panel advises Ofcom and others on the interests of consumers and citizens in the communications sector. This has been prompted partly by a planned change to the EU regulatory framework.
The revised Universal Services Directive, which is expected to be finalised by the end of this year, requires that:
"Member States shall ensure that national regulatory authorities establish a consultation mechanism ensuring that in their decision-making process due consideration is given to consumer interests in electronic communications." (Amendment 20, page 31)
The preamble to the Directive explains the thinking behind this:
"In order to overcome existing shortcomings in terms of consumer consultation and appropriately address the interests of citizens, Member States should put in place an appropriate consultation mechanism. Such a mechanism could take the form of a body which would, independently from the national regulatory authority as well as from service providers, carry out research on consumer-related issues, such as consumer behaviour and mechanisms for changing suppliers, and which would operate in a transparent manner and contribute to the existing mechanisms for stakeholders' consultation." (recital 25, page 18)
I was recently asked to speak at a training event for NHH, the Hungarian communications regulator. They wanted to learn more about the Panel and the Toolkit. There is lots of material about the Toolkit on our website but what it boils down is a set of questions that can be used for a variety of purposes. They can be used as policy is being developed to ensure that consumers' interests are identified and reflected in the final decision. They can also be used to review an organisation's performance in relation to certain projects and overall.
Staff at the Hungarian regulator are making a big effort to find out the views of consumers and factor them into their decisions. They are hampered by the fact that Hungarian civil society is less developed than in the UK - a legacy of communist rule - but they are now drawing more heavily on market research and the consumer complaints data that they gather. All the presentations from the training event are available online and it will be interesting to see how other European regulators, and the European Commission itself, develop new ways of reflecting consumers' interests in their decisions.
Yesterday afternoon the Panel held an open meeting to discuss our draft work plan for 2009/10. This was a first for the Panel and the attendance suggested there was a real appetite to hear more about us and our plans. We invited a wide range of interested organisations, including consumer bodies, Citizen bodies, communications companies and regulators and policy makers. More than 30 organisations attended and I am very grateful for the time they gave us.
We had two questions for the meeting:
We got some great feedback, mostly positive, but with ideas for refinements and suggestions about how we might take the work forward. We hope that opening a discussion up about our work in this way will make it easier for people to work with us.
If you weren't invited and would have liked to be - please let me know by e-mailing us sofia.sturesson@communicationsconsumerpanel.org.uk. We will make sure that you are invited to other, similar events. And if you would like to have your say, it is not too late. The presentation I gave at the event can be found by clicking here http://www.communicationsconsumerpanel.org.uk/smartweb/about-us/panel-work-programme and you can send your thoughts by adding a comment to this blog or e-mailing alistair.bridge@communicationsconsumerpanel.org.uk. Comments will be most useful to us if we have them by the 17th March, please.
Anna