Connected Research

Union policy research in the 21st century

DEB – good news on Ofcom investment duty

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The Digital Economy Bill had its first reading in the House of Lords last night, introduced by Lord (Tony) Young, former General Secretary of the Communication Workers Union.

Wednesday’s concerns (see below) that the Bill would not include the trailed new duty for Ofcom to take account of impact on investment in its decision-making proved unfounded: the Bill does indeed have such a duty. Clauses 1-3 deal with the general duties of Ofcom and include not only the need to have regard to impact on investment but also to report to Parliament every two years on the state of the nation’s communications infrastructure: the first such report to be filed one year after the Bill is passed.

With regard to the new duty to have regard to investment, the Bill could not be clearer:

(1A) In performing their [sic – though this repeats the existing faulty grammar of the 2003 Act!] duties under subsection (1), OFCOM must have particular regard, in all cases, to the need –

(a) to promote appropriate levels of investment in electronic communications networks;

(b) to promote appropriate levels of investment in public service media content; and

(c) for the investment to be efficient, wherever possible.

The words are simple but the context is dynamic: Section 3 of the 2003 Communications Act currently requires Ofcom to ‘further the interests of citizens in relation to communications matters’ and also to ‘further the interests of consumers… where appropriate by promoting competition’. This has been the sole context of its approach to regulation and, perhaps, Ofcom can be forgiven for rather forgetting the ‘wherever possible’ caveat given the lack of an alternative context for its decision-making. Henceforth, however, Ofcom will no longer have to have sole regard to promoting competition – it must also look at impact on investment since it now has such an alternative context. This should ultimately mean that we get an approach to the regulation of the industry which is geared towards the sustainability and continuing contemporary relevance of the network (which the duty to report regularly on the state of the infrastructure should also support).

I’m still thinking of the impact of the words of sub-section 1A(c) but the more I look at it, the more I like it: investment must be efficient (presumably this is a reference to it being, in another one of Ofcom’s buzzwords, ‘contestable’), which is probably right, but (according again to the doctrine of ‘wherever possible’) not to the exclusion of other alternatives. So, if for some reason Ofcom is not persuaded that investment can be made efficiently – for example, in cases where there is only one operator interested in building a network – it must still take impact on investment into account despite the apparent absence of contestability. Essentially, it means that non-market based investment (i.e. in the reverse case – I’m not going to use the word ‘inefficient’!) can still proceed without being held up by arguments regarding whether or not is contestable – and that is good news for those in rural and outlying communities.

The bulk of the Bill, as the media reporting and reaction has outlined, concerns the clauses on digital piracy. These remain controversial, although these pages are in favour (see below, passim). The goverment may need to be careful not to allow critics of these proposals to derail the rest of the Bill: the improvement in the regulatory framework in which Ofcom works is an advance and I would be loath to lose it.

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Written by Calvin

20/11/2009 at 4:54 pm

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