Connected Research

Union policy research in the 21st century

New powers for Ofcom also dropped

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The government is also proposing to drop Clause 1 of the Digital Economy Bill (see also The Guardian). This would have given Ofcom new powers to have ‘particular regard’ in carrying out its statutory duties on behalf of consumers to the need ‘to promote investment in electronic communications networks’. The dead hand of the Tories on the tiller is all too visible here, too.

The Connect Sector had supported this Clause right from the publication of the final report of the Digital Britain initiative since it would have commanded Ofcom to focus in its promotion of the interests of consumers on the need for investment, alongside the existing duty to promote competition. It would have overturned a singular reliance on promoting competition, which had been how both Ofcom and Oftel before it had interpreted the interests of consumers. It is the promotion of competition, to the exclusion of all other concerns, that has allowed us to reach the stage of falling real prices for telecoms services to the point where it is likely to endanger investment. In an intensely competitive situation, falling prices can only inhibit levels of investment since it both undermines and makes more uncertain the rates of return that can be made. When investment is expensive – not least given the need to boost investment in fibre towards fibre to the premises solutions, rather than just fibre to the cabinet – such levels of uncertainty will simply lead to it not being made. And that’s not in the interests of consumers either.

Yet we’re now back in the situation of Ofcom interpreting its regulatory remit on looking at the interests of consumers solely through the telescope of competition. A one-club, narrowly focused and ultimately irrational approach to regulatory policy.

The new duties for Ofcom, by recognising the central role of investment in developing the UK’s communications infrastructure and in insisting that Ofcom supported that in its approach to regulatory decision-making, would have helped to support the case for that investment. Their likely withdrawal – voting on the Digital Economy Bill is tonight – only undermines that case and, in the process, undermines a significant portion of the Digital Britain initiative.

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Written by Calvin

07/04/2010 at 3:51 pm

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