Communications - Life-blood of Enterprise
Communications Services for the Public and Private Sectors -
2010 and beyond: CMA's Manifesto for the next General
Election
Introduction
CMA has a vision for the future of communications services in
the public and private sectors in the UK, and how this should be
achieved. The way in which a future government will promote and
invest strategically in communications services beyond 2010 will be
a crucial element in the policies of those political parties who
wish to demonstrate their economic, social and technological
competence to voters in the run up to the next General
Election.
The current economic downturn provides the opportunity for
politicians to think smarter, focus better, and provide the
necessary policies to underpin a better future for communications
services and, in consequence, UK plc. With members who spend £15
billion annually in the communications market, CMA has the
necessary industry experience and know-how to help shape this
future for the benefit of everyone.
Communications services in the UK
Electronic communications services are the vital life blood in
the UK's economy. They enable all organisations, including
government and business to unlock value, reduce costs, and provide
value for money to the customer and citizen alike. But whilst
competitiveness, enterprise and innovation are always important
business objectives, communications are also used to improve
people's economic and social well-being. Enterprises generate
growth, provide jobs and provide wealth creation benefits which are
a compelling enough reason for future governments to pay particular
attention to the needs of enterprise users.
The UK's electronic communications sector contributes around
2.3% of Gross Domestic Product (GPD) with an industry turnover of
£38.8 billion in 2007. However, this contribution is dwarfed by
that from business users - the contribution of multi-national
enterprises (MNEs) and their supply chains approximates to 35% GPD,
according to data based on the top 500 EU companies. Government
policies must therefore aim to optimise this output by fully
supporting and encouraging the enterprise demand side of the
communications sector. Unfortunately, UK policy-makers have
hitherto tended to focus exclusively on the supply side of the ICT
sector with initiatives and policies aimed at growing the 2.3%
contribution to GDP from the operators and manufacturers.
Imbalance between consumer/citizen and business
users
About two-thirds of the revenues received by the telecoms
industry come from public and private enterprise. The disparity in
contribution is in inverse ratio to the political and regulatory
focus, which embraces protection of the "citizen-consumer" rather
than supporting, or even recognising, the needs of the business
user. Further distortion derives from the co-ordinated lobbying
efforts of some of the ex-monopoly operators. Few efforts are
directed towards measuring and encouraging the economic benefits
generated by the provision of communications services to business
and resources are lavished on the pursuit of protection of the
citizen-consumer. Yet public policy on wealth creators and wealth
consumers must be evenly balanced in order to achieve equilibrium
between economic benefit and protection of the consumer. This need
is overlooked in the Communications Act 2003, resulting in a
significant inequality in the way that regulatory resources and
activities are deployed.
The Act, implementing European legislation, brought together
several regulators to form a single communications regulator,
Ofcom, and also laid down the new Regulator's general duties:
(1) It shall be the principal duty of OFCOM, in carrying out
their functions-
(a) to further the interests of citizens in relation to
communications matters and
(b) to further the interests of consumers in relevant markets,
where appropriate by promoting competition.
However, the Act fails to recognise that there are significant
differences between the domestic consumer and large business users.
The key differences between the needs of the two are characterised
as:
- Bandwidth: Enterprises and public sector users depend
extensively on (very) high speed, dedicated, leased lines, backed
up by xDSL or even dial-up circuits. The majority of domestic users
have requirements that (at present) are satisfied by low speed ADSL
or dial-up connections.
- Traffic Patterns: Enterprise and much public sector traffic is
high volume and centres on a supply or value chain. Tariffs are
refined accordingly. Residential traffic is individual, low volume,
intermittent and peaks at predictable times of day/week/year.
- Quality: Enterprise traffic on fixed links is intolerant of
inconsistent performance parameters. Connectivity outages or breaks
in synchronisation can cost large sums of money. Residential
traffic is largely tolerant of breaks in service.
- Choice: Enterprises and public sector bodies tend to be locked
in to one or more suppliers for far longer periods than the typical
residential contract. Outsourcing adds further complexity.
- Reach: UK-based multinationals need seamless quality of
service, underpinned by seamless connectivity, across international
borders, and if possible procured via a single supplier. This
requirement has no equivalent in the residential or SME
markets.
- Management: Only the very largest enterprises - those with
international reach - and central government departments tend to
employ in-house specialist regulatory staff. Medium-size companies
usually employ staff who manage outsourcing contractors, either
technically or financially, while the smaller companies rely
exclusively on their suppliers.
At the Regional level the need for a single, seamless market in
telecommunications goods and services has never been greater if EU
enterprise is to compete globally. Yet, acknowledgement of the
problem is muted: even the 2007 review of the relevant Framework
Directives misses the point. The European Commission has offered no
road map, no milestones and little recognition of the end
objective. The European Union can offer nothing compared to the
continent-wide connectivity that is easily available on the basis
of a single contract in the USA. The competitiveness of UK
businesses suffers as a result.
Failures in current UK communications
policy
The structure of UK government and policy-making is fragmented
between departments and lacks continuity and stability in
ministerial appointments. This is an issue which the Secretary of
State for Innovation, Universities and Skills has recognised,
particularly in relation to the lack of co-ordination amongst Ofcom
and other business regulators .
Until recently, the UK has lacked a national communications
policy focus under strong and well-informed leadership and with
clear and funded objectives. However, although Lord Carter of
Barnes has now been appointed as the first Parliamentary
Under-Secretary of State for Communications, Technology and
Broadcasting, he reports to two masters and there is still divided
expertise between the responsibility for entertainment and content,
centred on DCMS, and the technical and economic aspects of
telecommunications, centred on BERR. There is a sense that
activities that hitherto have been carried out in government have
been outsourced to the regulator. At the same time the regulator is
becoming visibly under-resourced and over-stretched.
A rapidly converging industry demands a converged approach to
policy-making at the higher reaches of government, together with a
properly resourced, fully independent regulator and a clear
division of responsibilities between the two.
Converged policy authority at the top, supported by policing of
the industry by the regulator, must be supported at the lower end
of the supply sector by a positive, dynamic approach to local
provision of infrastructure and services.
CMA's vision for the future
UK plc needs:
- New or revised legislation that places a responsibility on the
regulator to address the specific needs of UK plc
- A national policy aimed at the provision of a universal
broadband access infrastructure by 2013 to which all service
providers have open access unconstrained by technical
architectures.
- Real, effective and sustainable competition in the supply of
telecommunications goods and services
- A mobile communications network that provides better than 95%
geographical coverage and allows roaming of basic services between
national operators.
- A Single Market in telecommunication goods and services across
and within all 27 Member States of the European Union, based on a
harmonised and rationalised system of sector-specific regulation
and competition law.
How this vision is achieved
- Today's neglect of business and public sector ICT needs can be
addressed either by a revision to the Communications Act 2003, or
through a new Act that takes full account of the impact of
convergence.
- A converged Act, applied by a converged regulator, must be
supported by a converged government Department, having the
requisite skills and resources to develop national policy and to
represent the interests of UK consumers in international
forums.
- Ofcom must be given a remit to:
1) take full account of the differences between domestic and other
users
2) conduct research into the needs of business and public sector
users and the extent to which those needs are being met
3) monitor continuously the extent of competition in the supply of
services to business and the public sector and take appropriate
action to ensure that competition is effective and sustainable,
especially outside of the major cities - The regulator must be given appropriate powers and resources to
discharge that remit effectively, including the authority to
require suppliers to provide all relevant data.
- Given the resources that the suppliers are able to devote to
lobbying the Regulator, and the close relationship that the
Regulator is forced to maintain with them, measures should be put
in place to minimise the danger of regulatory capture. An annual
report to Parliament on this specific point would assist in this
process.
- Improved harmonisation of the application of remedies is a
beginning, but it is not enough. The Commission's focus on
competition law at the expense of ex-ante regulation is
counter-productive while the incumbents continue to dominate the
market. Competition law must be harmonised across all Member States
and, in the meantime, misuse of the appeals process must be
monitored and curtailed.
- The intense activity surrounding the Commission's proposals to
curb excess profits from international roaming on voice and data
calls highlights the imbalance of lobbying power between the
telecommunications incumbents and their competitors. The business
consumer voice is too fragmented to be fully effective. The UK
Government is urged to support the Commission's intention to
redress the imbalance through, for example, a significant reduction
in call termination rates.
- The UK Government should exert more effort to persuade the
Commission to create and adopt a roadmap, based around the needs of
European businesses, leading to the establishment of a Single
Market in telecommunications goods and services.
- While it is important that governance of the public internet
continues to be entrusted to co-regulatory bodies such as the
Internet Governance Forum, it is important that formal regulatory
policy complements and supports that model. Ofcom must be given the
powers to ensure that content carried on the internet is not
discriminated against on the basis of origin, ownership or
destination.
- "Digital Britain" is a long-delayed step in the right direction
and implementation of its access and infrastructure proposals
deserves unqualified, all-party support.
CMA, Ranmore House, 7 The Crescent, Leatherhead, Surrey KT22
8DY. Tel:01372 361234
info@thecma.com
CMA - The Communications Management Association is the UK's
business communications membership organisation. We inform and
represent corporate enterprise in both public and private sectors
and support individual professionals with responsibility for
communications systems.
thecma.com