Ofcom's job is not to make money for the government

Rumour has it this week that the National Audit Office (NAO) is going to be investigating the 4G spectrum auction. Why? Well, for not bringing in enough cash to the Treasury.

Before the bidding process had even kicked off, Chancellor George Osborne stepped up to the dispatch box and used an estimated figure of £3.5bn to bolster his Autumn Statement to the Commons. Gideon claimed borrowing had gone down as the Coalition were “making progress” and “fronting the country’s problems, not ducking them.”

But the Chancellor had cashed the 4G cheque before it had been written and a few months later Ofcom announced the actual amount the auction had raised – £2.34bn.

According to The Guardian, Labour MP Helen Goodman, shadow minister for media and communications, has written a fuming letter to the NAO demanding an investigation, adding: “By not making maximising the auction’s revenues an objective for Ofcom, the government has failed to get value for money on this project.”

Now, a lot of abuse is being thrown in the direction of the telecoms regulator, as well as the Exchequer, saying it had its priorities out of whack.

I will be the first to step up and give abuse to the Treasury. I did it at the time as it seemed Osborne was living in a fantasy world thinking he could predict the exact amount an auction would bring in before it had happened and using it to make his department look like they were doing better than they actually were. The nature of an auction is the end result is unpredictable, it is why Bargain Hunt is still on our TV screens.

But I want to stick up for Ofcom here. Before Christmas I met with Ed Richards, CEO of Ofcom, to discuss how the auction process would work and when the question of the Chancellor’s figures came up he was very clear. Ofcom’s job was not about making money for the government, it was about ensuring the best deal for consumers.

After the ludicrous amounts the 3G auction brought in, leaving mobile operators out of pocket and unable to invest in infrastructure and fast deployment, Richards strongly believed that a lower price on the cost of spectrum this time would mean a faster roll-out and more reliable networks as the operators poured their money into these areas instead.

This isn’t to say they didn’t want to raise money, of course they did, but as Richards rightly pointed out, it was for the government to think about that and for Ofcom to think about the consumer outcome.

Goodman seems to be playing into the government’s hands here. The issue is that Osborne used a predicted figure in his budget, not that the auction didn’t raise enough. This is what should be investigated. 

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