Reading Signals and Questions of Loyalty

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Q9 Chair: One way of putting this is to say you cannot hide behind the economics; you have to make judgments.

Sharon White: Yes, absolutely. You cannot hide behind a Minister, and that is the great thing about heading an organisation that is professional and evidence-based.

Q10 Chair: That is interesting. Over the weekend, the Chief Executive of BT was interviewed and seemed to be saying that any attempt to separate out Openreach from the rest of BT would be met with 10 years of litigation. What do you make of that?

Sharon White: I think you know that we published a report last week, in which we said we are reviewing the current arrangements for functional separation, of which structural separation is one option, but we were looking at other options too, including the status quo and strengthening the current arrangements, as well as deregulation. We are some way from making a decision. Clearly, the other thing we have said about the report is we are taking this forward without, in a sense, reference to the current EU framework for telecoms regulation or indeed the Communications Act because we want essentially to figure out what the right answer is without legislative constraint. If that is the position we get to, we have not yet worked through from that what the detailed legislative implications would be and whether that would need a change in the European framework, which I think the Committee will know is under discussion anyway.

Q11 Chair: Do you think it was appropriate for the Chief Executive of BT to be threatening litigation for 10 years within a week of the publication of the report?

Sharon White: Where I hope we will get to with BT, which I am pretty confident of, is that we will have some very open and constructive discussions on the evidence of how well Openreach has worked and whether there are reforms that we might make that could be even more effective for the consumer.

Q12 Chair: How far will these threats intimidate Ofcom in terms of the decisions you are going to make?

Sharon White: I cannot say I am easily intimidated. Our driver is: what is going to be the best possible deal for the consumer? We do not start from a position that the Openreach separation is broken, because if you look at how the market has delivered over the last 10 years, of which regulation has been a part of it-but most of this has been through the efforts of the companies themselves-it is not a broken position. I would like to have an evidence based conversation with BT and with the other players about how we, for the next 10 years, get to a settlement that works best for the consumer.

Judgements! Threats!  Figure out what the right answer is without legislative constraint! Indeed! Decoding mandarin speak from the utterly brilliant reply of Sharon's to Q10 is simply this: the Ed Richards Communications Act of 2003 is dead but not yet buried  - when I have decided what to replace it with, oh, and I shall consult with the rest the mandarins and the EU, first before I get back to you! Brilliant! Brilliant! Utterly brilliant!   

Being fair to Ed at this point I shall refer the reader to his last appearance before the House of Lords Communication Committee honestly summarising the true position, which I find myself by and large in agreement with.  

Hence, current arguments concerning splitting BT and Openreach are premature and for the birds. 

Once the UK is fully covered by a rolled out broadband network with 100% both geographical and population wise coverage (for everyone who wants a digital connection that is) that is the time to be looking at competition issues regarding content and services and delivery.

Now come the crux of the exchanges relating to Q38/Q39:

Q38 Chair: Just to follow up on that quickly, though, Ms White, does that mean you think that Ofcom ought to have a role in helping to shape an industry response to the problem, to actually give some leadership so that instead of fighting with each other some of these guys say, "We will find some overall solution that serves the public interest"?

Sharon White: Personally, I do. I am a slightly hesitant regulator because, as I mentioned before, when using the direct levers as a regulator, you do it with care and you do it with proportionality given the dynamism of the market. Personally, I think you can go a long way to improving the services for consumers using some of your convening power because we all have a shared interest, which is business wants to be able to serve more customers profitably, Government and parliamentarians want to close the digital divide, and we have statutory responsibilities that we take very seriously to serve not just the consumers who have access but citizens like the broader public who do not have such access.

Q39 Chair: We might be able to expect from you positive proposals to the industry as to how this problem could be addressed?

Sharon White: As a matter of practicality, if Government so chooses, we will be directly responsible for implementing the USO. We will be designating the provider. We will be running that programme once the Government has taken the requisite statutory instrument.

Chair: Setting the incentives, essentially?

Sharon White: Exactly.

Chair: Okay, that is interesting. Did you have a quick follow-up?