OFCOM
Jamie Cowing and Damian Tambini
This month tabloid newspapers warned the public that the Communications
Bill had “insidious implications” for press freedom. Concern centred on the
public interest test contained in the Bill for newspaper mergers. According to
the Daily Mail, The Mirror and The Sun, the ability to take the public interest
into account when assessing mergers and ownership is the first step on a
slippery slope.
Either the tabloids got it wrong or they were playing the long-game. The
proposed public interest test does not extend the current powers of the
Secretary of State. It merely provides greater predictability for newspaper
owners in the future and will reduce the scope for political interference in
ownership decisions.
Underlying the tabloids’ overreaction to the Bill is the fear that OFCOM will
eventually swallow the self-regulatory PCC, which has been subject to
increasing criticism in recent months. While there is expected to be an
amendment proposed to this effect in the Lords, the Bill itself makes no such
proposal. It seems the tabloids are almost alone in their fear and loathing of
OFCOM.
The responses to the White Paper’s proposal to establish a single regulator for
the communications sector were universally positive, and the Bill appears
almost certain to be passed without major amendments, allowing OFCOM to
assume its powers by the end of 2003.
Though tabloid fears for press freedom were misplaced, it is too soon for
complacency, as the chequered history of similar exercises in regulatory
reform such as setting up the FSA demonstrate. The prize is a big one: an
integrated regulator with a clear strategic vision for the whole sector. But
reform processes are extremely complex, and the dangers of regulatory
hiatus or a lack of legitimacy are constant.
If there is a more general concern, it is that there is a real danger of a gap
opening up between the rhetoric surrounding the “super” regulator and the
reality.
The Bill sets out four core objectives for OFCOM. Firstly, it will further the
interests of consumers, where appropriate by promoting competition.
Secondly, it will secure the optimal use of spectrum. Thirdly, it will secure the
availability of a wide range of television and radio services of high quality and
appeal to a variety of tastes and interests. Finally, it will secure high
standards in all television and radio services.
These core objectives are expanded upon in a further few hundred pages of
legislation ranging from OFCOM’s duty to promote media literacy through the
national curriculum, to the standards expected from the public service
broadcasters.
OFCOM has quickly become dubbed the new “super” regulator. And, while
Lord Currie - OFCOM’s chair – may indeed be able to leap tall buildings in a
single bound, a more realistic account of what OFCOM can achieve is needed.
Thankfully, the first real indication of how the new regulator could achieve its
aims was recently published in the form of Creating OFCOM, a consultants
report on structure and internal organisation.
OFCOM will have around 900 staff, a reduction of 200 on the total of the
current regulators. The largest part of OFCOM will be the proposed
Regulatory
Policy
and
Compliance
division.
This
will
cover
policy
implementation, compliance and complex complaints. The consultants
propose that the group should be divided into content and consumer
protection, competition and markets and the allocation of scarce resources
such as spectrum.
A Regulatory Operations group will be the first point of contact for most
customers and consumers. The Operations team will cover spectrum
enforcement activity and will handle standard complaints and licence
applications. The Strategy and Development team will provide the “strategic
vision” for the agency and manage OFCOM’s international relations. The
consultants reassure us that this will involve many stakeholders. Following
criticism of the elitist makeup of the boards of previous regulators, we should
expect to see international media moguls rubbing shoulders with cab drivers
during consultation meetings, rather than just on the way home afterwards.
OFCOM’s Governance is set out in statute. A Content Board chaired by
Richard Hooper, the main board’s deputy chair, compliments the main board.
The content board will deal with broadcast content regulation. A consumer
panel will offer advice on consumer matters outside of content.
The consultants recommend that OFCOM practices “risk-based regulation”.
Risk-based regulation was developed in the nuclear industry and uses
complicated formulae to assess the risk of failure in any one sector. This
conjures up images of OFCOM’s finest mathematical brains developing
algorithms to assess the chances of swearing before the watershed. It is more
likely to mean that the regulator will attempt to see problems coming, for
example
new
forms
of
market
foreclosure,
and
devote
resources
appropriately, before they reach crisis.
OFCOM’s sister “super” regulator, the Financial Services Authority (FSA),
provides some clues as to the challenges ahead. The FSA was also welcomed
as an opportunity to improve regulation in the financial sector by removing
the often confusing, overlapping regulators and replacing them with a lean
and mean super regulator.
The FSA merged different regulators into a single organisation, bringing
hundreds of staff together with the challenge of creating a new organisation
and culture able to provide effective governance and support for a crucial
sector of the economy.
As the FSA has bravely pointed out, and events have proved, despite also
practising risk-based regulation they could not ensure stakeholders that there
would be a “zero failure state”. Cock-ups can and do occur. Good regulation
can only ensure they happen on a less than before.
There is a danger that OFCOM, like the Christmas turkey, will be better in the
anticipation than the eating. The remaining debates on the Bill, and the early
strategy of the regulator itself will be crucial for the entire communications
sector in the UK. During the setting up of the FSA, the financial journalists
gave the legislation a very effective airing in public. If the state of public
debate on OFCOM consists only of weak claims of attacks on press freedom,
it might be reasonable to say that the media are failing democracy – and their
own industry.
1,008 words
Jamie Cowling is a Research Fellow at the Institute for Public Policy Research
Damian Tambini is a senior fellow at Oxford University