OVUM on: Ofcom's Mobile Sector Assessment

By: Matthew Howett, Analyst, Ovum
(Business News & Technology News, 8 Sep 2008)

Ofcom, the UK's national regulator, recently launched the first phase of what it calls an "open and candid" debate on the future of mobile regulation. It is not a specific proposal for regulatory change but rather an opportunity for operators and consumers to shape the future regulation of the sector. Yet how mobile termination will be regulated after 2011 is already threatening to dominate the debate.

Overall satisfaction is high, but complaints are rising
"On the whole Ofcom finds that most UK citizens are satisfied with the service they receive; however, the number of complaints about bills and cases of mis-selling appear to be rising. The other area of grievance is coverage. While generally good, there are still areas of the UK which are not served by some or all of the operators. Yet for a 166-page document surprisingly little is said. Instead the approach being taken is to make very broad statements and ask questions designed to attract as many people (i.e. consumers) as possible to reply to the consultation. While the range of issues likely to be raised will be vast, we are confident that among the operator community one of the hottest topics will be how, if at all, the mobile termination rate (MTR) regime should change once the current charge controls end."

How will the mobile termination rate regime look after 2011?
"This is a debate which is raging not just in the UK but throughout Europe, following a recent recommendation from the European Commission on how the wholesale charges should be calculated. Neither the EC nor Ofcom have said they are arguing for change to the current system, but both are keen to start a debate on whether MTR should be reduced drastically, and whether this would bring a change in the retail charging models. But ultimately this last is a decision that has to be made by the operators themselves. While now is as good a time as any to consider the options, it shouldn't be allowed to overshadow the wider debate Ofcom is trying to stimulate."

A shift in emphasis from competition issues to consumer protection
"It is well known that the UK mobile retail market is already one of the most fiercely competitive. Yet despite this some elements remain regulated, particularly in spectrum and numbering. Looking forward, while it is likely we will see some new measures to reduce mis-selling, Ofcom will on the whole be looking for opportunities to deregulate where it makes sense and has already started by liberalising the allocation and management of spectrum. But it is not just the quantity of regulation we are likely to see change, but also where it is directed. So far it has mostly focused on competition issues; however, given the observations highlighted during this initial phase, it appears consumer protection and content will become more of a focus for intervention."

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