Ofcom dodges chance to inject competition into UK telecoms

Richard Neudegg
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It is frankly quite embarrassing to see how far behind the communications market is on this (Source: Getty)

Earlier this month, Ofcom published a new initiative to “help make it easier for communications customers to get better deals”.

It sounds positive. But buried in the announcement was a brief mention of the regulator’s decision “not to make changes to the process for switching communications services between Openreach, KCOM, Virgin Media and Sky”. This small print matters. And could have significant longer term implications.

Ofcom’s decision to pull back means thousands of consumers face a daunting mountain of perceived hassle should they choose to switch services.

Read more: Broadband A-Team assembled to create "step change" in Britain's internet

For customers wanting to move to another provider sharing the Openreach infrastructure, such as from BT to TalkTalk, switching has already been simplified, and the new provider handles everything.

The problems begin, though, when moving from one infrastructure (like Openreach) to another (like Virgin Media). Then the process becomes confusing, convoluted, and a barrier to competition.

Ofcom’s decision to ignore the complex issue of so called “inter-platform” switching, and to bury its head in the sand is worryingly narrow minded and paints a potentially bleak picture for the future of the industry. It also follows hot on the heels of the decidedly watered down approach to customers trying to switch mobile network that the regulator announced last month.

Why is all this important? Clearly consumer hassle should be minimised to ensure we can get a better deal without fuss. But beyond that, complexities in this switching process unnecessarily hold back competition between infrastructures. Providers aren’t fighting enough among themselves to offer the fastest service, the top infrastructure or the best customer service – so the incentive to invest in upgrades is weakened.

And it’s not just in our broadband infrastructure where cross-platform competition matters – we’re seeing a double standard in TV competition too.

The process to cancel “over-the-top” TV services, such as Netflix, is simple. Customers can get rid of these services at the click of a button, and that risk of losing customers drives the providers to invest in new content to keep us watching. To cancel satellite or cable TV, you’re heading for a call centre phone queue to have a debate with a retention agent. Instead of investing in reasons for customers to stay, the TV providers make it difficult to leave.

Until very recently, Ofcom was planning to sort out switching between different platforms, but now it’s decided to wash its hands of the hassle. It took a narrow view of the specific harm caused to people currently trying to switch, and accepted providers’ claims about increased costs. As a result, the reality of what is exactly happening in the market was ignored.

In the meantime, comparable sectors are racing ahead. In the energy sector, following the investigation by the Competition and Markets Authority (CMA), regulatory changes and the rise of smart infrastructure are modernising the energy market and making sure it works in consumers’ interests. And in finance, the CMA’s Open Banking project sets to totally transform how we engage with financial services.

It is frankly quite embarrassing to see how far behind the communications market is on this.

This is about more than just customers frustrated by an antiquated switching process. It is about ensuring sectors meet consumer demand now and in the future. They need to innovate, invest and adapt to meet technological advances.

If Ofcom is not willing to drive progress, it’s time for the government to get providers around a table and see what can be done. If we can sort out the basic issue of giving consumers the freedom of choice they deserve, perhaps the communications sector can catch up.

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