John Robertson (Glasgow, Anniesland): I do not think that my contribution will be as entertaining as the last one, but I shall do my very best. I am delighted to participate in the debate, but I must declare an interest. Before entering Parliament, I worked for BT for 31 years and I am a member of Connect, the union for professionals in communications, which part-sponsors a researcher to assist me with research on the communications industry. I am also chair of the newly established all-party telecommunications group. Therefore, I have a long-term interest in communications and I have experienced at first hand the rapid change of the communications sector.
I shall not go into the figures that some Members have mentioned, but people understand that the communications industry has come a long way over the years. It is interesting to note that it took about 38 years to build up a figure of 50 million television watchers in America–a country run by television–yet it took only a decade for the number of mobile phones to increase from 1 million to 30 million today. It took only four years for the internet system to achieve 50 million users, so the communications industry has moved on from a can and two bits of string. That is why Ofcom must take over from the previous regulatory bodies and why the Government’s introduction of a Bill that proposes the creation of a unified regulator is timely.
The industry, in terms of service providers and content, is becoming increasingly convergent, and separate regulation will not be able effectively to monitor areas that are now essentially intertwined. I want to consider first the way in which the new regulator should work. Ofcom needs to be able to act independently, as many have said, but I agree that the new body must work closely with the Department of Trade and Industry and the Department for Culture, Media and Sport to ensure that the transition is smooth. However, Ofcom must be able to respond to changing circumstances in what is new terrain.
The White Paper set out the Government’s proposals for the creation of Ofcom and attracted more than 250 responses from interested parties–broadcasters and service providers as well as trade unions, which look after people who work in the industry, and consumer groups, which protect users. I am glad that there is widespread support for the proposals. The general feeling is that the creation of Ofcom will simplify the complex web of existing regulators, removing problems in the current framework such as regulatory overlap and double jeopardy whereby the same issue can be investigated in parallel through different regulators. However, concerns have been raised and I seek clarification from the Minister.
First, how will we ensure that the concentration of authority in one regulatory body does not lead to unchallenged industry control? We must ensure that the checks and balances that exist where bodies have different remits are not lost through the creation of a single entity. Others have expressed concern that content regulation might overshadow competition and that those two aspects must be examined separately. Perhaps the Minister can put meat on the bones of that perceived problem.
We need to ensure that Ofcom is properly resourced; some companies complain that there have been difficulties with the current system due to the high staff turnover at Oftel. We must put checks in place to ensure that ongoing investigations by the new body are as smooth as possible.
The Scottish Consumer Council has raised concerns of particular importance to me. It is disappointed that the initial proposals failed to acknowledge the realities of constitutional change in Scotland. Ofcom can perform its role in Scotland only if the framework takes account of the specific political, social and economic environment in Scotland, and the SCC points out that for Scotland’s interests to be represented and addressed in the new structure, the organisation must have a positive relationship with the Scottish Parliament and the Scottish Executive.
The SCC also stresses that Ofcom must maintain an office in Scotland to ensure that the protection of consumers in Scotland is addressed at UK level. Many respondents to the White Paper argued that Ofcom must maintain local offices and ensure that the relevant issues are devolved as much as possible, to reflect the cultural diversity of regions and communities.
We must address the way in which the new body will work alongside the Office of Fair Trading. I am pleased that the Minister made a contribution on that matter and that it will be considered. If I put my two pennyworth in, that might help him on the way. The proposed reorganisation of the regulatory structure will better suit the converging market place, and I support that. Multiple bodies have created a regulatory patchwork, so we need a clear description of Ofcom’s mandate to act, especially on competition.
It is important that the OFT continues to lead on issues relating to competition regulation, and the OFT leadership must ensure continuity and consistency in decisions about market definition and market power. It would be detrimental to the entire process to transfer the lead role in investigations into competition from the OFT to the new regulatory body.
In some countries, such as Australia, where the industry regulator and the general competition functions are combined, overall regulation can be achieved under one roof. However, as in the United Kingdom where responsibility for competition and for industry-specific regulation is separate, the competition regulator should maintain primary responsibility for issues relating to competition. Perhaps we should consider a system similar to that in Australia. It was helpful to hear the Minister’s views on the OFT, and I hope that this matter will be taken care of in the future Bill.
I want to deal with Ofcom’s role in consumer protection, as I have been disappointed in the amount of attention that has been paid to the consumer in the debate. I hope to rectify that. In the United Kingdom, 4 per cent. of consumer spending goes on telecommunications, television and other communications services. As the White Paper rather nicely points out, that is more than we spend annually on beer. I have to tell the House that I do not spend that much on beer.
British businesses increasingly rely on new technology to thrive, irrespective of the sector to which they belong. However, when things go wrong their reliance is highlighted in a very alarming way. I was approached by a number of constituents who had been hugely affected by the demise of Atlantic Telecom, which went into receivership in November. Businesses that used Atlantic Telecom’s services were suddenly without phone lines. All material, such as stationery and advertising, was wasted because it contained a non-existent telephone number. Some companies still face the possibility of going out of business.
The Office of Telecommunications was of no use to the people who were affected, and PricewaterhouseCoopers, which was in charge of the receivership, was also unhelpful. In fact, as they say where I come from, and as I said to the Leader of the House in business questions in November, in this respect the current system is about as much good as a chocolate fireguard.
BT wanted to take on responsibility for the service provided by Atlantic Telecom, but unfortunately that was at a cost, and nothing could or would be done. No one was willing to pick up the tab. Regulation exists to protect the consumers’ interest, but this example has highlighted that that is not always the case under the current system. I disagree with my right hon. Friend the Member for Islington, South and Finsbury (Mr.
Smith). We need to be rigid on consumer protection. The introduction of this legislation is an excellent opportunity to provide more effective protection for consumers.
Mr. Alexander: I hope that my hon. Friend will bear in mind the fact that joint action was taken by the Department of Trade and Industry and the Scottish Executive to ensure the extension of the service for Atlantic Telecom customers, and that when this issue was addressed in an Adjournment debate I gave an undertaking to consider the specific issue of regulation thrown up by the Atlantic Telecom case after I had put the rescue package in place.
John Robertson: I thank the Minister for that information. I did not know that, and I will take his comments on board. I realised that the Scottish Executive had done something, but it only provided service on an incoming call basis for about six weeks. Although that helped businesses over the initial period when they were trying to get their communications systems sorted out, many of them that did not have that extra money to take on the new operator were left in a bit of a state. I am glad that the Minister has taken that on board, and perhaps he will do the same regarding the next item I want to raise.
There is little point in having any regulatory framework if consumer interest does not underpin its entire operation. I would welcome Ofcom having powers along the lines of those of the Association of British Travel Agents, which investigates claims for compensation for people with a complaint against a travel agent. Although I welcome the creation of Ofcom, my concern is that it will be a toothless tiger, and we need to ensure that the consumer is not left to flounder when things go wrong. Ultimately, we need to make sure that there is sufficient scope for customer redress.
For example, there could be a bond for a licence based on projected turnover. That would ensure proper cover for the consumer, and would pick out the cowboys as they would not be bonded. I am sure that the Minister could think of other ways to look after the consumer, and I would interested to hear his ideas on the subject.
Mr. Alexander: I can give my hon. Friend an assurance that we are considering all the options in the light of the Atlantic Telecom case. We will examine the specific example that he has given, not just in relation to this Bill but as part of the Department’s ongoing work.
John Robertson: I thank the Minister once again. I welcome the Bill. I have raised a number of issues. We need to ensure that the design of the new body is right: it must be transparent, the regulation process must be clear, its objectives must be clear and it must be governed to the highest possible standards. Most of all, it must protect the customer and the industry.