Ofcom Annual Report Annual Report / M O B I L I T Y 2007/8 P A R T I C I P A T I O N C O N T R O L I N N O V A A T C C I O E S N S S E R V I C E S A V A I L A B I L I T Y C O M P E T I T E I I C O O N H C R C E E A O L C D I N N I B E O T G E O R S N M E P T V E • • N C S O T M C R A K U • R R M K O S E T M • S W R T • O M B E F R N T A O A R A D • L K B P A N E D M • T U R E S T R • C U M E T P C O S U B R I O T L I S E D A A R R F I N Annual Report and Accounts for the period 1 April 2007 to 31 March 2008 Presented to the House of Commons pursuant to the Office of Communications Act 2002, Schedule 1 (Sections 11 and 12). Ordered by the House of Commons to be printed 26 June 2008. HC 608 London: The Stationery Office Price £18.55 2 www.ofcom.org.uk Contents Ofcom Annual Report and Accounts for the period 1 April 2007 to 31 March 2008 © Ofcom copyright 2008 The text in this document (but not the Ofcom logo) may be reproduced free of charge in any format or medium providing that it is reproduced accurately and not used in a misleading context. The material must be acknowledged as Ofcom copyright and the title of the document specified. Ofcom Annual Report & Accounts 2007/8 3 A INTRODUCTION C OPERATING AND E ACCOUNTS FOR THE 4 Chairman’s Message FINANCIAL REVIEW PERIOD 1 APRIL 2007 6 Chief Executive’s Report 29 Performance and evaluation TO 31 MARCH 2008 35 Statistical data 72 Certificate and Report of the Comptroller 45 Financial Performance B CORE AREAS OF ACTIVITY and Auditor General 11 Driving forward a market-based 74 Income and Expenditure approach to spectrum D STATEMENT OF ACCOUNTS Account AND CORPORATE 14 Promoting competition 75 Statement of Total and innovation in GOVERNANCE Recognised Gains and Losses converging markets 48 Foreword 76 Balance Sheet 16 Improving compliance and 52 The Ofcom Board 77 Cash Flow Statement empowering citizens and 54 Corporate Governance consumers 78 Notes to the Accounts 55 Board Committees 20 Delivering public outcomes as platforms and services converge 58 Non-Board Committees 25 Reducing regulation and 60 Statement of Responsibilities minimising administrative 61 Statement on burdens Internal Control 26 Maximising our impact 65 Remuneration Report on international policy development 4 www.ofcom.org.uk Chairman’s Message David Currie Britain’s citizens and consumers have taken to the current generation of digital communications services in ever greater numbers. ine in ten But we have also begun to look ahead definition television could not be households to the next generation of digital accommodated within the spectrum in the nations services: very high speed broadband currently available. However, the and regions of for residential and business solution which Ofcom put forward the UK now have consumers, high definition digital has now received widespread television and new wireless services. acceptance and will allow three Ndigital television. A majority slots suitable for high definition of households have broadband Next generation broadband channels from next year and a fourth connections with increasing Ofcom has been addressing the in 2012. The BBC Trust will be speeds, falling prices and more issues involved in regulating to overseeing the launch of the BBC’s widespread availability than assist competitive investment in high definition service on DTT any other major developed next generation broadband. The and Ofcom will conduct the selection economy. The deployment of commercial decision to invest will process for the other slots. When Edge, Wi-Fi and 3G mobile have be determined by many factors. this process is concluded viewers fuelled the explosive growth We are therefore working closely will have a wider choice, without of mobile broadband. Over the with the Government’s review led having to wait on the possibility past year Ofcom has continued by Francesco Caio to address all of new nation-wide spectrum to oversee and support the the supply-side issues in the round. becoming available after digital competitive marketplace television switchover. that brings these benefits. High definition TV High definition television via satellite Public Service Broadcasting and more recently via cable is An area where Government and the product purely of commercial Parliament will play a pivotal role investment and innovation. Digital is in the follow-up to Ofcom’s second terrestrial television (DTT), however, statutory review of public service is constrained by the amount of broadcasting. The accelerating pace spectrum available. And, well of change in household viewing and into the year just passed, many the economics of broadcasting means experts were still arguing that high that the current model of public Ofcom Annual Report & Accounts 2007/8 Section A: Introduction 5 Chairman’s Message service broadcasting, combining that, with its emphasis on People have all given generously of the BBC with commercial empowering viewers, media literacy their time and advice; and I and my broadcasters to give viewers plurality, and accredited self-regulation, meets colleagues on the Ofcom Board are will not survive the full transition the objectives with which Ofcom very grateful for that. to digital and that a new model and the Government entered the The independent Ofcom will be needed; one that also takes European negotiations. Consumer Panel acts as a strategic advantage of the opportunities We are now similarly engaged conscience for Ofcom to ensure offered by convergence to meet with the revision of the framework that the consumer interest remains public purposes in new ways. set of directives on communications front and centre to Ofcom’s thinking. The traditional regulatory levers networks and services. I am pleased It has done so very effectively under have decreasing purchase. Ofcom’s that the Commission has taken up, the chairmanship of Colette Bowe role will therefore primarily be as one possible remedy available who, during 2007/8, came across to lay out detailed evidence, the to national regulators, functional to join the main Ofcom Board. options and their consequences. separation of the enduring monopoly Her successor, Anna Bradley, is an It will then be for the Government parts of an incumbent’s business from equally determined and thoughtful and Parliament to determine the rest, where greater deregulation champion of the consumer interest. the model that will best serve is then possible. Alongside the arrival of Colette citizens’ interests. We live in an increasingly Bowe, there have been a number interdependent age and some of other changes this year to the Radio spectrum decisions can only practicably composition of the Ofcom Board. In spectrum there is already much be taken at European level. Sara Nathan, a founder member in the civil sphere that can be International roaming charges of the Board and former deputy liberalised and brought into wider for mobile phones is one such chairman of the Content Board market use. Over the last year issue. I welcome the part that retired from the Board on Ofcom has made a start on what the European Regulators’ Group, 31 December 2007. Stephanie Liston will be the greatest set of spectrum of which Ofcom is a leading stood down from the Board at the releases in the UK’s history, creating member, played in developing the end of March 2008. And shortly scope for many new wireless services Commission’s original proposal to after the end of this reporting year and bringing social and economic produce regulation which is both Ian Hargreaves, who has been benefit. But traditionally about half workable across Europe and brings on the Board since 2002, first as a of the available and readily usable real benefits for consumers in lower non-executive director and latterly spectrum has been reserved for prices for international voice calls. in an executive capacity, departed to military and other public sector In carrying out its wide-ranging join the Foreign and Commonwealth uses. The review of this spectrum work, Ofcom receives invaluable Office as its Director of Strategic last year has created greater assistance and advice from a Communications. Mike McTighe, opportunities for more of it to be number of Boards and committees. Chairman of Pace, Colette Bowe and brought into wider use and sharper First and foremost, of course, is the Tim Gardam all joined the Board incentives to do so. The Ministry Content Board which, in addition during the year, bringing a high of Defence now plans to release a to the advice they have given to the level of experience and expertise significant proportion of its spectrum Ofcom Board, has taken a number in commercial, technical, consumer holdings and to consult on how. of significant decisions on and broadcasting issues to the Board. Broadcasting Code issues and has To them and to my other colleagues International overseen the development of robust on the Board my thanks for their International developments play viewer protection measures over help and wisdom over the past year. an increasing role in the way we the use of premium rate telephone regulate. During 2007/8 agreement services in broadcast programmes.