Annual Report 2008/9
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annual report 2008/9 � E W O R D S H E R E E C R O L I A S N D B K T R I O O E O N M S W T P T • E • E C S N T M K • R A R U R O S M K M E W R • T T S E O M • N F A T B • A R R K O M L E A U P T D R • S T B A C E • N P E R M D S U D I O T O R A C B I U L E T R A S F R I N Ofcom Annual Report & Accounts 2008/9 Annual Report and Accounts for the period 1 April 2008 to 31 March 2009 Presented to the Houses of Parliament pursuant to the Office of Communications Act 2002, Schedule 1 (Sections 11 and 12). Ordered by the House of Commons to be printed 8 July 2009. HC 638 London: The Stationery Office Price £19.15 www.ofcom.org.uk © Ofcom copyright 2009 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. ISBN: 9780102960587 Ofcom Annual Report & Accounts 2008/9 3 Contents Annual Report and Accounts for the period 1 April 2008 to 31 March 2009 Section A Introduction Section D Statement of Accounts and Corporate Governance 4 Chairman’s Message 56 Foreword 6 Chief Executive’s Report 60 The Ofcom Board 10 Annual Report of the Content Board 62 Corporate governance Section B Core Areas of Activity 64 Board Committees 67 Non-Board Committees 14 Driving forward a market-based approach 70 Statement of Responsibilities to spectrum 71 Statement on Internal Control 16 Promoting competition and innovation 76 Remuneration Report in converging markets 18 Delivering public interest objectives as platforms and services converge Section E Accounts for the period 23 Empowering citizens and consumers and 1 April 2008 to 31 March 2009 improving regulatory compliance where necessary 83 Certificate and Report of the Comptroller and 29 Reducing regulation and minimising administrative burdens Auditor General to the Houses of Parliament 85 Income and Expenditure Account 29 Maximising our impact on international policy development 86 Statement of Total Recognised Gains and Losses 87 Balance Sheet Section C Operating and Financial Review 88 Cash Flow Statement 89 Notes to the Accounts 32 Performance and evaluation 41 Statistical data 52 Financial performance 4 www.ofcom.org.uk Chairman’s Message Colette Bowe Challenge for the communications sector, change at Ofcom. For better or for worse, we are now in a new phase for the UK communications sector. The fully digital age, long hailed, is fast becoming a reality. By the end of this year, for example, nearly one in five households will have moved over to receiving television only via a digital signal. This migration to digital also intersects with The competition that Ofcom has striven to introduce a period of momentous economic change. into the sector is working for the consumer and citizen Since Ofcom came into existence the economy interest in these tough times as well as in the good. But has enjoyed strong and continuous economic we also need renewed vigilance for when these interests growth. With the UK and many other economies are being harmed. Much of Ofcom’s focus for the next throughout the world now contracting, all sectors year will be on sustaining investment in the sector and are feeling the effects. We have already seen meeting consumer and citizen interest in a world of redundancies and austerity measures by some immense structural and cyclical change. of the UK’s biggest communications providers. Whatever lies ahead, I am determined that Ofcom Further upheaval should not be discounted. will be a powerful and vocal agent for the interests of citizens and consumers. I assume the chairmanship of an organisation well placed to deliver against those objectives. My predecessor and Ofcom’s inaugural Chairman, David Currie, has fashioned a lean and efficient organisation that has reduced both its headcount and its budget while regulating a sector of increasing significance to the lives of people in the UK. As we prepare to take on new responsibilities I pay him the warmest of tributes for the work that he has done over the past six years, setting up and running Ofcom and setting a framework for the delivery of competition and the protection of consumers and citizens. We are all in David’s debt for his outstanding work. Ofcom Annual Report & Accounts 2008/9 Section A: Introduction 5 Chairman’s Message Progress in the past year, priorities for the next In all that Ofcom does it is supported by the invaluable work of its Committees and Boards. Over the past twelve months we have been able to move forward in a number of important areas, from new This year we have said goodbye to Philip Rutnam, who measures to clamp down on mobile mis-selling, to the has served as Ofcom’s Partner for Spectrum since its allocation of new capacity for High Definition broadcasts earliest days and more latterly as a member of the Board. on Digital Terrestrial Television, to name just two. Philip has been a key player in our ongoing programme of spectrum liberalisation, an area that remains one of Key milestones included our establishment of a conclusive Ofcom’s main priorities. We wish him well in his new role framework for the first phase of infrastructure needed for within Government. super-fast broadband, delivering much higher speeds than currently possible. The way is now clear for wide-scale We have also welcomed two new executive Board deployment by BT and others, and consumers can expect members in Peter Phillips and Stuart McIntosh. Peter has the telecoms business to deliver. been with Ofcom since 2006 and has overall responsibility for its strategy, technology, consumer policy, chief In January we published our final statement on the future economist and market research teams. Stuart joined of public service broadcasting, including recommendations Ofcom last year as our Partner for Competition and for Parliament and Government. I am pleased to see the was appointed to the Board shortly after. I look forward Government’s Digital Britain project building on these to continuing working with them and with the rest of firm foundations. the Board. Digital Britain is itself testament to the growing centrality The Content Board, alongside the advice it provides the of communications to the UK’s economy and society. main Board, has continued to discharge its duties with Ofcom will work with Government and to Parliament diligence. I also acknowledge the work of the Ofcom to implement the many changes necessary to meet the Spectrum Advisory Board and the National Advisory ambition of putting the UK at the forefront of the global Committees for England, Scotland, Wales and Northern digital revolution. Ireland, as well as the Advisory Committee on Older and A major focus for the next year will be in our review of Disabled People. The past year has also seen a significant local media, an area of huge citizen and consumer interest revision of the independent Ofcom Consumer Panel and one which faces enormous change and challenge. And under the chairmanship of Anna Bradley, including a we will continue to prepare for the forthcoming London name change to the Communications Consumer Panel. 2012 Olympic Games and Paralympic Games and the To the members of these bodies and to my fellow Board possible expansion of our remit to include responsibility members I give thanks for your work and insight over the for the postal sector. past year. I very much look forward to working with you in 2009/10. In Europe we have continued to engage actively across the full range of policy areas, including the ongoing review of Colette Bowe Chairman the Framework for electronic communications and services and revisions to the Directives on Roaming and GSM. With a new Parliament elected in June, followed by a new college of Commissioners in November, 2009 will be a year of substantial change in Europe. We will continue to support the shaping of the new agendas in Europe for the benefit of UK citizens and consumers. 6 www.ofcom.org.uk Chief Executive’s Report Ed Richards At Ofcom one of our aims is to understand the UK’s communications sector as well as anybody else. We do this by putting a huge effort into analysing the markets we regulate to identify new trends, the latest technological shifts, changes in consumer behaviour and new phases in the sector we regulate. The communications sector is now worth £51.2bn. During the period covered by this report, Ofcom passed It is therefore essential that we understand the its five year mark. Basing our policies and decisions on sector inside out to allow us to create a regulatory solid evidence – rather than hunches and best guesses – environment that allows the industry to thrive and is something that has characterised all our work since consumers to reap the benefits. our inception. Now five years old, Ofcom has moved into a new phase of its development. Watershed year I believe that 2008/9 – the year that saw Ofcom’s founding Chairman David Currie step down to be replaced by Colette Bowe – was a watershed for the organisation. Phase 1, Ofcom’s first five years, was characterised by fixing problems of the previous two decades, in particular opening up bottlenecks to allow competition flow through.