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Mostly Mobile (PDF File, 983.4 Mostly Mobile Ofcom’s mobile sector assessment Second consultation Consultation Publication date: 8 July 2009 Closing date for responses: 16 September 2009 Mostly mobile Contents Section Page 1 Executive summary 2 2 Introduction 12 3 The changing market environment 19 4 Competition and new entry 42 5 Investment 70 6 Consumer protection and empowerment 78 7 Access and inclusion for disabled and vulnerable citizens 102 8 Coverage 115 9 Mobile content 140 Annex Page 1 Responding to this consultation 147 2 Ofcom’s consultation principles 150 3 Consultation response cover sheet 151 4 Consultation questions 153 5 Spectrum for mobile broadband 155 6 Wholesale mobile voice call termination 161 7 Mobile device evolution 171 8 Summary of consultation responses 174 9 Glossary 187 0 Mostly mobile One-page summary Mobile has become central to UK citizens and consumers. In the future, our telecommunications will be mostly mobile. Driving this success has been competition between mobile operators. As a result, the great majority of people in the UK use mobile services. Innovation is ongoing: we are using more text and data services; mobile internet access is taking off; and devices can do more and cost less. However, not everyone benefits from these developments equally. Some consumers find the variety of mobile prices and services confusing, while others suffer from harm or inconvenience. Elderly and disabled people still have lower take-up. And coverage not-spots persist. Our focus will be on resolving these issues. We propose to achieve this by using markets where we can. We also recognise the limits of markets and will respond to risks of market failure and to consumer protection needs with focused intervention. We are widening our focus to reflect the importance and complexity of mobile services: Competition. We will ensure that consumers continue to enjoy the benefits of competition. We have initiated a review of the market for mobile call termination. This will consider how the regime needs to evolve, whether the rates should be reduced, and if so how quickly, following the expiry of the current charge controls. We also intend to take an active approach to reducing the barriers facing new entrants but do not propose to undertake a wider formal market review of the mobile sector (unless there is a material change in the market). Consumers. Competition alone is not always sufficient to ensure consumers are properly protected, and enabled to make well-informed choices. We have already taken action to protect consumers from mis-selling and unfair additional charges. The mobile sector is becoming more diverse and further consumer issues are likely to arise. We propose to provide regulatory certainty for consumers and providers by adopting a framework that sets out: our consumer protection objectives, how we will assess their achievement and how we will develop our regulatory response to any emerging consumer issues. Coverage. We will look more closely into the persistent ‘not-spot’ problem and work where we can to facilitate better coverage. We welcome the Government’s work in Digital Britain to extend mobile broadband coverage, and we are also working with mobile operators and emergency services to allow roaming for 999 calls. Spectrum. It is vital that spectrum is available in a timely manner to optimise the prospects for competition, innovation and better mobile coverage across the UK. In addition to our own work to ensure spectrum is used efficiently, we will assist the Government in its efforts to make spectrum available for mobile broadband services through the Digital Britain process. Overall, we consider it appropriate to build on the consumer and economic benefits that have been driven by the mobile sector rather than to adopt a new regulatory approach. Continuing regulatory activity is required, however, to help promote competition and innovation, safeguard consumer interests, and to address, where possible, those areas where the market fails to deliver (such as not spots). 1 Mostly mobile Section 1 1 Executive summary Mobile has become central to our lives – driven by investment and innovation in a competitive market 1.1 Mobile has become central to UK citizens and consumers (including businesses). In the future, our telecommunications will be mostly mobile.1 1.2 The driving force behind this success has been competition, in the UK and in international markets. In the chase to win customers, mobile operators have deployed networks, offered ever-broader services and created new ways to buy and pay for services (such as pre-pay). As a result, the great majority of people in the UK use mobile services and most people report that the market meets their expectations.2 1.3 A further wave of innovation is now taking place: we are using more text and data services; mobile broadband is taking off; devices can do more and cost less. 1.4 As a result of these developments, mobile services play an increasingly important role in our lives, as individuals and as a society. The need of policy-makers to respond to this changing role is at the heart of our assessment of the mobile sector. Our aim is that consumers and citizens continue to derive maximum benefit from innovative, widely available mobile services 1.5 Ofcom’s central purpose is to regulate in ways that further the interests of UK citizens and consumers.3 1.6 Our goal is to ensure that the mobile sector contributes fully to the UK economy and society at large. In our first consultation for the mobile sector assessment4 we set out our vision for the mobile sector more specifically, and set out seven objectives: choice of provider and value for money; ease of switching (and porting); choice of services; 1 By revenue, the mobile sector comprises 51 per cent of the UK telecoms sector. We estimate that, by mid-2010, more than half of all telephony in the UK will be mobile. Take-up of the mobile internet and mobile delivery of video and audio content is far less widespread, but is rapidly growing, albeit from a small base (Source: Ofcom, GfK). 2 In 2008, 86 per cent of people aged fifteen and over personally used mobile services at least monthly while 94 per cent of mobile users said they were satisfied with their mobile service (Source: Ofcom). 3 Communications Act 2003, Section 3(1) 4 Mobile citizens, mobile consumers, Ofcom, August 2008 http://www.ofcom.org.uk/consult/condocs/msa08/ 2 Mostly mobile a diverse range of high quality content; protection from harmful content; coverage (as far as commercially feasible, and further, if socially desirable); and protection from unfair practices and scams. 1.7 Currently, most of these objectives are being achieved most of the time, but there are some important gaps. For example, some consumers find themselves exposed to mis- selling and scams, others find the market confusing to navigate, and others (both individuals and businesses) report issues with absent or poor network coverage. Our assessment also seeks to identify where regulation may help address problems in a cost-effective and proportionate way. The context of Ofcom’s work in the mobile sector is changing 1.8 Since the late 1990s, regulation of the mobile sector has focused on two specific objectives: awarding spectrum and setting a ceiling on payments to deliver calls passing between networks (‘mobile call termination call charges’). This approach has served consumers well in a market that was rapidly growing and adopting new technologies. 1.9 As the sector has grown in scale and significance and mobile has become an ’essential’ service to many users, a small minority of customers are dissatisfied with their experience of mobile services. Industry stakeholders responding to our first consultation argued that we had shifted our focus over the years, imposing more regulation on retail activities (consumer protection), and that the regulatory burden had increased. We have been more active in consumer protection, reflecting the growth in mobile services and the fact that not all emerging issues were addressed by competition. We have taken a number of measures over recent years (such as action on mobile mis-selling) to provide a reasonable safety net for consumers. 1.10 The nature of the mobile sector is changing. Rather than mobile operators controlling all aspects of service, some of the fastest-growing services combine features supported by handset manufacturers with features enabled by third-party applications and content providers (for example, mobile email and social networking). Therefore, in the future the UK mobile market will be more diverse, with a growing number of content and application providers, and a new range of consumer and competition issues. 1.11 At the same time, industry is adapting its approach to deploying networks; the current trend is to share sites and, in some cases, access networks – while keeping the door open to providers who do not own a network, i.e. mobile virtual network operators. If this trend continues, regulation will need to keep pace with a changing market structure. 1.12 Greater attention to availability, inclusion and consumer issues, by us, our advisory bodies in the Nations, and the Government, also reflects the growing significance of the sector to the social and economic fabric of the UK. This is underlined by the Government’s Digital Britain report,5 which cites the widespread growth in mobile and 5 The Government’s Digital Britain interim and final reports can be found at http://www.culture.gov.uk/what_we_do/broadcasting/5631.aspx 3 Mostly mobile raises the option of mobile networks playing a role in achieving universal access to broadband in the UK. 1.13 Content issues in mobile have the potential to be every bit as significant as in the fixed world.
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