OFCOM ANNUAL REPORT & ACCOUNTS 2009/10 The Office of Communications Annual Report and Accounts for the period 1 April 2009 to 31 March 2010 Presented to Parliament pursuant to the Office of Communications Act 2002, Schedule 1 (Sections 11 and 12). Ordered by the House of Commons to be printed 1 July 2010. HC 31 London: The Stationery Office Price £19.75 www.ofcom.org.uk © Ofcom copyright 2010 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: 9780102966466 Printed in the UK for The Stationery Office Limited on behalf of the Controller of Her Majesty’s Stationery Office. ID2369812 07/10 Printed on paper containing 75% recycled fibre content minimum. OFCOM ANNUAL REPORT & ACCOUNTS 2009/10 3 Contents Annual Report and Accounts for the period 1 April 2009 to 31 March 2010 Section A Introduction Section D Statement of Accounts and Corporate Governance 6 Chairman’s Message 48 Foreword 8 Chief Executive’s Report 50 12 Annual Report of the Content Board The Ofcom Board 52 Corporate governance Section B Core Areas of Activity 53 Board Committees 56 Non-Board Committees 16 Driving forward a market-based approach 59 Statement of Responsibilities to spectrum 60 Statement on Internal Control 18 Promoting competition and innovation 64 in converging markets Remuneration Report 21 Delivering public interest objectives as platforms and services converge Section E Accounts for the period 24 Empowering citizens and consumers and 1 April 2009 to 31 March 2010 improving regulatory compliance where necessary 30 Simplifying regulation and minimising 71 Certificate of the Comptroller and administrative burdens Auditor General to the Houses of Parliament 31 Maximising our impact on international 73 Statement of Income and Expenditure policy development 74 Statement of Changes in Equity 75 Statement of Financial Position Section C Operating and Financial 76 Statement of Cash Flows Review 77 Notes to the Accounts 32 Performance and evaluation 41 Statistical data Annex 1 Spectrum licensing 45 Financial performance Annex 2 Spectrum Operations – Spectrum Engineering and Enforcement KPIs 4 www.ofcom.org.uk Ofcom is the regulator for the UK communications sector, with responsibilities across television, radio, telecommunications and wireless communications services. We aim to make sure that people in the UK get the best from their communications services and are protected from unfair trading practices. We are also responsible for ensuring that communications markets remain competitive and that suppliers have incentives to invest in developing communications services. Ofcom operates under the Communications Act 2003. This Act of Parliament says that Ofcom’s general duties should be to further the interests of citizens and of consumers. It also sets out Ofcom’s specific responsibilities: • Ensuring that a wide range of electronic communications services – including high speed data services – is available throughout the UK • Ensuring that spectrum is used effectively and efficiently • Ensuring a wide range of TV and radio services of high quality and wide appeal • Making sure that audiences have access to a range of broadcasting services • Applying adequate protection for audiences against offensive or harmful material • Applying adequate protection for audiences against unfairness or the infringement of privacy OFCOM ANNUAL REPORT & ACCOUNTS 2009/10 SECTION A: Introduction 5 6 www.ofcom.org.uk Chairman’S Message COLETTE BOWE Every year since its inception, Ofcom’s chairman has reported on a year of change in the UK’s communications sector. Yet again, this has been true in 2009/10. Super-fast broadband, available to around In last year’s Annual Report I pledged that Ofcom would half of all homes, is now widely seen as an continue to be a powerful agent for consumer and citizen important contributor to the UK’s economic interests. Some of the issues we tackle on behalf of consumers and citizens hit the headlines. But others, that recovery and future prosperity. Digital never or rarely get reported, can have just as much impact switchover, extended to around 70,000 on people’s lives. From impartial advice on how to get the homes this time last year, is today complete best mobile phone deal to new rules boosting the amount of in the great cities of Manchester and television made for sign language users, to groundbreaking Liverpool, as well as throughout Wales benchmarking of broadband speeds, we are keeping our promise to citizens and consumers. and in most of the West of England. New responsibilities Parliament has in the year under review considered and passed new legislation for the communications sector. The Digital Economy Act gives Ofcom new responsibilities and powers in areas such as infrastructure, public service content, internet domain names, radio and spectrum. We are also enjoined to oversee and implement specific aspects of the new regime to tackle online copyright infringement. In some of these areas the work has already started. In others, it will do so shortly. Last year also saw long awaited revisions to the EU’s Framework package. A key reform is the creation of a new pan-European body, the Body of European Regulators in Electronic Communications (BEREC), that will hardwire detailed regulatory analysis into the Commission’s deliberations, and within which Ofcom will play a full role. OFCOM ANNUAL REPORT & ACCOUNTS 2009/10 SECTION A: Introduction 7 Chairman’S Message New challenges us. Stewart is intending to pursue the academic career he placed on hold when he joined Ofcom and he leaves Ofcom These legislative changes take place in a world and a sector with warmest thanks from the Board and the Content Board much altered by the recession of the past year. Despite for his contribution to our work. the UK’s return to growth, the effects of this contraction continue to be felt. We have seen redundancies and cutbacks As in previous years, citizens and consumers have been in the communications sector, but also evidence of real well served by Ofcom’s statutory advisory committees for resilience born of a tough competitive environment. The England, Scotland, Wales and Northern Ireland. At the challenge for the future is to maintain this competition while Advisory Committee for Older and Disabled People we said also ensuring that investment in the networks of the future goodbye to Chair Mike Whitlam and John Welsman and continues and intensifies. welcomed, as the new Chair, Jo Connell. On behalf of the Ofcom Board, I thank the members of Ofcom’s Content The public debate about infrastructure provision, Board, and the Communications Consumer Panel for their particularly for next generation broadband, has focused continuing work. I would particularly like to thank Sir on those parts of the UK likely not to be served, or to be David Brown who is retiring as Chairman of the Spectrum under-served, by the market. The other side of the equation Advisory Board, for his wise counsel to Ofcom over many is take-up and participation. Following the publication of years – but I am delighted that he is continuing to assist us the Digital Britain report, the Government asked Ofcom to by Chairing the Spectrum Clearance Finance Committee. lead a new Digital Participation consortium including major players such as BT, BSkyB, AOL, the BBC and Google. And, again on behalf of the Board, I would like to thank Some 12.5 million people in the UK do not go online; this Ofcom’s staff, right across the UK, for their hard and is a level of exclusion that cannot be tackled by increased effective work during a challenging year. access alone. It is clear that the year we are going into will be even more Alongside these new responsibilities our work in planning challenging. Ofcom will continue to have to carry out a wide the UK’s spectrum requirements for the London 2012 range of regulatory responsibilities; but, in common with Olympic Games and Paralympic Games will intensify other public corporations, will be asked to make reductions throughout the coming year. I’m pleased therefore that for in its costs. the sixth consecutive year we have cut our budget on a like- for-like basis, with further savings achieved through a pay We do not, at the time of writing, know precisely how freeze, improved procurement and property management we will have to recast our cost base. But it seems to me and better integrated IT. right that in such a situation I should reduce my own remuneration: which I am accordingly reducing by 10%. Renewed accountability and engagement Ed Richards, as you will read in the Chief Executive’s Report, has made a similar decision. Ofcom functions under statute, and accountability to Parliament is central to how we work. Westminster now has a greater proportion of new MPs than at any time in living memory, many of whom – quite rightly – are less concerned with what we have done and more interested in what we will do to improve communications services Colette Bowe Chairman for their constituents and for citizens and consumers as a whole. We will work hard to account for our regulatory proposals and actions, and to take action in support of our statutory remit. In September, I was delighted to welcome Norman Blackwell to Ofcom’s board. Hyacinth “H” Nwana joined as Ofcom’s new Partner for Spectrum, while Christopher Woolard took on the role of Partner, External Affairs and Governance. We will sadly be saying farewell to Stewart Purvis, Partner, Content and Standards, later this summer. Stewart joined Ofcom in 2007 having had a distinguished broadcasting career and has given Ofcom invaluable advice, judgment and guidance in his time with 8 www.ofcom.org.uk Chief Executive’S Report ED RICHARDS “Without your advice..