The following comments on the evidence given by Ed Richards, Chief Executive of Ofcom, to the Public Accounts Committee of Parliament on Tuesday 14 December 2010, have been shared with members of that committee and others.
• Transcript of the evidence (see Q128)
Mr Richards did a fine job of presenting Ofcom as it commonly seeks to be characterised - totally convinced of its own rectitude, stuck in the middle between competing forces, feeling unappreciated by all.
Glimpses were offered of the "courage" which Ofcom shows when engaging with the companies it regulates. These showed that it does so on totally unequal terms. Being relatively poorly resourced, it lives in constant fear of legal challenge and it is consequently unable to do its work properly, but feels deserving of great praise for what it manages to achieve.
Ofcom clearly makes no attempt to justify outcomes as the consequence of specific interventions that it makes. It is indeed difficult to properly attribute the effects delivered by a competitive market to the efforts of regulator, which is simply required to ensure that competition operates effectively. This duty is commonly fulfilled by failing to intervene when asked to do so, leaving the market to produce the desired effects. In many areas of its work Ofcom cannot present direct evidence of "value for money", as one cannot necessarily predict the alternative outcome that would have resulted had Ofcom chosen to intervene in situations where it chose not to, nor vice versa.
Mr Richards could have advanced the argument that Ofcom delivers most value when it wisely decides to do nothing, as this assumption underlies the spirit of a "light touch regulator". His defensive approach however precluded any such open and honest discussion. The defensiveness even extended to fiercely maintaining that "value for money" was always a driving factor, as he responded to a challenge on this point. This was done despite having referred to fulfilment of statutory duties at minimum cost as being the totality of the motivation only a few seconds previously.
It was most significant to hear Mr Richards presenting Ofcom as being independent in its thinking, as a total unified organisation. Having to account for both public funding as grant in aid and payments from those regulated, perhaps suggests the need for alternative approaches to be taken to assessment of different aspects of its work. This would satisfy the distinct demands for accountability and reflect the fact that some outcomes are more readily attributable to its work than are others.
Not so for Ofcom; it continually conflates distinct roles and duties, to obfuscate attempts to call it to account. Failure to acknowledge the difference between the distinct and potentially conflicting duties to citizens and those to consumers is what most clearly demonstrates thinking that is centred on Ofcom itself, rather than the nature of the world in which it operates.
It was most entertaining to hear Mr Richards attempt to deny the obvious truth that meeting a demand for a changed approach in the future must mean this approach was not being followed in the past. This demonstrates a characteristic insularity, a failure to recognise that certain truths exist in a world of which Ofcom is only a part.
I am a little lost in trying to understand why Ofcom itself seems to place so much emphasis on trying to justify the decision to create it, by merging other bodies. That decision was taken by parliament which conferred duties on Ofcom. I cannot see why Ofcom has to answer for that decision; surely it is only answerable for the performance of the duties which it holds. Effort spent on justifying its existence undermines performance of its own duties; indeed it may lead to them being carried out in a manner that serves the interests of Ofcom, rather than those whom Ofcom exists to serve. (Failing to use the powers it holds against those practising persistent misuse, because this may lead to an increase in the number of complaints received, would be a classic example of such self-serving action.)
I was also entertained by a development that occurred long after we had heard a vigorous defence of having demonstrated economy by direct comparability between Ofcom and the bodies which it had replaced. In a later exchange, Mr Richards was compelled to switch to saying that one was not comparing like with like, because Ofcom was performing functions other than those which it had inherited. Mr Richards thereby undermined the basis of earlier lengthy exchanges, although it is unsurprising that the Committee did not wish to go back and replay them.
The defensiveness shown in response to the enquiries from the Committee demonstrates to me that Ofcom is not familiar with having to account properly for the performance of its duties. Mr Richards confirmed the impression commonly presented by Ofcom personnel, that it lives in a world of its own, feeling that it has to guard itself against any input from outside and only let out that which it chooses to release on its own terms.
One must also note that if the lines of argument presented by Mr Richards are typical of those pursued by organisation that he heads, it is unsurprising that it lives in fear of opposition from good legal minds.
The issue of Silent Calls clearly demonstrates one area where Ofcom applies its own interpretation of its duty, in direct contradiction of the direction of parliament - "we expect you to use your powers to eradicate the nuisance of Silent Calls".
Ofcom interprets its role, in this respect, as being that of a regulator, balancing the needs of the call centre industry with the interests of citizens, or perhaps the interests of the consumers of those who use the services of the call centre industry e.g. those seeking low energy prices or cheap bathrooms. This is totally outside the scope of Ofcom's statutory powers and duties. Ofcom’s regulatory role is limited to the communications industry and the furtherance of the interests of consumers of telecommunications services. The business activities of those who misuse the telephone network should be of no direct relevance to its use of the persistent misuse powers.
Mr Richards referred to regulatory action - writing to certain companies to advise them of new requirements that would be imposed from February. This approach is totally improper. Ofcom has no statutory authority to impose general regulations regarding the extent to which companies may make Silent Calls. In this case, the revised guidance is only about when Silent Calls should be made to any particular person – on successive days, rather than being repeated with a day. If applied, this change will simply redistribute the nuisance, over a longer period for any one victim and to more victims on any particular day. Furthermore, such explicit statement of what is required serves to confirm that one Silent Call, per caller, per victim, per day is acceptable to Ofcom.
The relevant powers are simply for the purpose of preventing and potentially penalising cases of persistent misuse of the telephone network. The powers enable the issuing of Notifications and the imposition of enforceable requirements and penalties on specific offenders. All of these actions are public, and as Mr Richards confirmed, such action will lead to an increase in the number of complaints received by Ofcom.
Noting previous reference to engagement with certain companies, I have asked for the names of these companies to be released. If these companies are known to be making Silent Calls, they must be practising "persistent misuse", as understood in the general sense, even if they are doing so within the tolerances improperly applied by Ofcom. As Ofcom is aware of their activities then it must have the necessary "reasonable grounds" for issuing a formal Notification of Persistent Misuse. One consequence of this would be the capacity for Ofcom to impose enforceable requirements on them. Ofcom however prefers to work with these companies privately, so that neither its activities, nor theirs, can be exposed to public view.
Proper use of the persistent misuse powers does not suit Ofcom's style as a regulator - balancing provider and consumer interests. It therefore twists the nature of the powers, thereby distorting its function, failing to fulfil its duty to further the interests of citizens in relation to communications matters.
The point that is being missed with Silent Calls is that this is not something that has to be tolerated and reduced - habitually hanging up in Silence when someone answers a call is totally unnecessary and unacceptable. It is properly covered by the persistent misuse powers and should therefore be subject to use of these powers, as specified in the legislation, not addressed by Ofcom's preferred pseudo-regulatory approach. The only purpose of the persistent misuse powers is to cause persistent misuse to cease, not for it to be redefined as though it may be tolerated at some negotiated level.
As stated previously, if Ofcom is unwilling or unable to use its powers properly then this aspect of its responsibilities must be passed on to another body able to deliver value for money, by using the powers properly.
The issue of Silent provides a good example of where Ofcom's attempts to demonstrate value for money, by showing falling complaint figures, fails woefully. Despite Mr Richards' suggestion that other means of measurement are used, complaint levels remain as the principle means by which Ofcom itself measures its effectiveness in this aspect of its duties.
By acknowledging my frequently published point about the levels of complaint being tied to levels of publicity rather than the levels of nuisance being experienced, Mr Richards went some way towards holding up his hands in admission of failure, although he tried to pretend otherwise. Fear of increased levels of complaint is clearly one factor that inhibits Ofcom's desire to use its powers; this was seen very clearly in the way that Mr Richards referred to the possibility of more complaints being generated in the event that Ofcom, most reluctantly, finds any need to use its powers in the new year.
In fact, the "consumer experience" data does not confirm the drop of 25% to which Mr Richards referred. A new category of experience - "abandoned calls" has been added to the data set. If consumers are as confused about what is an abandoned call (both in itself, and as distinct from a Silent Call) as is Ofcom and those who seek to understand its guidance, then any data on this topic must be considered wholly unreliable. There is simply no evidence whatsoever of Ofcom responding to the expectations of parliament in 2006 - to use its powers to eradicate the nuisance of Silent Calls.
There is one very simple way that we could see if Ofcom is delivering value for money in its efforts to stop Silent Calls. Ofcom could simply use the powers it holds by issuing Notifications of Persistent Misuse to those found to be making Silent Calls, including (as required) as specification of the activity that led to the Notification. On noting that Ofcom did not need to follow such Notification with a penalty for breaching a requirement to cease the practice, we would know how many Silent Calls had been stopped.
The simple fact is that Ofcom continues to tolerate, and even encourage, the making of Silent Calls. It does not even regard the practice as being the persistent misuse which most of us believe it to be.
This evidence session confirmed that Ofcom is failing to perform its duties under the Communications Act, in relation to Silent Calls. I hope that the Public Accounts Committee will reach this conclusion. I believe that it is for the BIS committee to take the matter forward.
I will be addressing the specific points made by Mr Richards on this issue in more detail in a further communication.