Gerry Steinberg MPIn the House...

Commons Gate

The Office of Telecommunications: Helping Consumers Benefit from Competition in the Telecommunications Market [HC 768]

Public Accounts Committee Monday 10 November 2003

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Sir John Bourn, KCB, Comptroller and Auditor General, further examined.
Mr Brian Glicksman, Treasury officer of Accounts, HM Treasury, further examined.
Examination of Witnesses
Witnesses: Mr David Edmonds CBE, Director General of Telecommunications, Mr Chris Kenny, Director of Compliance and Ms Caroline Wallace, Chief Engineering Adviser, examined.

Q23 Mr. Gerry Steinberg (City of Durham): Would you say this is a good or a bad report? If you were to read it, if you were to get it like we got it, through the post, and read it on a Sunday afternoon, would you say it was a good one or a bad one?

Mr Edmonds: In terms of its comment on the way Oftel works or -----?

Q24 Mr. Gerry Steinberg (City of Durham): No. In the way that you are presumably protecting the consumer's rights.

Mr Edmonds: I think it is a report that, interestingly, focuses on two areas. I think it is a good report in that it draws to our attention the need for very effective anti-competitive action on the part of Oftel. It is an interesting report because it gets into an area of consumer information which the Chairman focused on.

Q25 Mr. Gerry Steinberg (City of Durham): Is that a yes or a no?

Mr Edmonds: Yes, it is a good report that has made us think.

Q26 Mr. Gerry Steinberg (City of Durham): It says right at the very beginning of the report that part of your brief is to see that the customer gets the best deal within the telecommunications industry. When I read the report I have got to say that I got the same impression as the Chairman, that you have failed the customer.

Mr Edmonds: You are, of course, perfectly entitled to reach that conclusion but I think that is the wrong conclusion to reach. If you look at -----

Q27 Mr. Gerry Steinberg (City of Durham): The Chairman seems to have come to that reasoning. I have come to it. It will be interesting to see what the other members think. Whether you think that or not, frankly, is not really important because what is important is that this report indicates to us that the consumer is not getting a good deal and it is up to you to do something about it. The telecommunications industry is a nightmare and people like myself, just an ordinary sort of bloke, have not got a clue what is a good deal and what is a bad deal. I am reading this report and I suspect that the vast majority of people in this country do not know whether they have got a good deal or a bad deal. You may know if you have got a good deal, but if you do not know you have got a good deal then God help us because if you do not know you have got a good deal there is not much hope for the rest of us. If we look at the report there are so many options. Look at page 18, figure 7. If you go with BT you can have BT Standard, or you can have BT Standard with Domestic & International Friends & Family. If you are not happy about that you can have BT Together with unlimited local calls. There again, if you are not interested in that one you can have BT Standard with Domestic Friends & Family. There again, you do not need to have that because you can have BT Working Together. On the other hand, if you do not want BT Working Together you can have BT Together. On the other hand, if you do not want BT Together you can have BT Together with Friends & Family. Which is the best one? How do people know? Do you tell them which is the best one?

Mr Edmonds: I do not think that is the job of the regulator.

Q28 Mr. Gerry Steinberg (City of Durham): Of course it is the job of you to give people the information to know which way to go.

Mr Edmonds: The job of the regulator, I would argue, -----

Q29 Mr. Gerry Steinberg (City of Durham): Ofgem and your opposite numbers in the power industry give information out where people can make valid judgements. You do not give any information out where you can make a valid judgement.

Mr Edmonds: They are giving information out, and very good and very effective information it is too, which enables people to take a simple switch from one supplier to another. As you have just illustrated in your question, the telecommunications sector is not a simple industry. The companies out there are trying to tailor packages for you and for other people around this table which are directed at your needs. They are trying to give you something that provides you with good value for money.

Q30 Mr. Gerry Steinberg (City of Durham): That is the whole point. It is so confusing. Turn to page 11, figure 2. There it tells us about BT Standard and Together tariffs and NTL's 3-2-1 tariff. What the hell is happening? I have not got a clue what that means. All I know is that it gives us three graphs telling us national peak calls, national weekend calls and local off peak calls. If you can tell me how I as an ordinary member of the public can make a valid judgement on which one to take which is going to give me the best deal, then that is the job that you should be doing. There is no indication at all about how I go about picking what is the best deal for me.

Mr Edmonds: If you happen to live in an area where NTL operates this table will help you. If you do not happen to live in an area where NTL operates, which is about 85% of this table, it does not help you. The telecommunications consumer in the UK is getting a very good deal indeed and I think the telecommunications consumer in the UK is getting a very good deal because of tough regulatory intervention by me and my colleagues in the past. Can I give you three simple statistics? In the fields of gas and electricity prices since liberalisation have dropped 32% in gas, 25% in electricity. In telecommunications there has been a 58% reduction in prices. Prices have gone down by almost twice as much in the telecommunications area as in some of the areas that you have just quoted and using examples of good practice. That is what the consumer wants.

Q31 Mr. Gerry Steinberg (City of Durham): Of course he does. That has nothing to do with you. I would say that that is because of the competition in the industry and the fact that they have to do it because they want to compete. Why, for example, do you not tell everybody or give an example to everybody of what BT would charge them and give them a couple of comparisons with two others?

Mr Edmonds: Because it changes so dramatically, it changes so quickly.

Q32 Mr. Gerry Steinberg (City of Durham): But that is the point. Surely you should be doing something about it.

Mr Edmonds: Do you want me to stop private sector companies from providing competitive products to consumers in the United Kingdom when they are constantly, as you have said yourself a moment ago, in competition which I think has been brought into the market place by regulation and which is driving down price and is bringing in choice and is bringing in higher quality? I can only keep coming back in defence of Oftel, which I roundly defend, to the fact that in the UK consumers have some of the lowest telecommunications prices in the world and a lot of that has been achieved through regulation to develop competition and that is something that UK consumers do recognise.

Q33 Mr. Gerry Steinberg (City of Durham): It may well be all right if that is the case, but the vast majority of people do not know that. They have not got a clue. I do not know what the best deal is for me. I have got BSB Sky. They sent me a leaflet saying do I want to reduce my telephone calls. I looked at it and it said, "All you have to do is put 141 in front when you dial and we can reduce your calls by 50%", or whatever it was. I do not know whether that was true or not, I have not got a clue, but I did it. I have not got a clue whether that saves any money or not. I hope I have saved money but I do not know whether I have. It is your job to tell me whether I have saved money by doing that, and if I do not go with BSB Sky I can go with somebody else, and it is your job to tell me. I looked up two sites on the internet because in the report it tells us that there are two sites. I got on one of the sites. This was, and frankly that was quite good. I looked at it and although I did not know really what I was on to begin with I just guessed what I was on. I am not sure whether I put the right information in but within two or three steps I found that I could save myself £75. I had never heard of that before. I had not got a clue that was there. I am quite certain that the National Audit Office's report is not in the Top Ten best-seller non-fiction list in W H Smith, not yet anyway, although it might be after today, but only because I read that I knew how to get on to that website. Then I got on to your website that you recommend people to get on about comparisons. I could not understand it. It might as well be in Chinese because it is so complicated. This is the one you tell people to get on. I got on it and it is just a waste of time It is just a load of figures that mean nothing, whereas this one, which is the private one, is quite good. Why do you not produce something like that for everybody in the country? You could put it in their telephone bills and tell them what to do.

Mr Edmonds: Because that private site is a site that we have encouraged the development of and which we accredit. It is a site that we said we would like to see the private sector develop. I think it is much better done in the private sector, unless, of course, they want to put in an organisation like Oftel (or in the future Ofcom) the resources that would be needed constantly to get that data on, to monitor that data and to run that system. I personally take a different view. I do not think that is the job of a regulatory agency. It is not a job that Oftel has done in the past and it has not prevented the growth of the biggest competitive market place with the lowest prices for telecommunications consumers that exists in much of the developed world. I will use strong argument to justify the way in which we have done it.

Q34 Mr. Gerry Steinberg (City of Durham): The last time that this Committee looked at telecoms and prices was four or five years ago, and yet I am still saying the same things that your organisation was criticised for then. Nothing seems to have changed a great deal because the vast majority of people are still confused on what is their best deal. Your aim is still, and I will read it again, to protect the consumer and to get the best deal suitable to their needs. I do not think that you have done anything over the last four years.

Mr Edmonds: I think that is simply not fair. I do not think it is a reflection on what has been achieved, and I will not go back over a number of facts I think we knew before, but if I could refer you to page 36 of the report, the NAO's own work says that people say that making changes to telephone services has been easy in the last two years, 93% could identify the companies offering the services, getting information from customers is easy or very easy. 85%, it says here, - and it is not my report; it is the NAO report - understand the information. 78% find it easy or very easy to make comparisons about prices. 70% can make comparisons about the quality of the service. 93% find it easy or very easy to complete the paperwork. These are not my statistics. They are statistics in the NAO report, which suggests to me that the UK consumer is a fairly shrewd person, and I think they are.

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