The UK’s telecoms regulator, Ofcom, has announced the results of its latest survey of broadband speeds. But it has again failed to recommend the main policy which would help consumers: minimum broadband speeds. As I posted last July this is the only way that BSPs will be forced to give broadband customers the level of service they are entitled to, and at the same time create a more level playing field for broadband providers.

Instead, in a response to a review by the Advertising Standards Authority into broadband advertising practices, Ofcom recommends that BSPs should be forced to publish a “Typical Speeds Range”. This is described as “representing the range of speeds actually achieved by half of customers”.

Ofcom also recommends that “If a maximum ‘up to’ speed is used in an advertisement, then the TSR must have at least equal prominence. Furthermore, the theoretical maximum ‘up to’ speed stated must be a speed actually achievable by a material number of customers.” This is particularly odd, since DSL technology simply cannot deliver the theoretical maximum (as advertised) in real life.

Finally, Ofcom has finally agreed with something I have been calling for since 2006, namely “a move away from advertising ‘up to’ headline speeds”. Well, that’s not quite as strong as banning this useless phrase, but we should be thankful for small mercies.

Whether any of these recommendations is ever implemented, and in what form, of course remains very much open to question. It would be surprising if, even after several more rounds of recommendation, review and procedural drafts circulating between the various regulatory and government bodies, that BSPs and their advertising partners were not able to neatly sidestep the key issues and keep consumers just as confused as they always have been.

The TSR idea sounds persuasive at first sight, but in reality, if implemented, is likely to do little to make broadband services clearer to consumers. BSPs will find all sorts of ways to obfuscate what TSRs really mean, there will be endless arguments over how they should be calculated, and in any case, if the TSR has as much prominence as the “Up To” speed in advertising, this is likely to be even more confusing to end customers.

It seems almost as though Ofcom got half way towards recommending Minimum Speed guarantees, and then pulled back, for what reasons we can only surmise. After all, a true TSR would include both a “minimum” and a “maximum”, at either end of the “range”. But if it only applies to half the customer base, it is as good as useless.

As I have pointed out many times, the background to this debate is the universal broadband commitment, which is itself an outcome of the misguided attempt to avoid talking about the politically incorrect “rural divide”. We need to get over this – it’s the nature of the technology and there’s nothing anyone can do about it until we run fibre to every doorstep in the country. It’s the poor souls in the 5-10% of the country who live too far from exchanges and out of cable coverage who are the reason we have to have these fruitless debates. If the government and regulator did the decent thing and put those homes, however many there are, into a special “rural broadband” category, the rest of the population and the industry in general could get on with talking about broadband in grown up language. Advertised minimum speeds would be perfectly feasible and DSL services could be banded into packages consumers could understand.

Too little, too late; but now that Ofcom has finally bitten the bullet on “up to”, here’s something else it needs to get stuck into: anecdotally I am seeing increasing numbers of friends and family getting frustrated with switching broadband providers. In particular the issue seems to come down to where responsibility lies for any problems with the line or broadband service. I am aware of several cases where AOL (TalkTalk) broadband customers have had problems getting acceptable service, either as new customers or when they upgrade for some reason; AOL/TalkTalk is unable to help, BT is unable to help, and the customer feels that they “may as well” go with BT because they know BT owns the network and will get the problem sorted out.

There are too many conspiracy theories to start thinking about, but there seems little doubt that it is too difficult to switch and many consumers consider it too much hassle. Our own survey of UK broadband customers (admittedly carried out in late 2008) showed that “hassle of scheduling connection/installation” and “inconvenience of cancelling service” were the single most important reasons why consumers would avoid switching to a new BSP. Ofcom may eventually get the advertising sorted out, but that will have little impact if consumers still feel it just isn’t worth trying to change providers.

David Mercer

Client Reading: Broadband Service Provider Performance Benchmarking: Q3 2010 (Europe)

A year ago almost to the day we called for Ofcom to put an end to ISPs’ ridiculous practice of describing broadband speeds with the meaningless phrase “up to”. Now Ofcom is again skirting around the issue in its latest survey of UK broadband speeds. Its own data shows that while “headline” speeds (ie the theoretical maximum – and even they are not true) have increased significantly over the past year, the actual speed achieved as a proportion of that “top” speed has actually fallen, from 58% to 46%. The craziness is illustrated further by the fact that the average speed attained by customers subscribing to “up to 20Mbps” packages is only 6.8Mbps, ie lower than the “headline” speed of inferior “up to 8Mbps” packages. The average download speed for all DSL connections has increased by only 10% over the past 12 months, from 3.7Mbps to 4.0Mbps, in spite of the fact that many more customers are being offered “up to” 20Mbps packages (ie DSL 2+). Note that the primary factor behind the higher increase in UK speeds overall is because of Virgin Media’s upgrading of its cable service: average cable broadband speeds have more than doubled, from 4.9Mbps to 9.9Mbps. That’s a testament to the growing strength of the UK’s cable operator, and an indictment of the recent supposed improvements in the DSL network. Ofcom’s excuse regarding regulating the “up to” nonsense is that this is not its job, but that of the advertising regulator. We regard this as a cop-out. Ofcom does have a Voluntary Code of Practice which “ensures that consumers are given the clearest possible information on access line speeds at point of sale”, and if that doesn’t relate to advertising, I don’t know what does. The Code of Practice talks a lot about maximum speeds, but not about minimums. This now has to change. Even with the well-known limitations of DSL technology, in the second decade of the 21st century customers have a right to know what minimum level of service they should expect to receive in return for their hard-earned pounds. BT will moan that it cannot yet deliver a minimum of 2Mbps to some parts of the country, so those remoter rural areas should be considered a special case, where “true” broadband (however that is defined) is technically (and temporarily) unavailable. This all goes back to early political demands that broadband be made “universally” available, and the politically inspired nonsense that 99% of UK homes can get DSL broadband services. Yes, but only if you count 250kbps as broadband. We need to step back so that we can move forward. The reality is that a small percentage – perhaps 5% - of UK homes are currently out of reach of 1-2Mbps+ broadband services, and remain “geographically challenging”. That needs to be accepted as a policy issue and targeted accordingly. The market as a whole should no longer be distorted because of this artificial and technical constraint. Once those homes are identified, the rest of the country should be given guarantees of minimum service, and tiered services will emerge which will give customers a great deal more clarity and confidence than they have had until now. Client Reading: Global Broadband Scorecard: 2010 Broadband Composite Index (BCI) Rankings

A year ago AT&T introduced tiered broadband pricing in the US. Its main DSL competitor, Verizon, markets "High Speed Internet", not "up to 8Mbps", and also offers the following small print: "Speeds and service availability vary. High Speed Internet will be provisioned based on Verizon line qualification requirements at 768 Kbps or up to 1 Mbps (1 Mbps service); at 1.5 Mbps or up to 3 Mbps (3 Mbps service); or at 5 Mbps or up to 7.1 Mbps (up to 7.1 Mbps service)." So American DSL providers are being much more transparent than their UK counterparts by clearly stating the performance bands, ie minimum and maximum speeds. Interestingly, they also do not claim a maximum of 8Mbps for standard DSL, as in the UK, but 7.1Mbps. This supports the Ofcom research results, that no one paying for “up to 8Mbps” can receive more than 7Mbps. It’s time for Ofcom to enforce similar marketing requirements in the UK. I won’t hold my breath. Twitter: twitter.com/DavidMercer_SA Client Reading: Broadband Service Provider Performance Benchmarking: Europe Q1 2009

Only 9% of the UK’s broadband subscribers to the most popular “up to 8Mbps” service receive more than 75% of the stated maximum broadband speed (ie 6Mbps or more), according to the latest study from the communications regulator, Ofcom. On an average 24-hour basis, these customers should in fact expect to get speeds of less than half the stated maximum – 3.9Mbps. The study also found (see Figures 6.3 and 6.4) that not one respondent receiving “up to 8Mbps” service received an average speed of more than 7Mbps, and only one (a very isolated looking blue dot) received a maximum speed of 8Mbps. Chances are this was some kind of freak data point. None of these findings are surprising, of course; they merely confirm what we have suspected all along. Since the early days of this blog I’ve been railing against the misleading practice of marketing broadband data services with the phrase “up to”, since that can mean anything from 0 to the stated number. What Ofcom’s detailed technical research confirms is that customers should not even expect 8Mbps, and only a small percentage should expect more than 6Mbps. That surely is a case for the advertising watchdogs to investigate. Twitter: twitter.com/DavidMercer_SA Client Reading: Broadband Service Provider Performance Benchmarking: Europe Q1 2009

Another excellent session this morningat the IEA/Marketforce's Future of Broadcasting conference, representing all the key players except the BBC. The main topic of debate was the Digital Britain report (DBR), and again Sky, in the form of David Wheeldon, Director of Public Affairs, stood alone in objecting to some of the key premises of the report. Describing the study as having “some deep flaws”, he suggested that the report failed to offer an accurate understanding of consumers’ future behaviour, and that key assumptions about the public interest were based on past behaviour. It also assumed by default that the instruments of change would be “incumbents” such as the telco (BT) and the BBC, rather than alternative providers (such as Sky). Fundamentally, Sky again questionned the premise that only free content has public value, whether state or advertising funded. Instead, the DBR failed to recognise the contribution of pay television, and Wheeldon again listed the various programming investments Sky is making in the arts and drama. We also heard from Dan Marks, until last night the head of BT Vision at BT, but since this morning officially unemployed. Dan told me he was really looking forward to kick-starting the retail economy (“going shopping” were his words), and intended, once the session was over, to do no more talking about the broadcasting or broadband industries. And who can blame him? So with his BT hat partly off, Dan broadly speaking gave the perspective of the public service player, which covers both the BBC and BT, since the latter is presented as the natural partner for ensuring delivering of universal broadband service. “Broadcasters will have to cooperate increasingly with telcos to manage the broadband spectrum” as it evolves into a fully fledged new medium for delivering interactive and television services. Sky “does not challenge the concept of the licence fee, but its scale and distribution”, according to Wheeldon, but it clearly has a fight on its hands as government policy responds to the recommendations of the DBR, and in its battle with Ofcom over control of wholesale pricing. I suppose it’s inevitable that these high level discussions are characterised primarily by two divergent sets of opinions. The history of UK, and indeed European, broadcasting, has been built upon the premise of free access for the whole population to a minimum level of television content, and based on government controlled access to wireless infrastructure. As we move into the era of broadband television, supported by new communications technologies and a plethora of potential new business models, these assumptions are inevitably going to be challenged. Twitter: twitter.com/DavidMercer_SA Client Reading: Digital Media Devices Global Market Report

So far we have not been disappointed at the IEA/Marketforce's Future of Broadcasting conference, even though the precise questions I suggested have not been addressed. We did, as expected, have to suffer the well-worn cliché, courtesy of Channel Four’s Anne Bulford, that the UK has the “best broadcasting” in the world. If somebody could offer a quantitative measure to prove this I might start to believe it. The battlelines have, as usual, been drawn between Sky on the one hand, and everyone else on the other, although Michael Grade, Chairman of ITV, in which Sky is a major shareholder, did a good job of supporting Sky’s view that there is too much regulation in broadcasting in general. As Grade said, “it’s not as though broadcasting is a life-threatening industry, like air travel or drugs”. Grade described the process involved in getting business deals done as a “nightmare involving years of lobbying”, because of the grip Parliament has on the broadcasting industry. Sky, in the form of COO Mike Darcey, has done its usual excellent job of standing up to the forces lined up against it (as it sees it). The key question, from Ofcom’s Peter Philips in the audience, was “why should Sky not be regulated like the telecoms industry?”. Darcey’s response: “because, unlike Sky, BT did not build its own network – the government did”. In that response lies the nub of the regulatory and competition issue in the UK and in many other markets around the world. Should content be split from the network? Ofcom has indicated clearly that it does not see this as an appropriate solution, instead preferring to concentrate on the issue of the rates at which Sky wholesales its channels to other service providers. Darcey today indicated clearly that it would take Ofcom to court if it went ahead with proposals to price-regulate Sky’s wholesale business. At the same time, Sky recommends that competitors, such as ITV and Channels 4 and 5, consider becoming pay TV providers as advertising revenues plummet. But competitors have already failed at this in the UK: first, Channel Four’s abandoned its premium movie service; and now Setanta has had to withdraw its pay sports channels. With a few minor exceptions (including adult content) there are no successful pay TV competitors to Sky in the UK. Sky’s success has been built on its control of network, technology platform and content. Unless another firm is prepared to make a similar investment, or content is forcibly split from the network, it is unlikely that a serious alternative will emerge. Twitter: twitter.com/DavidMercer_SA Client Reading: Digital Media Devices Global Market Report

I attended the Westminster Media Forum Seminar in London this afternoon, entitled Pay TV – market prospects , competition and service to viewers. The conference took place somewhere deep in the bowels of the Local Government Association headquarters near the Houses of Parliament. The rising temperature reflected the growing intensity of the debate as the afternoon wore on, while the absence of a view through outside windows nicely reflected the fact that “Sky” was the only major player absent from the debate. The Forum assured us that the “gorilla” had been invited. My overall impression is that these sessions tend to veer too much towards the old “how do we reduce Sky’s power” debate, hence the reason for that company’s decision to decline invitations to speak. We were however treated to comments from expert participants from the regulatory and legal fields, as well as from Freeview, Freesat, BT Vision and Virgin Media Television. Kicking off the debate was Stephen Unger, Competition Policy Director at Ofcom, who summarised the current state of the two investigations currently relevant to pay TV in the UK market. These are 1. the submission from BT Vision, Setanta, Top Up TV and Virgin Media, and 2. the application from Arqiva and Sky to launch Picnic, a pay TV service on the DTT platform. Both investigations are still in progress, and after second consultations a number of preferred options are being considered. According to Unger, Ofcom “believes that Sky has an incentive to restrict supply to other retailers and other platforms, and there is evidence that Sky is acting on that incentive”. Ofcom’s preferred option is to propose a wholesale must offer obligation on Sky. In other words, Ofcom would regulate the prices at which Sky must offer its channels to other platforms. It would be necessary to determine how prices are set as well as certain non-price issues (for example, protecting against piracy). If this option is agreed, it will also be consulted upon, probably by Spring 2009. Later in the day, Jenine Hulsmann, a Partner at lawyers Clifford Chance, made one of the best contributions. She pointed out that competition law is not good at addressing pricing issues. In her opinion it would be “a very great challenge” for Ofcom to establish a pricing mechanism that is acceptable. She also made the point that there would inevitably be one, if not several, appeals once any decision was made, and that these appeals would lead to long delays in any implementation of Ofcom’s proposals. Hulsmann made one final recommendation for content owners who might have contracts with Sky: “Check your contracts for any clause that allows for Sky to renegotiate in case of a change in regulation.” Martin Coleman, a Partner at Norton Rose, observed another challenge facing Ofcom, concerning the definition of channels and their related content. If regulations are introduced relating to “sports” or “movies” “channels”, these must be very carefully defined in order to prevent changes that might circumvent regulations. In other words, a regulation that decides on the appropriate price for Sky Sports 1 showing Premiership football would be little use if Sky decided to remove that content from that channel and show it elsewhere. Ilse Howling, MD of Freeview, and Emma Scott of Freesat, each presented lots of research about the appeal of their respective “free-to-view” platforms. Maybe it was the constant repetition of the word “free” that got to me, but I couldn’t take my mind off the fact that no one had so far mentioned the fact that these “free” platforms would not have come into existence without the government-mandated annual licence fee, and would not be half as appealing without the BBC’s digital channels. So had any of this research addressed the issue of acceptance of or resistance to the licence fee? Apparently not… Emma Scott suggested that Freesat’s research had “never had any negative feedback about the licence fee”, which suggests to me that they had never asked the right questions. Howling at least admitted that the question of cost does come up in Freeview’s research, and consumers do raise the issue of the price of set-top boxes and/or aerial installations and upgrades. But there was no evidence that consumers related Freeview to the cost of the licence fee directly. These two debates – competition in pay TV, and the future of public service broadcasting – cannot be considered in isolation. Together they form one overriding question – “How should television be funded in the digital era?”. Any debate that focuses on a single funding issue is going to reach conclusions of limited value. Considering the bigger picture would achieve a more rounded perspective from all sides of the industry, and may even attract the attention of the absent gorilla. Client Reading: The Television and Movie Industry Explained: Where Does All the Money Go?

Today's launch of the first dedicated free-to-air satellite service, Freesat, will help inject some much-needed competition into the UK's HDTV market. Even though its HD performance has been disappointing, Sky Digital remains the only major source of HD broadcast content in the country, notwithstanding Virgin Media’s offer of on-demand HD video. Freesat has been four years in the making and is a joint venture initiative of the BBC and ITV. 17.9% of the latter, of course, is still owned by BSkyB. Although Sky has been directed by Ofcom to reduce this stake, the matter is currently under appeal. Whatever the result of that lengthy dispute, Sky’s holding does not seem to have prevented ITV taking the significant decision to restrict its own soon-to-be-launched HD service to the Freesat platform, thus providing Freesat with a competitive advantage over Sky’s HD service, whose paying subscribers will not be able to see ITV HD. How much of a disadvantage that is for Sky, only time will tell. But given the paucity of choice in HD broadcasting today, and the continued popularity of ITV programmes, it should at least provide some pressure on Sky. The other HD channel on Freesat, BBC HD, is also available to Sky viewers. ITV and the BBC, more than most, will be regretting the exit of England and the other home nations from the finals of the European Championships, for which they will be providing live coverage. Live games in HD could have provided a significant boost to Freesat uptake. The major difference from Sky of course is that Freesat viewers will not have to pay a monthly subscription for their HD programmes. BBC and ITV alone would not appear to be a huge attraction for viewers to buy and install new HD set-top boxes at £200 or more, so much will depend on persuading other channels to launch HD over the coming months. As we have discussed, free-to-air HDTV (excluding well-funded public broadcasters like the BBC) is a challenging business model until wider platform reach has been established, so we can expect Sky to continue to lead in HDTV service adoption. But competition is usually a good thing, and Freesat will put modest additional pressure on Sky to improve its own range of channels and bring costs down. Freesat channels at launch are listed below (EPG channel numbers in brackets). There are in fact around 40 discreet mainstream TV channels. The remaining 80 comprise shopping, radio and regional feeds of the main BBC and ITV channels. Entertainment (101-199) BBC One (101) BBC Two (102) ITV1 (103) C4 / S4C in Wales (104) BBC Three (106) BBC Four (107) BBC HD (108) ITV2 (113) ITV3 (115) ITV3+1 (116) ITV4 (117) S4C Digidol / C4 in Wales (120) E4 (122) More4 (124) Zone Romantica (135) Zone Thriller (137) News and Sport (200-299) BBC News (200) BBC Parliament (201) S4C2 (202) Al-Jazeera English (203) Euronews (204) Movies (300-399) Film4 (300) True Movies (302) True Movies2 (303) Movies4Men (304) Movies4Men2 (306) Lifestyle (400-499) Wedding TV (402) Overseas Property Channel (411) Men and Motors (450) Music (500-599) Chartshow TV (500) The Vault (501) Scuzz (502) Bubble Hits (503) B4U Music (504) Children (600-649) CBBC (600) CBeebies (601) CiTV (602) POP (603) POPGirl (604) Tiny POP(605) Special Interest (650-699) Teachers TV (650) Radio (700-799) BBC Radio 1 (700) 1Xtra BBC (701) BBC Radio 2 (702) BBC Radio 3 (703) BBC Radio 4 FM (704) BBC Radio 4 LW (705) BBC Radio Five Live (706) BBC Radio Five Live Sports Extra (707) BBC 6 Music (708) BBC 7 (709) BBC Asian Network (710) BBC World Service (711) BBC Radio Scotland (712) BBC Radio nan Gaidheal (713) BBC Radio Wales (714) BBC Radio Cymru (715) BBC Radio Ulster (716) BBC London 94.9 (718) Shopping (800-849) QVC (800) Price Drop TV (801) Bid TV (802) Pitch TV (803) JML Lifestyle (810) Interactive (900-949) BBCi Regional (950-999) also accessible via BBC One/BBC Two BBC One London (950) BBC One Channel Islands (951) BBC One East (W) (954) BBC One Northern Ireland (957) BBC One Scotland (960) BBC One Wales (964) BBC Two England (968) BBC Two Northern Ireland (969) BBC Two Scotland (970) BBC Two Wales (971) ITV regionals accessed via ITV1 London (not listed separately) Ulster STV Scottish East STV Scottish West ITV1 Wales ITV1 Border England ITV1 Central West ITV1 Granada ITV1 Anglia East Channel TV STV Grampian North Client Reading: HDTV Channels Shut Down: A Sign Of Things To Come?

At the Westminster eForum's Digital TV seminar today, I spoke on a panel discussing HDTV on the DTT platform. I was lucky enough to be drawn ahead of Dermot Nolan, the recently appointed Director General of the Digital TV Group, otherwise there would have been little else to say. Dermot is not known for holding back with his forthright views, and he did a good job of pulling apart Ofcom's proposals for HDTV on the DTT platform. You can read the DTG's analysis here. My own presentation put the HD-DTT debate into the context of HDTV and HD video across multiple platforms (disc, satellite, internet), which have been discussed frequently in this blog, as well as commenting briefly on the international rollout of HDTV. I also referred to the French decision to mandate HD tuners in HDTVs. Not surprisingly, this seems to be the sort of direction the DTG would like to see from the UK government. I have no doubt Dermot will do everything possible to make the DTG's case against Ofcom's proposals, but I fear the efforts may be in vain. As we predicted last year, Ofcom was always unlikely to ringfence additional spectrum for HD-DTT, and while its proposals to use emerging technologies (MPEG4, DVB-T2) to expand the capacity of the DTT system invite predictable scepticism over timing, reliability and manufacturer support, they appear to represent a reasonable compromise all things considered. The last thing manufacturers need is years or even months more arguing between the various parties. Decisions need to be made quickly if DTT is not to get left behind in the race to HDTV. Client Reading: HDTV and DTT: The Impact Of Platform Evolution Decisions On HDTV Adoption Scenarios

Ofcom's Ayre report on premium rate telephony and television participation services is a damning indictment of "systemic" practices in the UK TV industry. The UK is widely seen to have led the world in interactive TV, but this report has cast a shadow over the industry from which it will be difficult to emerge. The cynical way in which some of these interactive programmes have been manipulated will do lasting damage, and if viewers have any sense, it will be a long time before that trust is rebuilt. One has to question why the government decrees that Ofcom, a communications regulator if it is anything, does not regulate premium rate telephony, which would appear to fall under "communications", or even "media", rather than, say, food standards or planning regulations. For years telephone service providers have been able to get away with charging models that are alien to the media industry. Now that the two have collided so catastrophically, we can only hope for lessons to be learnt, and that regulators will rapidly take control of a situation that should not have been allowed to develop in the first place.