Digital Economy Bill (First sitting)

Kevin Brennan Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 11th October 2016 Public Bill Committees

[Christian Matheson (City of Chester) (Lab)]

Q What flexibility would you like to see within the legislation for either the Government or perhaps Ofcom to be able to deem the level of the USO in the manner that Baroness Harding described as technology increases?

David Dyson: I have a couple of points. Covering some of the previous questions, it is impossible to predict what will be the right speed in five years’ time. There are two elements to delivering that. One is effective competition. On the second, I agree with Baroness Harding that in those harder-to-reach less economic areas, the separation of Openreach is the only way that you will get assurance that those customers will get the right speed.

Fundamentally, Ofcom needs to have more powers to make the right decisions that effectively create the right competitive environment in the UK—an environment where it is not constantly worried about being litigated. At that point, you have a stronger regulator that will make the right decisions for the right reasons and a lot of these discussions will take care of themselves.

Baroness Harding: You can see from my nodding head that I agree with David. A lot of the provisions in the Bill are very good, pro-consumer, and I would encourage the Committee to look very favourably towards them. David has just alluded to one of them, which is to make sure that you have a stronger regulator that can get decisions taken faster without using up nearly 50% of the Competition Appeal Tribunal’s time.

Sean Williams: On the specific question about flexibility, as long as it is stable enough for network investors to deploy a certain investment in order to get to the target and then recover some of their investment money, it can be flexible after that. If it is too flexible, you never quite know what you are supposed to be investing in, so I think it needs to be definitive for a period and then it can move on progressively as society and the economy moves on.

I agree with Baroness Harding on the subject of reliability. Reliability is a very important metric, but SMEs are not typically the most demanding broadband customers. A big household streaming lots of HD videos is a very demanding broadband supplier. SMEs and large households have different kinds of requirements and we need to work with Ofcom to establish exactly what those standards should be.

It is true that some of the problems happen within the home or within the business premises. It is important to make sure that all the retailers—TalkTalk and all the others—are able to support their customers in the business or home. Making sure those networks and wi-fi work well is also very important, to answer Mr Perry’s earlier remarks.

[Kevin Brennan (Cardiff West) (Lab)]

Q Sean, do you recognise the figure that improving wayleave rights under the ECC will reduce costs for providers by 40%? Would you like to tell us whether any surplus from that will be used to invest in local communities or will it be going to your profit margins?

Sean Williams: I do not recognise the particular figure, to be honest, but I would not necessarily dispute it.

[Kevin Brennan]

Q Is it in the right ball park? Is that what you are saying?

Sean Williams: It is 40% of what? I do not know exactly where that figure comes from, to be perfectly honest with you, but what I would say is that on the EE network we have a commitment to get to 99%-plus of premises getting 4G, and 95% of the geographical area of the country, by 2020, getting 4G services. Also, that requires us to roll out new masts and new services, and every cost reduction in that vein will support the agenda of rolling out 4G networks everywhere as far as we can.

[Kevin Brennan]

Q So all that will be reinvested into the—

Sean Williams: I think it is all supportive of delivering more roll-out by all the mobile networks, yes.

[Kevin Brennan]

Q Can I ask you, how will we have competition in next generation access? Will certain areas of the country be limited to 10 megabits in the future?

Sean Williams: As I say, I think we are getting lots of competition already. Virgin is rolling out. Hyperoptic, Gigaclear and others, all the 4G networks, Three, EE, Vodafone, O2 are all rolling out competitive networks, so I think the large majority of the country will have availability of choice of provider.

[Kevin Brennan]

Q Will certain areas be limited, do you think, in reaching the 10 megabits?

Baroness Harding: I think the way that you ensure that there is sufficient competition to drive investment and create choice is by having a very strong regulator that does not believe any of us, actually, when we say “Trust us, we will be okay; we will do it for you.” If you live in any of the rural constituencies in the country, you do not have Virgin as an alternative. There is only one fixed line network provider. There are only two mast joint ventures for mobile networks, so I would argue that the telecoms market is not competitive enough at all and that the best way Government can ensure that all constituents across the country benefit is by having a much stronger regulator that forces competition. I think you should be very worried when you hear large incumbents saying, “Set up a universal service obligation but don’t let it get too far ahead of what we’ve got in our business case.” That is not what business should be doing. Businesses will invest more if they are scared their customers will go elsewhere, not because they have been given a promise by Government.

David Dyson: But also you should be very worried when you hear statements about how BT is planning to take profits from the duct access and reinvest in that, and in cross-subsidising mobile access. That is just fundamentally wrong, and is not supportive of competition.

[Christian Matheson]

rose—

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[The Chair]

I will come back to you.

[Kevin Brennan]

Q I remember one of your predecessors in a predecessor company, Mr Butler, explaining to me why they were digging my street up in the 1990s. They basically said, “We are installing a straw to suck money out of people’s houses”, which I think is the best explanation I ever received of what was involved. On the electronic communications code, how can you assure us that its reform will actually benefit consumers principally and not just allow you to keep more of the money that you suck out of people’s houses?

Daniel Butler: The reforms that are envisaged will transform the economics of roll-out. The figures discussed in the previous session were a 40% reduction in the cost of roll-out. The primary way in which that benefits consumers is that that allows us to build to more premises on a commercial basis.

Virgin Media currently plans to build to 4 million premises by 2020. Wayleaves are a considerable line item on the balance sheet for that investment, and also it takes a lot of time to get agreement, so anything we can do to reduce the cost and improve the efficiency of getting those will have the consumer benefit of allowing us to connect up more premises. I mentioned that Government could be more ambitious in this regard. In effect, the Government’s reforms will deal with the worst abuses of the systems—that is communications providers’ exposure to ransom rents—but Ministers and the Secretary of State increasingly talk about broadband being equivalent to a utility and the reforms do not quite go that far. Water companies have the most advantageous wayleave regimes under their statutes. They do not pay what is called in the valuation jargon “consideration” and, as are result, they pay 60% less—these are Government’s figures—than communications providers.

[Matt Hancock]

I think the explanations coming from the witnesses are excellent. I did not have any other questions.

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[Mark Menzies (Fylde) (Con)]

Q On a slightly different point, I have a question for Which? around data sharing. Clearly, there are mixed views as to whether it is a good or a bad thing. I would like to understand what you think that the benefits would be, particularly to vulnerable groups, of the Government having access to this data?

Pete Moorey: In broad terms, we support the measures in the Bill and we see this from two perspectives. There is the work that we have done in our campaigning, particularly on areas such as energy, where we know that year after year the energy suppliers have said that they would like to be able to better target energy efficiency schemes at the most vulnerable households, and that they have struggled to do that. We think a lot of good steps could be taken as a result of that.

The other side is around the role we play in providing products and services for consumers. We run a number of excellent websites—Which? University, Which? Birth Choice, and Which? Elderly Care—which provide people with all the information they need to enable them to make a choice when they come to that decision. We have been hamstrung on occasion in being able to provide the richness of information that people would want when trying to make that decision where local authority data or other public service data have not been available. Taking steps in this direction would help not only Which? to do that better, but a lot of the other service providers in that space.

[Kevin Brennan]

Q On the point about coverage of broadband and mobile, where would we come in the European champions league of coverage? Will the Bill push us up the league at all, in your opinion?

James Legge: I cannot give you a precise figure. I am afraid I do not know the answer to where we lie in the overall league table of Europe.

[Kevin Brennan]

What do you think?

James Legge: I do not know. Our ambition certainly seems to be less than what the European Union intends to see delivered. I think there is scope for saying 10 is great, but we should be looking at more. We should also make sure that the USO moves up—I think the Bill makes provision for this—because there is no point in leaving it at 10 when we have 300.

[Kevin Brennan]

Q You listed a lot of countries that do better than us when you gave your answer earlier. If the Bill potentially brings some progress, are we running fast enough to keep up with our colleagues on the continent?

Pete Moorey: I think it was me who gave the list of countries. We can come back to you on that with the data we have on 3G and 4G and also on broadband.

[Kevin Brennan]

Q It would be very helpful if you could do that before we meet next week.

Pete Moorey: On the 10 megabit point, clearly for a lot of consumers it will not be enough; for others, it will be a godsend. Ofcom has done a pretty decent piece of work in understanding average consumer use at the moment. It has developed a speed that is probably appropriate to start, but will have to be addressed in time. The really important issue is how it does that and how it involves consumers in the process. There is a real danger that we get into an arbitrary point of view and say, “Well, it should be 15 or 20 megabits” rather than setting the speed with consumers themselves.

[Claire Perry]

Q I want to focus questions directly on Mr Legge. I represent a very rural constituency. We are very anxious about home building. We now have effective neighbourhood plans that rather than mandating giant developments plonked down wherever anybody wants them, require developers—often small developers—to work with communities. The preamble is to ask you whether you think the new law coming in next year to require automatic superfast broadband connection for sites of more than 100 homes is suitable for rural areas, or whether we ought to be going further and effectively making it a utility provision for all home builders.

James Legge: My view is very much that it should be seen as a utility provision. The whole way in which we have looked at the housing problem in rural areas has transformed over the last 10 years from the idea of plonking mini-towns on the edge of existing communities. We have realised that if you try to do that, all you do is create massive local opposition and nothing gets built. What you want is small-scale development that is sensitive and local to the community, provides local housing, and is affordable, often affordable in perpetuity.

The idea that you will only get broadband provision when you build 100 premises on the edge of a village or in a rural area is undesirable, simply on the grounds that where new properties are going in and we are putting in an infrastructure, it seems absurd not to take the opportunity. We would not say we are not going to put in electricity, water or, ideally, gas as well, although we do not have mains gas everywhere, to be fair. I think broadband is too important.

It is also important to realise that the population trend at the moment is a move from towns to rural areas. There is enormous potential. If you take a population of 10,000, there are more start-up businesses in rural areas. I think London and some of the major urban city centres exceed. The countryside is a largely missed opportunity, but all the signs are there that if it gets broadband it is ready to fire and go further; so the figure of 100 is too urban-centric in thinking.

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[Thangam Debbonaire]

Q Is the Telephone Preference Service system now completely pointless? My constituents say to me that they feel completely unprotected by it. Could the Bill do more to strengthen it?

Pete Moorey: It is not pointless. Our research shows that if people sign up to the TPS they usually have a reduction in calls. The problem is that there are too many firms out there that either just abuse the Telephone Preference Service and call people who are on the list, or indeed have consumers’ consent to call them, because, sadly, the customers have incorrectly ticked a box at some point, and thought they were not giving consent when they were giving it. More needs to be done about the data consent issue. I know that the Information Commissioner’s Office is doing more about it.

[Kevin Brennan]

Q So just to be clear, you would welcome amendments to the Bill that would strengthen action, including direct action against directors to avoid the shutting down of shell companies. Is there a case for some kind of aggravated offence where people are on the Telephone Preference Service, or where older people are specifically targeted in such a way?

Pete Moorey: I know there is a local police commissioner who is looking at the issue at the moment—particularly around making scam calls a hate crime. That is an interesting development. There is more that could be looked at in that area. I think a good start in the Bill would be the introduction of director-level accountability.

[Kevin Brennan]

I introduced a ten-minute rule Bill on this in 2003, so it is depressing that it is still a problem.

[Chris Skidmore]

I am sure you are delighted at the progress.

[Kevin Brennan]

It is according to the Government that there has been much progress.

[Rishi Sunak (Richmond (Yorks)) (Con)]

Q Mr Moorey, to elaborate on what you said about the provisions in the Bill to reform the appeals process, I think you described the current set-up as having a chilling effect on competition and pro-consumer impacts. It would be great if you would elaborate on what the Bill will do to improve that situation.

Pete Moorey: I think it has. I think the reason why we do not have things like a gain in provider-led switching and automatic compensation in the sector is in part due to the fact that the regulator has not felt able to move ahead with those things without appeal. Indeed, the speed at which the regulator acts is also a result of the appeals mechanism. We see proposals coming from Ofcom, particularly around things like switching, where it seems to go through a process of repeated consultation really out of a fear of being appealed by the companies. So I think it has had a chilling impact, and those are a couple of examples.

As other panel members have said, moving to a system that every other economic regulator in the country uses, which means that you are able to challenge on the process rather than the merits, would therefore be a significant change. I simply do not see the case for the telecoms sector being any different from energy or any other economically regulated sector.

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[Matt Hancock]

Q Do you agree that those areas in addition that you are looking for are essentially administrative rather than legal changes? That is to say, the Government need to move in that direction, I would argue that they are moving in the direction that you set out, but you would not put that in a Bill; you need to make it happen.

Mike Bracken: Yes. Absolutely, Minister. Too often, there was an assumption that those things would need regulatory or Bill backing. My experience was pretty much 100% that that was not the case; these are largely about administrative and operational management of data across Whitehall and across Departments. Clearly, there are some areas, security being an obvious one, where you need more legal oversight, but primarily it is not so much about a Bill.

[Kevin Brennan]

Q First, I agree with what Jeni said about Citymapper; it has changed my life, it is absolutely fantastic—I actually use the bus now. However, either witness, will the Bill in any way help to avoid another care.data type of scandal?

Jeni Tennison: I will go back to what I was saying around transparency and public trust. For me, the important part of any dealing with private, personal data has to be that we drive towards trust by being open about what is being done with those data, by being transparent about how they are being used, what decisions are being made with them, whom they are being shared with and under what circumstances. Those principles of having openness around the handling of personal data are what will drive public trust in their use. We are in a very difficult space here between trying to balance the right to privacy of an individual with the public good we can get from the use of data. It is a fuzzy and difficult one, one we are going to be working through for many years, but having transparency and openness about it enables us to have an informed debate about where we are making that balance.

[Kevin Brennan]

Q Will the Bill make a care.data scandal in the future less likely, more likely or make no difference?

Jeni Tennison: For me, it does not go far enough in the need for transparency around where the sharing is going on, which is what I think would be necessary in order to avoid that.

[Kevin Brennan]

Q Finally, should the Bill be strengthened in some way in order to achieve that, and could that be done by an amendment to it, either of you?

Jeni Tennison: I think it could be strengthened by adding some provisions around openness and transparency, putting that at the heart of what you need to do whenever there is a data-sharing arrangement.

[Claire Perry]

Q I appreciate that point, but does either of you agree that there is a real asymmetry of concern between data which an individual may share with a public body and data which individuals share with a corporate body? One thing I am fascinated by, and it relates to so many provisions in the Bill, is that we knowingly or unknowingly give away rights to all kinds of information with every keystroke we make on the internet. We give huge chunks of personal information to corporate bodies which do not have the definition, as per clause 31, of improving the welfare of the individual, but are simply in it for profit. How would either of you help us to address that? Perhaps the Government—rightly, as an elected organisation—are being scrutinised about this, but my constituents are willy-nilly giving away vast chunks of their data, and in some cases giving away private data to very insecure storage facilities, almost without knowing it. It is frustrating for a Government who are trying to do the right thing to make digital government far more effective—as you did, Mike, during your time—to constantly be facing concerns and criticisms that ought properly to be applied to corporate bodies, but never are.

Mike Bracken: I completely understand your point about asymmetry and I agree with that. I would suggest that in corporate, public and private life it is a fair assumption that many people in the country are waking up to how their data have been used, how they have released that data and, increasingly, the repercussions of that, whether on social media, transactional data with a private company or, indeed, the public sector. There is a general awareness of and unease about some of the practices in all three of those sectors.

Having said that, the Government are held to a different account. Our members—we are a member-based organisation—hold the Co-op to a different account. We are the custodian of their data, and we are owned by our members. Many of the services we provide or help to provide to our members, such as wills, probate and funeral care, are deeply emotive at a certain time of life. These services often depend on Government data being in very good shape about place, location and identity. It is a fair correlation to draw that there should be a symmetry between how an organisation like us should be governed and managed, and the rules that should apply to public sector data. That is not to say that all the data regulations which apply to all corporations and trading organisations need to be exactly the same as those for the Government. That would be a political issue far beyond my position to comment on. The Co-op would look to see that the Government uphold the highest possible standards, so that our members can get the best possible use of that public data.

Jeni Tennison: Perhaps I can add a couple of things. Mike has made the point well that the Government need to act as a model for how to do data sharing well, and how to be open and transparent about handling people’s personal data. The Government are in a position of authority there. However, the other thing to bring up is that we have a mixed economy for the delivery of public services, including the private sector, charities and social enterprises. There should be some scrutiny over the way in which those organisations are handling personal data in the context of delivering those public services.