The market for digital communications has fundamentally changed over the last ten years since Ofcom undertook its strategic review of digital communications in 2005. At that time,  'broadband' was considered to be a speed of 128 Kbit/s while today's superfast broadband is defined as being capable of delivering speeds of 30 MBit/s (broadband which now reaches approximately 83% of UK premises). In that time, the growth in availability and takeup of broadband has driven the take-up of connected devices as well as the convergence of TV and content services over broadband. In 2005 there were no iPhones or tablets – now around 66% of the UK have a smartphone, and 63% of the population now make use of connected devices to watch TV. In the last 3 years alone, mobile data usage grew from 9m GB to 44.3m GB.

It is against this background that Ofcom announced its decision to undertake a new strategic review of digital communications on the 12th of March this year. On 16 July, Ofcom published its discussion document on the strategic review of digital communications - the review focuses on  four main policy objectives:

  • Investment and innovation, delivering widespread availability of services – ensuring that the right incentives for private sector investment are in place so that the full range of services are widely available. The report looks at requirements for universal broadband (i.e. that everyone in the UK has at least minimum broadband access) to ultrafast broadband (this includes broadband of up to 500Mbs)
  • Sustainable competition, delivering choice, quality and affordable prices – ensuring that there is a healthy competitive market and that there is appropriate regulation that protects both competition and incentives for efficient investment
  • Empowered consumers, able to take advantage of competitive markets. The review seeks to understand where markets are not working well for consumers.
  • Targeted regulation where necessary, deregulation elsewhere. Where possible Ofcom is looking to deregulate the communications sector, and address regulation through competition and general consumer laws.

Ofcom views the following as potential future challenges to be experienced in the sector:

  • Greater demand for non-residential connectivity: business adoption and use of ICT services (such as cloud based services) will continue to drive demand for higher bandwidth. The growth of the Internet of Things will drive demand for reliable networks.
  • Increasing demand for residential broadband: Simultaneous use of multiple connected devices in the home will continue to drive demand over the next decade.
  • Niche groups: the proliferation of services in the market will continue to lead to a diverse set of consumer needs and tastes and further customer segmentation.
  • last such review in 2005, lasted almost two years and ultimately led to the separation of BT’s access network. Commentators have argued that this review is unlikely to result in a further separation of BT and while Ofcom recognises there are challenges with Openreach, Ofcom suggests that further separation will not address these and could ultimately be disproportionate.  The review is, however, an opportunity for Ofcom to consider what impact "over the top" players (such as Skype and Whatsapp) are having on the communications market.

Ofcom has invited  responses to the issues raised in the discussion document by 8 October 2015 and intends to publish emerging views at the end of 2015. The report is available at http://stakeholders.ofcom.org.uk/consultations/dcr-discussion