As shown below, the Berkman Study first improperly estimates its econometric model and then incorrectly interprets the results from it. The error in the interpretation is significant. While the study’s authors verbally conclude that open access policies stimulate increased consumption of broadband, the econometric model they rely upon shows the opposite—open access reduces the consumption of broadband. As shown here, the Berkman Study’s authors are befuddled by their own modeling effort.

[T]he Berkman Study peeks at the outcome and then tries to formulate some procedure to attribute observed differences to one factor or another. In other words, throughout the Berkman Study, the authors are separating the sick rats from the well ones and then assigning the treatment ex post. This scheme is taboo among research scientists, since such outcomes- driven analyses are likely to render biased results, both in a statistical sense and by the introduction of researcher bias.

The Berkman Study provides a woefully inadequate review of the literature and offers no new data, no new methods, and no innovative policy ideas. The statistical analysis is mostly unskilled and unenlightening. Indeed, the economic and econometric analysis used in the Berkman Study to support its “most significant finding” that unbundling improves broadband consumption is embarrassingly bad. The analysis is so convoluted that even the Study’s authors cannot understand the results. The Berkman Study claims that “open access” stimulates broadband consumption, but the correct interpretation of its own evidence is that unbundling reduces broadband consumption.

Here are some useful links:

FT article on the Berkman Center Report

Berkman Center report

George S. Ford’s rebuttal

*Results are not guaranteed to be 100% accurate inasmuch as I did not use any actual BBC documents.  Still, one can imagine…

‘TTG has serious reservations about this proposal primarily because BIS officials and other government sources have previously suggested that the purpose of the new duty on Ofcom would be to allow BT to charge higher-than-normal prices for LLU and WLR services in order to fund NGA rollout.’

‘More recently, BIS appears to have stepped back from its position and now appears to argue that the amendment would simply be to give Ofcom more “confidence” to promote investment alongside the needs of competition. However, in our discussions with BIS, officials have been unable to point to a single example in the past where Ofcom’s work has been hampered by the lack of any such provision.’

I suppose that’s the big danger of relying on the continuation of a regulatory regime to support the core of your business!

(All … well almost all of the responses to the BIS consultation: here)

It’s not hard to imagine the Call of Duty game series will become one of the biggest media products of this decade, especially considering that — unlike movies or books — people will log countless hours of online play on platforms such as XBox 360 Live.  Halo 3, Microsoft’s huge 2007 release, has hosted over one billion online matches on the XBox Live platform.

As I have written before, video games are an interesting but often ignored segment of the overall media and communications business.  The NY Times has an arts section, but nothing really related to video games.  Unlike the Guardian, the NYT basically ignored the Call of Duty launch.

Video games also stand as a partial rebuttal to what are otherwise orthodox views about the way the media production and consumption are supposed to be changing.  We are told that mobility is important.  But people play these games mainly in front of massive flat screen TVs … while sitting on the sofa.  We are told that modern media consumption is fragmented, but with video games it seems that blockbuster titles are the norm, not the exception.

And like many new forms of media engagement, video games pose a problem for regulatory authorities of all types.  I just checked:  Call of Duty has an 18 PEGI rating.  That’s amusing for two reasons.  First, as nearly everyone can imagine, a huge percentage of the people who will play this game will be children.  Second, like many first person shooter games, players like to play with teams (online, while wearing headsets and microphones).  The kids swear at each other like sailors.

Stay tuned…

If you read through the 12-point press release you could be forgiven for thinking that nearly every telecoms-related social and economic problem — including SPAM — had been solved.  Ah, but reality is a bit trickier.

As an Ofcom watcher, I found this nugget interesting even though I recall it was not really a contested part of the package:  ‘The new telecoms rules reinforce national telecoms regulators’ independence by eliminating political interference in their day-to-day duties and by adding protection against arbitrary dismissal for the heads of national regulators.’  There is, of course, zero correlation between independent regulation and successful social and economic outcomes.  But everyone worships at the altar of independence these days.

The other interesting development, followed more closely by our friend Chris Marsden, are the notions of net neutrality and internet freedoms, however variously phrased.  Points 3 and 4 of the press release cover those issues.  It strikes me that neither the UK nor the EU has delivered real freedoms for broadcasting (just ask any small political party or pressure group that wants to advertise), so it’s quite a stretch to start making freedom-related promises about the internet.

Maybe it’s a generation-skipping freedom?

I thought the BBC Watchdog investigation on dodgy business practices at Openreach was excellent and raised some clear areas where more (or more strident) Ofcom oversight is necessary.   I thought the following (most are excerpted) comments on the BBC Watchdog’s website were among the more compelling pieces of evidence that demonstrate much more Ofcom oversight is necessary.  These comments appear to be from BT or BT Openreach personnel and show a pattern of what appear to be fraudulent business practices related to charges for external wiring near end users’ premises:

‘as a BT engineer in the [removed for legal reasons] (senior Operations Manager) [removed for legal reasons] has always told us to charge all customers where ever possible even if the we knew the charges aren’t appropriate, he always said its better to charge and have the money and then deal with the complaint.’

‘as an ex openreach engineer bt put alot of pressure on members of each team to make a certain amount of charges to the customers to increase revenue and offering incentives to the teams, if you did not hit targets on your three monthly appraisal you would have to justify on why your induvidual target of charges were not met and you would be given new targets and advice on how to meet these targets.’

‘I worked for bt/openreach for 22yrs I left in july this yr. while working for openreach as part of your job you were told by your manager you had targets to bill customers.’

‘This is part of an e-mail sent by my boss:  I require YOU to raise TRC (time related charge)if when visiting an EU’s property and working on BT plant which is to the current standard, ( i.e. DW10) at any point from the first fixing including all wiring, block terminals and sockets. Notes should be recorded “Not fair wear and tear”.  Justification we do not have to prove why the installation as gone faulty typical expectation is that a standard installation should last 30 years.  I require YOU to charge the hourly rate for ALL jobs that are not purely an unplug faulty equipment.  I require YOU to charge the appropriate stores pack on all jobs that attract the hourly rate.’

‘Further problems are due to the current aggressive BT/Openreach management style, which puts engineers under severe pressure to raise as many “TRC’s (Time Related Charges) as possible. Engineers who fail to meet their targets are harassed during regular 1:1 meetings with their line managers and threatened with being put on “Improvement Plans” etc.  When sending back job details on their laptops, some engineers who are under pressure to improve their figures, may be tempted to enter a Yes in the TRC charges box.’

‘I WORK FOR OPENREACH / BT AS A CUSTOMER SERVICE ENGINEER. OVER THE LAST THREE YEARS THERE HAS BEEN GREAT PRESSURE BY SENIOR MANAGEMENT TO CHARGE, CHARGE AND CHARGE AGAIN, THE TERM BT USES IS TRC – ‘TIME RELATED CHARGE’. NOW THE REASON FOR THIS IS OPENREACH IS A COMPANY, A VERY EXPENSIVE COMPANY.THEY HAVE ONE OF THE LARGEST FLEETS OF VANS IN EUROPE, A LARGE WORKFORCE AND PROCESS AND MANAGEMENT THAT ISNT EFFICIENT AND COSTLY AND NEEDS TO RAISE MONEY BY CHARGING TO BE IN BUSINESS.’

‘Looking a the cases on Watchdog the other night, (except for the Broadband ones) it was quite clear to me that those charges had not been raised by the Engineer but by ‘TRC Spotters’.  TRC Spotter? Well as much as BT pretend there is no such thing there is in fact a group of people hidden away in a secret location who go through closed faults to check if TRC (Time Related Charges) should have been raised.’

* * *

So there you have it.  Once again, similar to the “up to” broadband speeds deception, consumers are not really in any position to do anything other than complain … endure some harassment … wait months … and get a small credit.  Consumers without good knowledge of what’s going on are presumably fleeced.

Stay tuned…

‘However, it is unclear, throughout the Consultation, what evidence Ofcom relies on and what the full basis of its case is as it has redacted large parts of the Consultation and its Annexes making it largely impossible to respond to key aspects of Ofcom’s workings and conclusions.’

‘[T]o the extent that Ofcom’s concerns simply relate to platform choice for consumers this is easily capable of resolution by allowing Sky to continue with its Picnic proposals and to retail on DTT. The expansion of the DTT platform is being blocked, not by Sky’s activities, but by Ofcom’s refusal to allow Sky to continue with its Picnic proposal in light of the Consultation.’

‘The majority of Ofcom’s findings are all based on theoretical possibilities or apparent “likely effects”. The whole of section 7 is littered with weak assumptions, conjecture and unsubstantiated predictions which do not explain how consumers are suffering as a result of any actual harm that requires remedying; let alone in such a drastic way.’

‘[T]he idea that the existence of the wholesale remedy will somehow create a competitive utopia in which undertakings such as Virgin Media and BT Vision suddenly consider that they should reverse their historic strategy and start to bid for rights is self-evidently misguided. Indeed, Virgin Media’s CEO has recently stated that the developments on the regulatory front have vindicated the company’s strategy of not bidding for premium content rights. With the rights to retail Sky’s Core Premium channels handed to them on a plate by the regulator, any incentive they once might have had to bid competitively for rights is effectively gone forever.’

‘It is for the PL to determine its future packaging in compliance with competition law. The PL will not countenance any attempt by Ofcom, or any of the potential bidders for the rights, to try and determine its future rights packaging.’

My take:

I have a few thoughts –

1.  DLA Piper did an excellent job.  I’ve excerpted some of the more quotable nuggets above, but overall the firm’s economic analysis, presentation and point-by-point arguments are top-notch.  As I have said before, this is a forthcoming litigation-fest.  I don’t see Ofcom climbing down at this late stage, but the regulator is pushing some very esoteric ‘what if’ arguments to justify its massive intervention into the market.  It’s hard to imagine how Ofcom will prevail before a reviewing court.

2.  It’s interesting that the FAPL have picked up on the unfairness of Ofcom’s use of redacted evidence.  No surprise there, of course.  There is a footnote that says such a lack of transparency should cause a court to negate Ofcom’s entire plan.

3. I wonder how the discussion of this matter before the Ofcom board is going?  The idea that consumers will see a meaningful benefit from Ofcom’s proposals seems far-fetched.  It’s not helping, I think, that BT and Virgin Media promote the notion of a ‘ladder of investment’  and are still not really committing to putting skin in the game.  So we are on the bottom rung still?

The phrase “work with Ofcom” is disappointing, I thought Consumer Focus would actually be doing something to improve matters for the consumer.

I was one of 67 people who commented directly to Consumer Focus, none of my real issues were included in their report.

After using the ADR scheme 3 times I can think of nothing positive about removing my right to legal action until the ADR scheme has run its course, last time against Vodafone the ADR scheme took 28 months to offer my £30. This biased pointless scheme should be scrapped.

No mention about providers changing the contract conditions mid-term, no mention of changing price plans mid-term, no mention of falsely advertising a service they are unable to provide. The standard answer for any of the above is “you are bound into a contract, there is nothing you can do”.

Despite listing the problems, Consumer Focus offers no solutions other than talking to Ofcom and providers. Better than Ofcom’s pretending everything’s great but still no cigar.

Consumers love their mobiles but when it comes to finding the best deal, they face an overwhelming range of tariffs and patchy information. This means they often cannot choose the best match to their needs, an investigation by Consumer Focus reveals today.

Two thirds of respondents to an online survey commissioned by Consumer Focus said there are too many mobile tariffs in the marketplace; three quarters think they should be able to access essential services from a mobile at the same rate as from a landline; and half are unsure whether they would be charged for calling an 0800 number from their mobile.

Audrey Gallacher, telecoms expert at Consumer Focus said: ‘Millions of people now depend on their mobiles to access an ever growing range of services, yet many have no idea if they are getting good value for money.

‘With 1.3 million deals on the market and packages offering different allocations of voice minutes, text messages and data allowances as well as bundled deals, it is no wonder consumers are bewildered.  As a result, people often end up signing up for an unsuitable package and overspending.

‘Even when consumers shop around for the best deal, the true picture is muddled by ‘hidden’ costs such as charges for accessing voicemail, for itemised paper bills or for special rate numbers such as 0800 and 0845.’

Consumer Focus has identified complex tariffs, poor price transparency and quality of service as key consumer concerns and will work with Ofcom, mobile operators and other organisations to help tackle them. Gaps in mobile network coverage have also been identified as a further pressing problem for consumers, and Consumer Focus plans to support the Communications Consumer Panel in this area.