Ofcom response to the
European Commission public
consultation on specific aspects of
transparency, traffic management
and switching in an Open Internet
Publication date:
October 2012
General information
Question 2: a) Please provide the full name and a brief description of your organisation and
describe your interest in open Internet issues.
Ofcom is the independent regulator and competition authority for the UK communications
sector, with responsibilities across television, radio, telecommunications, wireless
communications services and post. Ofcom’s primary duty under the Communications Act
2003 is to promote and protect the interests of consumers and citizens. This duty underpins
all aspects of our activities and drives our work to promote and deliver competition,
investment and consumer choice in the market place.
Ofcom welcomes the opportunity to provide views on the European Commission’s public
consultation on specific aspects of transparency, traffic management and switching in an
Open Internet. These are issues in which Ofcom has taken an active interest, both at the
national level and in contributing to the various BEREC outputs since 2010, and we continue
to monitor this area closely. Ofcom consulted on a discussion document on Traffic
Management and Net Neutrality in June 20101 and published a statement on Ofcom’s
Approach to Net Neutrality in November 20112.
In our November 2011 statement, Ofcom summarised its overall position with regards to Net
Neutrality:

We recognise the benefits associated with ‘best-efforts’ Internet access and the
provision of managed services, and seek for them to co-exist.

We would be concerned if network operators were to prioritise managed services in a
manner that leaves insufficient network capacity for access to the open Internet. In
such circumstances we would consider using the powers which allow us to safeguard
access to the open Internet by imposing a minimum quality of service on all
communications providers.

We regard any blocking of competing services by providers of Internet access as
highly undesirable. Where providers of Internet access apply traffic management in a
discriminatory manner, our view is that this could have a similar impact to outright
blocking. Our current view is that we should be able to rely on the operation of
market forces to address the issues of blocking and discrimination, but we will keep
this position under review.

Effective competition requires that sufficient information is available to enable
consumers to make good purchasing decisions. We therefore set out our view on
what we believe to be necessary, both in terms of technical information on traffic
management practices, and transparent information for consumers.
c) Please provide the postal and e-mail address of your organisation and, if you wish, the name of a
contact person (including telephone number and e-mail address) for any questions on your
contribution.
Ben Wallis, International Policy Manager, Ofcom, [email protected]
Riverside House, 2a Southwark Bridge Road, London SE1 9HA, United Kingdom
d) In which Member State(s) are you established and where do you perform your activity?
United Kingdom
1
2
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/summary/netneutrality.pdf
http://stakeholders.ofcom.org.uk/binaries/consultations/net-neutrality/statement/statement.pdf
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1. Traffic management
Traffic management is the term used to describe a wide range of technical practices undertaken to
manage traffic across networks, which includes prioritization, slowing down, throttling or blocking of
certain data packets. There seems to be consensus that traffic management is a legitimate tool to
effectively protect the security and integrity of networks, to restrict the transmission to end-users of
unsolicited communication (e.g. spam) or to give effect to a legislative provision or court order.
It is also widely understood that certain traffic management techniques are involved in the provision of
"managed/specialised services"[1] (that provide a generally guaranteed quality of service and a strict
admission control). This questionnaire focuses on cases where traffic management is applied by ISPs for
such purposes, or for other contractual or operational purposes such as congestion management, the
enforcement of contractual restrictions etc. Furthermore, BEREC's traffic management investigation
showed that a number of traffic management techniques are actually applied by ISPs.
For instance, ISPs commonly apply certain traffic management practices in order to avoid or manage
traffic congestion in a network. Traffic management is also sometimes deployed to provide a guaranteed
quality of service for "managed services", for example IP-TV, video on demand (VoD), etc. Another issue
is that traffic management often involves monitoring practices that may raise privacy concerns. The
following questions ask for additional information regarding these traffic management techniques.
(“Managed services” are sometimes also called “specialised services”. For the purposes of this public
consultation both terms shall be deemed to be synonyms.)
1.1. Traffic management and differentiation
Question 5:
Please provide your views on the following ways/situations where traffic management may be
applied by ISPs.
Are traffic management measures:
a) applied to deliver managed services (e.g. to ensure a guaranteed quality of service for a specific
content/applications)
Necessary
By definition, managed services require some form of traffic management to deliver
guaranteed QoS for specific traffic types or services.
b) taking into account the sensitivity of the service to delay or packet loss
Appropriate
It is appropriate and will sometimes be necessary - whether it is necessary or not will
depend on how much capacity is available in the access link or at other points in the
network.
c) used to implement or manage compliance with the explicit contractual restrictions (e.g. on P2P
or VoIP) of the Internet access product accepted by the user
It can be appropriate but can also be potentially problematic. Whether it is problematic
will depend on the degree of transparency of the practice and the motivation for it. Ofcom
remains of the view that outright blocking or excess throttling to the point that the service in
question becomes effectively unusable is highly undesirable.
d) targeting types/classes of traffic contributing most to congestion
Appropriate
Certain classes of traffic can consume a high proportion of overall bandwidth without
necessarily requiring it for the underlying purpose of the applications (e.g. the use of P2P for
file transfers). This may be detrimental to the effective operation of other, “real-time”
applications such as VoIP, video calling and streaming. This suggests that it is appropriate to
preferentially target less time sensitive applications to ensure the overall consumer
experience is optimised.
e) targeting heavy users whose use is excessive to the extent that it impacts on other users
Appropriate
In some circumstances, particularly where a number of users share a restricted access
resource (e.g. such as the cable broadband customers on an individual node sharing a
common DOCSIS bearer), restricting individual users who are using a disproportionate
amount of the overall bandwidth available may be an appropriate means of ensuring equity
and improving the overall customer experience.
f) applied during busy times and places, when and where congestion occurs
Appropriate
Traffic management can be an appropriate way to deal with periodic congestion in order to
ensure an acceptable consumer experience. Simplistically, it could be argued that a better
approach would be to provide more network capacity at the point of congestion, but this may
not be commercially feasible or desirable.
g) affecting all applications/content providers in the same way (application-agnostic)
This will depend on the circumstances. These practices can be appropriate, but may create
risks. An application-agnostic traffic management practice may affect data from all
applications equally (slowing all equally under congestion, for example), and this is
potentially problematic as the prioritisation of time-sensitive applications (such as live
video) may be of benefit to consumers. Alternatively, an application-agnostic traffic
management practice may target the data traffic associated with individual subscribers, as
discussed in the answer to 6 (d) above.
h) affecting (similar) applications/content providers of the same category in the same way
The practice is appropriate but it does create risks which may be problematic; depending
on the level of prioritisation for particular classes of traffic and the overall peak congestion,
this can result in some applications becoming unusable.
i) used, without other grounds, against services competing with the ISP's own services
Problematic
As set out in our November 2011 statement, there is a concern that service innovation would
be hindered if providers of Internet access blocked services, or applied traffic management
in a manner that discriminated against competing providers. As well as being a general
concern, there is also a specific current concern that some mobile operators already block
services provided by some competing providers.
We do not have a general objection to models of competition where vertically integrated
operators do not provide open access to their networks, provided that there is genuine
competition and rivalry among the firms in the market and genuinely open access is provided
by at least some providers. We do however have a specific concern that restricted access to
the Internet could have a stifling effect on innovation.
Our stance as a regulator is that any blocking of alternative services by providers of Internet
access is highly undesirable. Similarly, whilst we recognise that some forms of traffic
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management may be necessary in order to manage congestion on networks, we expect
such traffic management practices to be applied in a manner which is consistent within
broad categories of traffic. Where providers of Internet access apply traffic management in a
manner that discriminates against specific alternative services, our view is that this could
have a similar impact to outright blocking.
j) implemented at the full discretion of the ISP
Appropriate
The Internet eco-system is a dynamic environment – new applications are continually being
developed and launched and the consequent demands on underlying network services can
change very rapidly. It would be wholly inappropriate for regulators or policy makers to set
prescriptive ex ante rules on how access and other network operators should manage their
systems in the face of this dynamic. It is therefore appropriate to allow network providers to
react to changes in demand as they see fit, relying on competitive market pressures with
backstop ex post regulatory intervention if necessary to prevent consumer detriment.
Question 8: What are likely positive and negative effects of certain traffic management practices
on the Internet ecosystem, in particular on innovation and investment, by (i) network
operators/ISPs and (ii) content providers? Please explain your view and, if appropriate, distinguish
between different traffic management practices.
The benefits of “innovation without permission” are important – consumers value the new
services that have arisen as a result of it, and the conventional model of competitive intensity
leading to the maximisation of such benefits could break down if access operators were able
to discriminate against other services unfairly.
On the other hand, traffic management can be an entirely legitimate means of optimising
network performance, for example by ensuring that the overall bandwidth in an access
network and between it and the “rest of Internet” is shared equitably between users, with
more time sensitive application classes being given some prioritisation if congestion occurs.
This may extend to the provision of “managed services” that provide QoS guarantees for
high bandwidth applications such as long form broadcast quality video.
The best means of ensuring that such traffic management is not unduly discriminatory and in
the best interests of consumers is by requiring or encouraging maximum effective
transparency of what measures access providers actually apply. This allows consumers to
make informed choices between providers, based on what service attributes are important to
them, and may provide an evidence base for regulators to determine if the practices adopted
are detrimental to the interests of consumers.
1.2 Traffic management and privacy issues
Question 11:
Where the user's consent is required for traffic management measures, particularly where such
measures might entail access to and analysis of certain personal data by ISPs, please explain how
(e.g. in which format) this consent should be sought by the ISP, what prior information needs to be
provided by the ISP to the user, and how the user consent should be given, in order to optimise
user awareness and user convenience.
Although we have not examined this in detail, we are not aware of traffic management
measures, including those using DPI techniques, which necessarily involve analysis of
personal data, although some DPI practices may do so.
2. Transparency and switching (consumer choice)
Transparency is a key tool in the EU electronic communications framework to protect users and to
ensure competition. Transparency enables consumers to optimise their informed choices and thus
benefit fully from competition, in particular at a time when ISPs are developing new business models.
The BEREC investigation has revealed that many consumers have Internet access subscriptions with a
number of restrictions. Moreover, the development of new business models is likely to lead to a broad
range of offers which may contain different traffic management restrictions. These may address the
needs or interests of specific consumers at prices which might not otherwise be available. It is,
however, not clear whether ISPs are sufficiently transparent about such restrictions allowing consumers
to make a deliberate choice. Customers, therefore, need clear, meaningful and comparable information
on any limitations of their subscriptions comprehensible to all.
These requirements raise the question whether a restricted Internet access product may still be
described, without qualification, as "Internet access" or whether the unqualified label "Internet access"
should be reserved to (largely) unrestricted access offers. This debate has already been opened in some
Member States and this public consultation seeks also views on this issue. Another aspect of
transparency concerns broadband speed, and in particular possible discrepancies between advertised
speeds and actual speeds.
Transparency should be complemented with measures aimed at ensuring easy switching from one
provider to another, and from one offer to another offer of the same service provider, to empower
consumers to choose the service which best matches their individual needs. The electronic
communications framework facilitates switching of operators by imposing the obligation to implement
number portability within one day, by limiting the initial commitment period in contracts with
consumers or by specifying that the conditions and procedures for contract termination shall not act as a
disincentive against changing service provider. It further specifies that subscribers have a right to
withdraw from their contract without penalty upon notice of modification to the contractual conditions.
It is also important to ensure that barriers do not arise as a result of the growing trend towards bundled
services. This may require that switching processes and contractual arrangements are consistent
between services offered in bundled packages, e.g. the most common "triple play" package of fixed
voice, broadband and pay-TV.
2.1 Transparency and general characteristics of the Internet access offer
Question 12:
In order to allow consumers to make informed choices, on the basis of clear, meaningful, and
comparable information, which elements should be communicated to consumers?
All of the parameters listed in question 12 are relevant and some are more important than
others. What is important is that, to help them make effective choices, consumers have
accurate, clear, comparable and accessible information about traffic management and other
variables which affect broadband quality of service and the customer experience.
Providing clear information on such a complex subject is challenging. As set out in our
November 2011 statement, we have identified six principles that can help suppliers provide
good traffic management information for consumers. They are based on a number of our
past projects including our 2006 Consumer Policy Statement which outlined the role we
need to take in consumer information and the need for consumers to have access to
comparative information. These principles suggest that consumer information should be:

Appropriate – ISPs should disclose all information, and only such information, that a
consumer needs to make an informed decision.

Accessible – Basic information should be available at the point of purchase, and
more detailed technical information should be readily accessible online or on request.
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
Understandable – Information should be simple enough for consumers to be able to
understand the practical impact of traffic management policies on the way they may
use the Internet service.

Verifiable – Consumers or third parties (e.g. intermediaries such as price
comparison websites) should be able to verify any information provided.

Comparable – Consumers should be able to compare information provided by
different providers.

Current– The information available to consumers should be up-to-date, both at the
point of sale and subsequently.
These principles require a trade-off between simplicity and completeness. This is a difficult
balance, and there is unlikely to be a single right approach. For example, third party
intermediaries may be able to make use of information which is complete but complex,
whereas many consumers are likely to require a simple summary of those traffic
management policies which have most impact on the services they wish to use.
Our view is that information on broadband quality of service should include at least the
following elements:

Speed information that indicates the level of service consumers can expect to
receive.

Information about the impact of any traffic management that is used on specific types
of services, such as reduced download speeds during peak times for P2P software.

Information on any specific services that are blocked, resulting in consumers being
unable to run the services and applications of their choice.
There have been a number of regulatory and self-regulatory initiatives in the UK to address
these issues.
Since June 2011, all major UK ISPs have been committed to the voluntary Broadband
Stakeholder Group (BSG) code of practice on Traffic Management Transparency3
which created a standardised format for reporting on traffic management policies, including
the production of Key Facts Indicators (KFI) tables. Ofcom has welcomed this code as a
positive first-step towards improving transparency and consumer awareness. The
information provided by ISPs in the KFIs should help consumers to compare broadband
products within each ISP’s product suite and also compare between the types of products
offered by the various ISPs. It could also be used by intermediary information providers (i.e.
price comparison websites) in ways which will help consumers make comparisons and
hence empower them.
The BSG Traffic Management Transparency Code of Practice has been in place for over a
year, and is due to be reviewed. As part of the research conducted into compliance with our
well established Voluntary Code of Practice on Broadband Speeds, we looked at the
provision of traffic management information. Compliance with the BSG Traffic Management
Code appears to be satisfactory and it is clear that UK ISPs have made positive efforts to
improve the level of information to consumers. However, it remains unclear whether the
information provided is easily understood and usable by consumers. This is something we
will address with stakeholders over the coming months.
3
www.broadbanduk.org/trafficmanagementtransparency
In July 2012, a number of major UK ISPs signed up to a second voluntary BSG Code of
Practice on Open Internet4, under which the signatories committed not to block legal
content, applications or services. In effect, this code complements the Traffic Management
Transparency Code by setting out what broadband providers will do, as opposed to what
they will inform consumers about. Ofcom has observed the development of the Code and is
supportive of the commitments it includes.
The Open Internet Code did not secure the same comprehensive participation as the
Transparency Code. In particular, among large fixed and mobile ISPs, Virgin Media,
Everything Everywhere and Vodafone did not sign up to the provisions of the Code.
Although wider participation might be better, the substantial coverage of the code is a
significant and positive outcome. Critically, it should not be necessary that all providers offer
broadband access services without any service discrimination for competition and innovation
on the Internet not to be at risk (and intervention to be unnecessary). What is required is that
there should be a satisfactory balance between fully open Internet access services, and
restricted or managed services, both in terms of products offered and consumer penetration;
and that there should be transparency and easy switching between providers.
Our next step in relation to the provision of open Internet access will be through Ofcom’s
Infrastructure Report Update, which is scheduled for publication in late 2012. The 2012
publication will include a section on the status of the open Internet in the UK, reporting on
the extent to which providers offer open Internet access services, and on the relative pricing
and consumer penetration of open and of managed/restricted access services. This
analysis will support Ofcom’s ongoing assessment of the need for intervention, for example
in the possible imposition of QoS obligations.
It is also worth mentioning Ofcom’s work on broadband speeds5. Ofcom has taken a
number of initiatives to ensure that the way in which broadband is sold works in the interests
of consumers. These initiatives include:

Introducing and updating a voluntary Broadband Speeds Code of Practice which
ensures that ISPs provide consumers with clear information on the maximum speeds
available on their particular line (and other speed-related information) with the aim of
helping them make more informed purchasing decisions.

Publishing regular research which allows consumers to compare fixed-line
broadband performance across different providers, technologies, geographies and
time of day. The data is collected from a panel of broadband users by our research
partner, broadband monitoring company Sam Knows.

Publishing consumer guides to advise consumers on how to improve their broadband
speeds and get the best deal on their broadband service.

Creating a ‘UK broadband map ‘which allows consumers to see at a glance how their
region compares across a range of metrics with other areas.
The broadband market has changed significantly since we undertook these measures:
speeds have improved significantly due to greater take up of superfast broadband, prices
have fallen, and there is now a greater choice of speeds and packages than ever before.
4
5
www.broadbanduk.org/openinternet
http://stakeholders.ofcom.org.uk/market-data-research/other/telecoms-research/broadband-speeds/?a=0
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Question 13:
Some ISPs currently apply 'fair use policies', which give them wide discretion to apply restrictions
on traffic generated by users whose usage they consider excessive. Do you consider that, in case of
contractual restrictions of data consumption, quantified data allowances (e.g. monthly caps of x
MB or GB) are more transparent for consumers than discretionary fair use clauses?
Ofcom is comfortable with either data allowances or fair use policies – the key is that
transparency in the application of such policies is vital if consumers are to be in a position to
exercise choice. Therefore, as long as ISPs provide consumers with clear and transparent
information about what these policies mean for their package and usage, we believe it is
best to let the market decide how ISPs should respond to usage they consider excessive.
Question 14:
a) When should the elements of information referred to in question 12 be provided to the
consumer by the ISP?
X before signing the contract
regularly updated during the contract period
X during the contract period if changes occur
X other
b) Which format (e.g. contract, general terms and conditions, separate and specific information,
other (please specify)) do you consider appropriate to communicate this information to consumers?
As stated in response to question 12, Ofcom’s 2011 statement explained how the approach
to transparency about traffic management requires careful judgement to ensure that all
necessary information is available, and in a form which consumers can understand.
Where consumers are entering into a long-term contract, for example, it is particularly
important that comprehensive information on broadband quality of service is available at the
point of sale. Whilst we recognise these complexities, our view is that any information
provided should include at least the following elements:

Speed information that indicates the level of service consumers can expect to
receive.

Information about the impact of any traffic management that is used on specific types
of services, such as reduced download speeds during peak times for P2P software.

Information on any specific services that are blocked, resulting in consumers being
unable to run the services and applications of their choice.
If there are material changes in this information once a consumer has purchased a service,
ISPs should provide an update as quickly as reasonably possible, probably via electronic
means (e-mail or SMS). If these have a significant impact on the service being purchased,
we also encourage the ISPs to provide the consumer with the option of switching to another
package or another service provider, and provide information to consumers as to how they
can exercise this choice. Where changes to terms and conditions are materially detrimental,
customers must be able to exit their contract free of penalty.
Question 16:
a) In order to promote transparency and consumer choice, do you consider it necessary that
comparable data on the Internet access provided by ISPs is collected and published by NRAs or
another independent organisation?
Yes
Please provide reasons for your answer. Also, do you think this information should be broken down
by geographic areas or different data plans?
In order to understand the performance of UK fixed broadband connections, we commission
research to identify the average download speeds they deliver, along with a number of other
metrics which determine the consumer experience of using broadband services. We do this
because it allows consumers to compare broadband performance across different providers,
technologies, geographies and time of day.
In addition, Ofcom has a duty under the 2010 Digital Economy Act to publish a regular
Infrastructure Report. In late 2012, an update to the Report will focus on the coverage and
data demands of fixed and mobile networks and, as mentioned in the answer to question 12,
will include a section on the status of the open Internet in the UK.
These data collection exercises have enabled Ofcom to provide consumers with an
interactive map (http://maps.ofcom.org.uk/broadband/) showing accurate information on
broadband take-up, speeds and availability.
We will continue our work to ensure that consumers have adequate information on the actual
fixed-line and mobile broadband speeds available to help them make informed choices when
selecting their broadband package.
Question 17:
a) Do you consider it necessary to regulate the labelling as "Internet access" of subscriptions that
restrict access to some Internet services, content or applications?
As noted in Ofcom’s November 2011 statement, if ISPs offer a service to consumers which
they describe as ‘Internet access’, we believe this creates an expectation that this service
will be unrestricted, enabling the consumer to access any service lawfully available on the
Internet. As a result, if a service does not provide full access to the Internet, we would not
expect it to be marketed as Internet access.
It is possible that providers may seek to market a restricted service as 'Internet access' by
caveating this with a description of the restrictions they have put in place. Consideration
needs to be given as to whether this practice is acceptable. We believe this will depend, at
least in part, on whether consumers would be able to make sufficiently informed decisions
based on such a formulation or whether, in practice, the risk of consumers being misled
about the service they are buying remains unacceptably high.
2.2 Switching
Question 18:
a) Please explain what barriers to switching ISPs still exist (if any) and how they can be overcome.
Please mention in your reply all direct and indirect factors dissuading consumers from switching
(e.g. obstacles linked to the terminal equipment, burden of proof regarding a possible breach of
contract, etc.)
Ofcom considers that in order for markets to operate effectively it is necessary for
consumers to be able to easily switch between providers. Consumers may experience
contractual barriers, interoperability barriers, informational barriers or process barriers to
switching.
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Ofcom research in 20106 found that, among inactive decision makers who agree that
changing provider ‘seems like too much hassle’, the key ‘hassle’ selected from the list
relates to the decision maker searching for information about potential providers; nominated
by over half (54%) of these consumers. The remaining aspects related more directly to the
process of switching; with around one third saying that they considered knowing the
necessary steps required to switch provider (34%) and needing to be in contact with more
than one provider to arrange the switch (29%) to be hassle. Contact with the current provider
featured as perceived hassle among inactive consumers with around one fifth nominating
having to tell their provider they want to cancel (22%) and getting their provider to give them
the necessary information to be able to switch (21%).
A variety of reasons for deciding not to switch were given by respondents who were
considering switching, and there were some differences across the services considered for
switching. Reasons relating to the switching process (18% fixed line voice, 16% mobile
phone) and the save and retention offer (17% bundle, 17% mobile phone) both play a role in
considerers deciding not to switch for some services, but these reasons are less likely to be
given by those considering switching pay TV (7% Process reasons, 4% Save and retention
offer). Those considering switching pay TV and mobile phone are more likely than those
considering other services to have decided not to switch due to availability (11% pay TV,
14% mobile phone). While the switching process and save activity play a role in considerers
deciding not to switch, inertia, no benefit in moving and contractual terms are also likely
barriers.
Below we provide detail on:
 Process barriers;
 Save activity;
 Contractual barriers;
 Interoperability barriers; and
 Information barriers.

Process barriers
One of Ofcom's annual plan priorities for 2012-13 is to develop and implement policies that
will improve the ease and efficiency of switching processes between communications
providers.
There are several problems with current switching processes which we think have
contributed to fixed voice and broadband consumers delivered over the Openreach copper
network either perceiving there will be difficulties if they switch, or having experienced
difficulties when they switched – both of which may deter consumers from switching.
Multiple processes
The use of multiple switching processes rather than a single process means there is:
a) a lack of clarity for consumers since the switching process to be followed depends on
things that are invisible to the consumer, and
b) increased hassle for consumers (e.g. following multiple processes simultaneously
when switching a bundle, additional time spent speaking to providers, additional
contact points with providers).
This is likely to worsen in the future with the increasing trend towards bundling, more
consumers switching complete bundles and as the bundles offered become more complex.
Ofcom research has found that consumers perceive that there is greater "hassle" in
switching ISP when the broadband service is bundled with other services.
6
http://stakeholders.ofcom.org.uk/binaries/consultations/consumer-switching/annexes/switching-bundling.pdf
Varying and unnecessary switching costs/hassle
While consumers will always incur some level of switching costs when they switch provider
(searching for information etc) we consider there are areas that may result in increased and
unnecessary switching costs for the consumer.
The evidence suggests that different levels of hassle are associated with the different
switching processes. Our research suggests a relatively greater level of hassle associated
with the Migrations Authorisation Code (MAC) process and a significant minority of switchers
find the MAC process difficult. Consumers indicate hassle associated with difficulty getting
through and getting information from the losing provider, having to inform the losing provider,
and arranging for stop and start times. Furthermore, our broadband consumer research in
2011 found that 6% of broadband considerers said they dropped out of the process due to
the hassle of getting the MAC. A losing provider can also discourage a consumer from
switching by making a reactive save offer.
The MAC process also requires the consumer to contact both the Losing Provider (LP) and
Gaining Provider (GP) to start the switching process so the number of touch points in the
formal switching process is higher. We believe this increases the time and hassle involved
in switching and also affects consumer perceptions of the hassle involved in the process and
may deter some from actively thinking about switching provider.
We believe the current MAC process result in considerable harm and unnecessary hassle
for consumers and there is a need for change to deliver better consumer outcomes.
Back end deficiencies
Industry-agreed back-end switching processes are intended to ensure continuity of service
when the consumer is switching providers. If followed, the consumer’s experience of
switching can be smooth and efficient. Some providers do not follow these agreed processes
which can mean consumers are asked to ‘cease’ their existing service and start a ‘new
provide’ with their new provider – this approach is burdensome to the consumer (e.g.
connection and cease charges, more hassle and potential loss of telephone number and/or
service). In other cases, consumers are sometimes asked to cease and have a new provide
because of deficiencies in processes which allows providers to validate assets appropriately.
Research suggests that 54% of switches that went through a Cease & Reprovide process
should have gone through an industry-agreed process.
Furthermore, some providers cannot easily cope with switching more than one service
simultaneously – this means they sequentially switch services in a bundle with around one in
five broadband switchers losing their service for an average of one week. In Ofcom’s
research into the Business Consumer Experience7, 16% of those who considered switching
but did not switch said the process was too complicated and 8% said they were concerned
about loss of service during switching. As with fixed-line users, lack of time and
complications in the process were among the most commonly cited reasons for considering
but not ultimately switching supplier. However a minority (8%) of internet and data users
were so concerned about losing service during the switching process that they decided not
to go ahead.
In addition to process barriers, there are of course many other barriers to switching ISPs. At
a high level, they can be categorised as follows:
7
http://stakeholders.ofcom.org.uk/binaries/research/consumer-experience/bce.pdf
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
Save activity
ISPs often offer better deals to consumers when they consider that the consumer is likely to
switch provider. In general, save (or retention) activity is a characteristic of a well functioning
market. However, in the case of "reactive save", i.e. the save activity which follows when a
consumer is required to contact an ISP indicating that they are going to change provider,
there is the potential for this process to disincentivise switching in a way which has a
detrimental effect on competition. Consumers are saved by their provider and across the
market as a whole this can have the impact that:
a) Entry is deterred as the acquisition costs for entrants are increased. This is because
incumbent providers only need to offer their most competitive deals to consumers
who are looking to switch away from them (whilst maintaining higher prices for
inactive customers) whereas entrants must offer competitive deals to all customers.
b) There is a problem with adverse selection where we believe providers have an
incentive to make save offers only to the most valuable customers. This also deters
entry as potential new providers will acquire a disproportionate amount of low value
consumers.
c) Switching regimes which require customers to contact their provider before switching
provider exacerbate these issues as ISPs face less pressure to maintain competitive
prices for all their customers, as they have the opportunity to make a counteroffer to
each and every customer that wishes to leave them.

Contractual barriers
These exist when consumers cannot change provider without paying a significant
termination charge. It is common for new customers for broadband services to sign up for a
minimum contract length. In the UK this is typically 12 or 18 months. This contractual
commitment may be driven by the need for the ISP to recoup installation costs or the supply
of consumer equipment, such as routers. As such, consumers receive benefits in return for
their contractual commitment. However, the role of regulators is to ensure that consumers
are aware of the commitment, that termination charges are proportionate8, and that contract
lengths are not detrimental to effective competition.
Other contractual barriers in the UK in the past include automatically renewing contracts,
whereby if a consumer does not terminate a contract within a certain period that contract
automatically renews, preventing the consumer from exiting without paying a termination fee
until the end of the renewed contract (typically after 12 months). Ofcom introduced regulation
which has meant that from 31 December 2011 these automatically renewing (or "rollover")
contracts are banned in the UK.

Interoperability barriers
There may be barriers to switching when there are restrictions as to how consumers can
access, share and create content acquired or generated across multiple devices and
networks, and when there are restrictions preventing content acquired or generated from
8
Ofcom has published sector specific guidance which sets out Ofcom’s view of the law and what
communications providers have to do to meet their obligations under the Regulations to ensure that additional
charges are fair and transparent. The Guidance is intended to help ISPs and other Communications Providers
meet the requirements of the Regulations, as well as to assist Ofcom and any other bodies which have powers to
enforce the Regulations. It complements OFT guidance on the Regulations. The Guidance focuses principally on
contract terms which provide for the payment by the consumer of additional charges, default charges, minimum
contract periods and notice periods, and contract terms which may lead to additional charges being incurred.”
(The “Guidance” can be found at
http://stakeholders.ofcom.org.uk/binaries/consultations/addcharges/statement/Guidance.pdf)
one device, platform or ecosystem being moved to another. These issues are likely to
increase as Internet service provision is increasingly bundled with content services.

Informational barriers
Lack of clear and easily accessible information on how to change provider may limit
switching. Similarly, switching may be constrained if consumers are unable to effectively
compare providers.
Since 2006 Ofcom has accredited seven websites offering price comparison calculators.
The Ofcom Price Accreditation Scheme provides quality assurance that the calculations of
price comparisons of fixed line, mobile, broadband and digital television services offered by
accredited companies are accessible, accurate, up to date, transparent and comprehensive.
The price accreditation scheme aims to give consumers a level of confidence and
reassurance in markets where finding the best price for communications services can be an
often confusing and sometimes daunting experience.
b) How should an ISP inform consumers of changes to their packages?
Under Article 20 of the Universal Service Directive (USD), Ofcom has the power to specify
the form in which notifications of changes to the contract are to be made. At present, we
consider that industry should decide in the first instance how best such notifications of
contract changes should be made and therefore, we have not set out specific notification
requirements.
That said, Ofcom considers that notifications will have to at least be in a form which
subscribers can reasonably be expected to read and expect ISPs and other communications
providers to actively communicate any proposed modifications to their customers.
Notifications should furthermore be expressed in plain, intelligible language and be set out
with due prominence.
Letters and emails (if that is the means of communication chosen by the subscriber) are the
most obvious examples of notifications. Other printed material, such as pamphlets or
magazines, may be used, but whether this is deemed sufficient will depend on how
transparent it is made to the subscriber upfront that such publications may contain important
information. Not all customers read pamphlets or magazines sent by their ISP. In addition,
we do not consider that a notification which asks subscribers to regularly check their ISP’s
website for possible changes to their contract is acceptable.
c) What actions by an ISP would constitute a breach of contract or modifications to the
contractual conditions which would enable a consumer to be released from a contract?

Breach of contract
If an ISP fails to adhere to the terms of a contract, a subscriber may wish to pursue the ISP
for breach of contract through the courts system. Alternatively, if the subscriber is a
consumer or small business customer, they may pursue an ISP for breach of contract
through an Alternative Dispute Resolution (ADR) scheme.
(In the UK, ISPs are required to be a member of one of the two ADR schemes (Ombudsman
Services: Communications and Communications and Internet Services Adjudication Scheme
(CISAS). The ADR schemes acts an independent middleman between the service provider
13
and the customer when an initial complaint cannot be resolved. The ADR scheme will
consider the complaint and come to a decision that the ISP must abide by).

Modifications to the contractual condition which would enable a consumer to be
released from a contract
Ofcom’s General Condition 9.6 (GC9.6) states that:
The Communications Provider shall:
(a) give its Subscribers adequate notice not shorter than one month of any
modifications likely to be of material detriment to that Subscriber;
(b) allow its Subscribers to withdraw from their contract without penalty upon such
notice; and
(c) at the same time as giving the notice in condition 9.6(a) above, shall inform the
Subscriber of its ability to terminate the contract if the proposed modification is not
acceptable to the Subscriber.
Therefore, if an ISP makes modifications to their contractual conditions they must comply
with the requirements in GC9.6 and must give one month’s notice of any modification that is
likely to be of material detriment to the subscriber (consumers and business customers) and
inform them of their right to terminate without penalty.
In addition, the Unfair Terms in Consumer Contracts Regulations (the “UTCCRs”) set out the
basis on which a contractual term may be considered unfair. The UTCCRs apply to contracts
between ISPs and consumers. A term in a consumer contract allowing the ISP to make
unilateral changes to that contract may be unfair under the UTCCRs if, contrary to the
requirement of good faith, it causes a significant imbalance in the parties’ rights and
obligations to the detriment of the consumer. If a contract is to be balanced, each party
should be sure of getting what they were promised in exchange for providing the
‘consideration’ they agreed to provide. If a term is found to be unfair, then it is not legally
binding on the consumer.
d) Should customers be able to easily opt out from certain contractual restrictions (up to a
completely unrestricted offer) by the same operator?
This depends on the terms of the contract and whether restrictions are fair and whether they
have changed materially during the term of the contract. Consumers must be able to exit
contracts when changes to terms and conditions are made which are materially detrimental.
If they are purchasing a contract with restrictive terms, these restrictions must be fair or the
contract will be illegal. Restrictions should be transparent to consumers at the point of sale.
e) Do you think that a customer should be allowed to switch to another operator within a reduced
contract termination period in case his/her current operator does not at all offer an unrestricted
Internet access product or does not allow switching to such unrestricted offer?
This depends on whether the traffic management practices are made clear at point of sale.
If not, then it may be reasonable for an ISP to release consumers from their contracts. Also,
if restrictions are added during a contract term, we would expect this to trigger the ability for
consumers to exit their contract.
Question 19:
While there may be valid (technical) reasons why consumers do not always get the advertised
service speed or quality, should there be a limit on the discrepancy between advertised and actual
service parameters (e.g. speed)?
Ofcom considers that, as the broadband market continues to evolve, it is necessary that
broadband advertising allows consumers to make informed decisions while also allowing
advertisers to effectively communicate how their product compares to others in the market.
Ofcom’s research on actual broadband speeds and consumer attitudes to broadband
speeds support the need for a move away from advertising ‘up to’ headline speeds.
The advertising of broadband speeds is regulated by the UK Advertising Standards
Authority. In responding to the ASA’s 2011 review of broadband speeds advertising9, Ofcom
made the following recommendations:

A Typical Speed Range (TSR) representing the range of speeds actually achieved by
half of customers should be used when advertising broadband on the basis of
speeds.

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.

Advertisers should include a qualification alerting consumers to the fact that they can
confirm the likely speed that they will receive at the point of sale, and must also
explain in the body copy that actual speeds depend on line quality and distance from
the exchange.

Any reference to broadband speed in advertising (for example words such as “fast”,
“superfast”, “lightning”, etc) must be accompanied by a TSR, which should have at
least equal prominence to these words.

ISPs must be able to substantiate speed claims made by providing robust data which
is representative of the actual average speeds its customers receive.
In relation to the use of the term “unlimited” in broadband advertising, we recommend that
the use of the term unlimited is only permitted where the service in question has no usage
caps through a ‘fair usage policy’ or similar.
Question 20:
Pursuant to Article 30 (6) of the Universal Service Directive conditions and procedures for contract
termination shall not act as a disincentive against changing service providers. How could changing
of operators be facilitated? Please provide examples and explain your response.
Please refer to our response to Question 18 which covers our views on how barriers to
switching ISPs can be overcome. In summary - consumers should be able to switch between
providers without undue effort, disruption or anxiety.
Question 21:
How could the transparency of bundles (packages including telephony, Internet, TV) be improved
for consumers and how could switching be facilitated in the presence of bundles?
It is vital that switching processes are simple and consistent between providers and that
consumers have easy access to clear information about the processes involved in switching
multiple services. Research indicates that consumers taking bundled services perceive
9
http://stakeholders.ofcom.org.uk/binaries/research/telecoms-research/bbspeeds2011/response-to-asa.pdf
15
greater hassle in switching provider (paragraph 4.10 of Ofcom’s 2012 Switching
Consultation10)
Consumers switching to, from and between bundled services for fixed voice and broadband
may need to navigate both the Notification of Transfer (NoT) and MAC switching processes
simultaneously. This increases the complexity of the process and places an additional
burden on the consumer (i.e. it increases switching costs). It also means that any consumer
or competition problems caused by switching one service using one process may have an
impact on the other service that is being switched using the other process. If a process
provides a built-in opportunity for reactive save activity or is associated with higher switching
costs, which result in the consumer deciding not to go through with the switch for that
service, they may then also decide not to go through with switching the other service.
Switching bundles could be facilitated by ensuring:

There is a single switching process for all services within a bundle (whether a
consumer wishes to switch a single or multiple services within the bundle) i.e.
consumers do not have to navigate multiple processes simultaneously which can
increase complexity and place additional burden on the consumer.

Consumers should be able to switch their bundled services in parallel, rather than
sequentially which can result in a break in one or more of their services within the
bundle. Our consumer research in 2010 suggests at least one in ten switching a
bundle experienced an unwanted break with no service. Furthermore, around one in
seven switching a bundle experienced a period paying more than one company to
ensure continuity of service.
Question 22:
a) How important would be the benefits for end-users of improved transparency and facilitated
switching?
Very important
Important
Slightly important
Not important
Please explain your response:
As stated in our November 2011 statement, our approach to traffic management will
continue to rely primarily on there being effective competition amongst ISPs but this requires
that sufficient information is available to enable consumers to make the right purchasing
decisions; and that consumers are able to act on this information by switching providers
where appropriate.
For individual consumers, efficient switching processes result in lower barriers to changing
providers. This is because efficient processes limit the hassle involved in switching, making it
easier to move to a preferred provider (and consequently, for example, taking advantage of
lower prices/better service quality). Efficient switching processes are therefore likely to
increase consumers’ ability to take advantage of competitive choice in the market. Switching
processes also need to be robust to accommodate market developments such as increased
bundling of services and any future emergence of new technologies and services
10
http://stakeholders.ofcom.org.uk/binaries/consultations/switching-fixed-voice-broadband/summary/condoc.pdf
For efficient providers, efficient switching processes enable expansion within markets where
they already operate and/or successful entry into new markets. In this way, new/innovative
providers are able to challenge incumbents, winning consumers that might otherwise stick
with an existing service. With markets opened up to potential entry, providers have the
incentive to innovate and supply services which offer customers a clear improvement on
existing products. Conversely, inefficient switching processes discourage innovation and
market entry and also discourage consumers who would otherwise switch from doing so.
b) What would be the expected benefits in terms of innovation by new businesses (content or
applications) as a consequence of improved consumer choice and increased competition between
ISPs?
As stated in our November 2011 statement, the widespread availability of 'best-efforts'
access to the open Internet gives rise to the following key economic characteristics:

low barriers to entry, allowing innovators to create and distribute new services; e.g.
anyone who wants to can develop an app or create a website;

low transaction costs that enable a wider range of transactions; e.g. consumers
selling goods on eBay;

large addressable markets that allow new business models to develop; e.g. for the
provision of niche content, by giving suppliers access to a wider audience; and

near-instant access to content and services; e.g. downloading music, films or books.
These characteristics create a virtuous circle, in which all consumers and citizens are able to
access a wide range of services, whilst any service provider can exploit the large
addressable market and low barriers to entry intrinsic to the Internet to develop innovative
new applications, and to test demand.
3. IP interconnection issues
Interconnection arrangements between networks take the form of transit and peering agreements.
They have traditionally been based on the "best effort" principle. Disruptions of interconnection or
deterioration of interconnection service quality at the wholesale level could lead to a situation
where end-users and content providers cannot reach all destinations on the Internet. IP
interconnection is therefore relevant for this consultation.
Question 24:
a) In your view, are there any problems regarding IP interconnection arrangements (between
network operators, ISPs, transit providers and/or content providers) that could have an impact on
the quality of the best effort Internet?
No
Please explain your response
Ofcom agrees with the conclusions of the OECD report on Internet Traffic Exchange11 and
the draft BEREC report on the IP Interconnection market12: that the market continues to work
efficiently without any regulatory intervention.
11
http://search.oecd.org/officialdocuments/publicdisplaydocumentpdf/?co
te=DSTI/ICCP/CISP(2011)2/FINAL&docLanguage=En
12
http://berec.europa.eu/eng/document_register/subject_matter/berec/download/0/33-berec-draft-reportassessment-of-ip-inte_0.pdf
17
Given that the relationships between the actors in the IP value chain (Content and
Application providers, Internet Service Providers, CDNs, etc.) are continuing to change, it is
however appropriate for regulators and policy makers to monitor this market and
developments in it in order to ensure that the competitive dynamic remains healthy. In
particular, we would be concerned if emerging managed or enhanced quality services led to
less investment or deterioration over time in best efforts Internet services.
Ofcom basically sees three potential areas of concern in the IP Interconnection market:
 where the so-called ‘eyeball’ access ISPs become integrated with the transit
providers
 where there is little competition in the access ISP markets
 where upstream providers of content or services have market power and discriminate
between access providers unduly.
b) Are there any specific issues related to the vertical integration of ISPs and transit providers?
Yes
Please explain your response
The vertical integration of access ISPs and transit providers becomes a potential problem
when combined with a lack of sufficient competition in the retail ISP market. Normally an
upstream provider is able to reach a specific end-user via either transit or peering. The
relative ‘equivalence’ between two alternative routes to reach an end-user lies at the basis of
IP Interconnection markets working in an effective and efficient way. Vertical integration
between ISPs and transit providers risks reducing the effectiveness of this market
mechanism if the access provider is able to discriminate in favour of services carried over its
own upstream arm.
When the end-user ISP also is a main transit provider, it gives this market player more
leverage when negotiating interconnection with, for instance, Content and Application
Providers. This is of relatively little concern as long as there is sufficient competition in the
retail market, as end-users are able to switch to an end-user ISP which gives them a better
Quality of Experience. CAPs are able to mitigate the risks of this development through direct
peering or bypassing any attempt at restricting access to their content, or could attempt to
extract additional revenues through consolidation.
Question 25:
Direct peering, Content Delivery Networks (CDN) or Quality of Service Interconnection (between
ISPs and content providers) are being developed to propose an enhanced quality of service for
content providers and end users.
a) What role can they play in reducing the risk of network congestion?
While it is not up to regulators to decide which solution will work in the market place, the
concept of QoS Interconnection deserves some attention.
It has been technically possible for more than a decade to implement QoS interconnection
between networks but, from a commercial and management point of view, it has never been
seen as necessary or practical. Now, however, it is being proposed by some market
participants as a way forward to allow network operators to get more value out of their
networks, by ensuring end to end quality for services that are of particular value to users and
providers. While this has some resonance in policy terms, in practice the concept has yet to
become popular although, arguably, the widespread adoption of content provider-financed
CDN and caching server-based delivery could be viewed as a means to the same end.
The Internet interworking market - largely absent of regulatory intervention – has mostly
chosen the most efficient way to improve the Quality of Experience (QoE) of end-users:

CDNs offset the increased bandwidth needs by serving and caching frequently
accessed content closer to the end-user. The closer CDNs are located to the enduser the more immune they become to upstream network congestion.

Direct peering (paid or free) allows two parties who mutually exchange significant
amounts of traffic to have a more efficient/direct interconnection, thereby becoming
less reliant on transit providers to manage their traffic.
In addition, there are new techniques such as multicast or MBMS to be introduced to
forestall problems that may arise due to network congestion caused by parallel content-rich
service delivery.
b) What opportunities and threats do they constitute for:
(i) ISPs,
(ii) content providers,
(iii) transit providers and
(iv) end users?
While Ofcom considers that CDNs and direct peering are an effective market response to
the increases in bandwidth demand, QoS Interconnection does offer a potential alternative
but does not necessarily justify regulatory or policymaker intervention at this stage. If
problems do develop, we believe that they can be more efficiently solved by market players
themselves, with regulatory intervention only as a last resort.
c) Are there any barriers of a regulatory, technical or business nature that prevent market players
other than ISPs from playing a more important role in reducing the risk of network congestion?
No
At present, the market mechanisms work effectively. However, there is an information
asymmetry where tools for mitigating network congestion largely reside with those players
with extensive direct AS (Autonomous Systems) or BGP (Border Gateway Protocol)
interconnection. While Ofcom is not against introducing QoS Interconnection into the market,
it should certainly not be mandated by any regulator at this stage as there are alternative
operational and commercial mechanisms to ensure a good QoE for end-users.
4. Process
Question 26:
a) Do you consider that intervention by public authorities is necessary at this stage?
No
Question 27:
a) Have you made use of the dispute resolution powers under the Framework Directive in relation
to a dispute about traffic management practices? (See in particular Article 20 of Directive
2002/21/EC (Framework Directive) which allows either party to request a binding decision by the
NRA to resolve a dispute within the shortest possible time frame and normally within four months).
No
b) Have you also made use of these dispute resolution powers also in relation to disputes between
an ISP and a content provider?
No
19
Question 28:
Do you consider that regulators should monitor interconnection agreements between providers?
Yes
Question 29:
Under article 22(3) USD NRAs have the power to set minimum quality of service requirements on
undertakings providing public communications networks. In a scenario where in a given Member
State no unrestricted offer is available (for instance because all operators actually block VoIP), do
you consider that the "minimum quality of service tool" should be applied by the NRA to require
operators to provide certain unrestricted offers?
Yes