Source · Select Committees · Public Accounts Committee
Recommendation 22
22
We asked the Department how it intended to protect consumers in areas with a single...
Conclusion
We asked the Department how it intended to protect consumers in areas with a single dominant supplier from being charged a lot more without proper competition. The Department told us that its contracts had price control provisions to ensure that internet providers cannot charge beyond what is reasonably comparable in that areas.59 The Department did agree that local monopolies were not a good thing but did not explain how price controls will work and told us that it had not yet decided how to define an area.60 56 C&AG’s Report, paras 3.18–3.20 57 Qq 19, 50 58 Qq 50–51 59 Q46 60 Qq 47–49 Improving Broadband 15
Government Response
Acknowledged
HM Government
Acknowledged
6: PAC conclusion: The Department cannot provide certainty to consumers that they will have a choice of internet provider or be protected from overcharging should they become tied to the sole supplier in an area. 6: PAC recommendation: In its Treasury Minute response to this report, the Department should set out how it plans to work with Ofcom, suppliers and industry bodies to ensure that all consumers will have a choice of service providers and are protected from overcharging, in particular where they become tied to a monopoly supplier. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2021 6.2 The department’s proposed contracts include an annual wholesale access price benchmarking requirement. Pricing is compared to the Ofcom regulated price and benchmarked against the department’s pricing database with only reasonable justifications allowed. Where pricing is deemed too high against market benchmarks, the department will require suppliers to revise pricing, ensuring consumers in areas benefiting from public subsidy will be protected from overcharging. 6.3 When scoring bids from suppliers for projects with support from public funding, there will be an evaluation of the quality of their Retail Service Providers (RSP), including the number of RSPs that will use the infrastructure built, product offering and pricing to end customers. In most commercial areas, there is significant competition at the retail level with a number of Internet Service Providers offering broadband services to consumers. 6.4 The government is also working with Ofcom to increase network competition and commercial investment in gigabit capable broadband. The Government’s analysis is that up to 80% of premises in the country are likely to be able to support two gigabit capable networks and that around a third of premises will be able to support three gigabit capable networks. If network monopolies do emerge in these more commercial areas, Ofcom has the regulatory powers to address them. 6.5 In addition, to help support retail competition over smaller networks, government is working with industry to facilitate standardisation and aggregation of operators’ wholesale networks to make them more attractive for retail internet service providers to offer their services on top of them.