Ofcom’s response to the Government's ‘Growth Letter’ hopes to convince them that it’s playing its part, but warns that its actual impact may be hard to measure
Highlighting previous track record of support for investment, competition and consumers
On 15 January 2025, Ofcom delivered to the Prime Minister, the Chancellor, and Secretary of State its response to a Christmas Eve letter from the Government asking Ofcom (and other sectoral regulators) how it is contributing to economic growth across the UK and where it could go further. In a surprise development, the equivalent response from the Competition and Markets Authority (CMA) led to a swift structural change, with Marcus Bokkerink replaced as Chair by former Amazon executive Doug Gurr, albeit on an interim basis. A similar situation is not currently expected to befall Ofcom, with Dame Melanie Dawes (CEO, Ofcom) stating at the regulator’s plan of work event on 21 January that it has always been a “pro-growth regulator” and that its past, current and future activities align nicely with the Government’s priorities. These comments mirror Ofcom’s response, where it states a belief that good regulation and economic growth go hand in hand, and that furthering the interests of citizens and consumers by having regard to investment and innovation – in addition to promoting competition – is its central duty under the Communications Act 2003. Dawes and Lord Grade (Chair, Ofcom), the response’s signatories, seem keen to stress up front the work Ofcom has done over the past 20+ years to support growth while contending with “huge waves” of technological change. This includes opening up the residential broadband market to competition in the early 2000s, thereby tackling the “traditional monopoly power of BT” and enabling providers such as Sky and TalkTalk to offer new services and grow.
The regulator identifies five work areas for 2025/26 that will promote growth and innovation, but adds a caveat
Looking ahead to its planned activities for the year ahead, Ofcom outlines five pieces of work that the regulator argues will directly support growth and innovation in the sectors it oversees, as well as across the wider economy, which it considers are therefore “in tune with” the Government’s recent industrial strategy:
Underpinning continued investment in fibre: Ofcom will finalise the second half of its 10-year framework for the economic regulation of fixed telecoms (i.e. the Telecoms Access Review), aiming to maintain stability and investment incentives;
Releasing valuable spectrum for innovation and growth: In response to market changes, Ofcom will expand spectrum allocations for space and satellite technology, and provide opportunities for private networks through high capacity mmWave, while supporting the mobile industry’s deployment of advanced 5G and 6G;
Implementing provisions of the Media Act 2024: This will update the UK’s regulatory framework to create a more level playing field between public service broadcasters (PSBs) and global streaming platforms. In the summer, Ofcom will conclude a review of the future of PSBs, outlining necessary policy reforms;
Tailoring regulation to small businesses: Ofcom has co-developed and tested a Digital Support Service that provides interactive guidance to help organisations, particularly SMEs, startups and community/voluntary services, understand and implement the Online Safety Act 2023, while moderating costs of compliance. The first phase of this service will launch in beta by the end of January 2025; and
Responding to technological and market developments and supporting innovation: Building on the creation of the Digital Regulation Cooperation Forum (DRCF) to improve inter-regulator collaboration, Ofcom is currently trialling a new spectrum licensing regime, granting organisations temporary access so they can test technical solutions before they launch commercially.
Ofcom sounds a note of caution, however, considering that it can be very difficult to quantify the specific impacts of its work, which is to support private sector decision-making. The regulator adds that it has a strong internal evaluation programme led and would be happy to discuss with the Government how this operates, and the main success measures that it tracks and monitors.
Government leadership is needed to drive further mobile network investment and greater adoption of fibre services
Reflecting on its ongoing partnership with the Government, Ofcom states that it welcomes the “close and collaborative relationship” it has with its sponsor department, DSIT, as well as with DCMS on media and broadcasting, and with DBT on the postal sector. Ofcom highlights two areas on which it is working with DSIT and DCMS to boost productivity and growth, but where it considers more could be achieved with government leadership:
Mobile investment: Government coordination may be needed to drive further investment in mobile infrastructure, particularly to ensure that areas with the greatest potential to increase productivity – and/or where the commercial case for investment is weaker – are given due priority. Ofcom cites mobile connectivity across the rail network as one example; and
Digital transition: Government coordination and ambition would be welcome in determining the future of TV distribution, which will be highly dependent on households’ future take-up of fibre, and encouraging the adoption of broadband by the 2.8m UK adults (5%) that remain offline that ultimately presents a barrier to economic growth and public service transformation.
As Ofcom awaits new Statements of Strategic Priorities (SSPs) for industries within its remit and looks to finalise its 2025/26 work programme, the regulator concludes that it would be happy to engage with the Government in these two or any other areas where it considers Ofcom’s work could support the growth and health of the UK economy.
