Ofcom today probably enjoyed hearing Viviane Reding’s endorsement of the regulator’s functional separation of British Telecom. Most of the news in the UK about broadband also seems good. LLU numbers are up, etc. Indeed, most of the press and TV coverage of Ofcom’s recent Communications Market Report was a PR dream: The headlines Ofcom wanted the public to see where duly repeated by everyone — including me — that had only a bit of time to read the report online.

That’s not to say Ofcom doesn’t deserve credit for the report and many of the underlying marketplace conditions the report documents. They do … but reading some sections of the report in-depth, I get the uneasy feeling that — at least with respect to broadband — Ofcom is in danger of departing from its role as an independent, critical regulator.

Consumers Get A Better Deal - In Theory. So, let’s briefly examine the portion of the report that relates to broadband. Section 4.1.6 of the report contains a sub-heading that should make anyone skeptical. It states that ‘broadband headline speeds double in 2006′. Ofcom go on to report that ‘UK broadband consumers are therefore, on average, getting a better deal in terms of the cost and the headline up to xMbits/s speed of their service.’ (emphasis in original)

What is meant by this term ‘headline speeds’? Ofcom have a definition that basically says it means ‘theoretical maximum’ speed. But it really just means — I assume — ‘advertised speeds’. So, providers of broadband services doubled their advertising claims in 2006. Or if I were being more charitable, I guess I would concede that it means that broadband providers have reported to Ofcom that they have installed equipment in exchanges that — only in theory — could result in doubled speeds on average. Ofcom has not tested whether the underlying speeds that consumers actually experience have doubled. So why are we told we are getting a better deal?

Whatever the case may be, thousands upon thousands of empirical tests have shown that broadband headline speeds are misleading. I checked my speed this morning and it tested at 10 percent of the headline speed. When Ofcom therefore use these industry-inflated figures — even with the disclaimers — it legitimises this misleading practice.

The OECD Broadband Report Is Wrong. On page 268 of the report, Ofcom take aim at the OECD’s recent report that placed the UK 16th in a league table of broadband prices per mbits/s. I think Ofcom make some fair points here… but it looks too defensive, as if the regulator’s main point is not to deal with the bad news, but rather to make it go away. Ofcom uses a variety of strategies to discredit the OECD report, but mainly relies on three things: (i) UK consumers purchase broadband in bundles making it free (depressing that Ofcom would even use that term) or discounted; (ii) lack of FTTH investment means the UK scores poorly compared to Japan (that’s the whole point, right?); and (iii) using cost per mbit/s is not appropriate because UK consumers don’t care that much about speed.

Ugghh. Listen, I’m sure the OECD report has its methodological flaws, but Ofcom’s critique seems odd because it comes from a regulator that uses headline speeds as a measurement tool.

Overall. Ofcom of course never reach a point in the report where their credibility is called into question — they take care to insert relevant disclaimers about broadband speeds and FTTH investment. But I’d nevertheless still like to see Ofcom become more independent and critical on the issue of broadband. Back in April, I was critical of Ofcom’s assessment of next generation broadband investment in the UK. So, I think the latest Communications Market Report continues this trend where Ofcom seemingly do not want to deliver bad news on broadband. That’s not to say there is not good news to report as well — there clearly is — but Ofcom should be just as eager to deliver bad news as it is eager to deliver the good news.

I think the problem with broadband is that Ofcom does not have enough data to deliver what is likely the bad news — actual consumer download speeds are far far below the headline speeds. You cannot manage what you do not measure: Ofcom should undertake some testing and tell the public the true state of broadband in the UK. And leave the headlines for someone else…