Ofcom has announced a new programme of work regarding digital communications markets.

In particular, it has now formally launched a market study under the Enterprise Act 2002 into the UK’s £15 billion cloud services market. It seeks feedback about how the market is developing and the nature of competition, particularly in cloud infrastructure services and cloud ecosystems.

Ofcom says that cloud computing is a huge and fast-growing market, which uses remote servers to offer services such as software, storage and computing power. It has become an essential part of how products are delivered to telecoms users, as well as viewers and listeners of TV, radio and audio content.

Ofcom's study will formally assess how well this market is working and the strength of competition in cloud services generally.  It will also consider any market features that might limit innovation and growth in this sector by making it difficult for other companies to enter the market and expand their share. In addition, because the cloud sector is still evolving, Ofcom will look at how the market is working today and how it expects it to develop in the future.  It aims to identify any potential competition concerns early to prevent them becoming embedded as the market matures.

If a market is not working well, it can have a negative impact on businesses and ultimately consumers, through higher prices, lower service quality and reduced innovation. In these circumstances, Ofcom can take one or more of the following steps:

  • make recommendations to government to change regulations or policy;
  • take competition or consumer protection enforcement action;
  • make a market investigation reference to the CMA; or
  • accept undertakings in lieu of making a market investigation reference.

Ofcom's call for inputs ends on 3 November 2022. It plans to consult on its interim findings and publish a final report – including any concerns or proposed recommendations – within twelve months.

Over the next year, Ofcom will also start a broader programme of work to examine other digital markets, including online personal communication apps and devices for accessing audiovisual content. It is interested in how new messaging and video conferencing services are affecting the role of traditional calling and messaging, and how competition and innovation in these markets may evolve over the coming years. It also wants to understand whether any limitations on their ability to interact with each other raises potential concerns.

Another future area of focus for Ofcom is the nature and intensity of competition among digital personal assistants and audiovisual "gateways" – such as connected televisions and smart speakers – through which people access traditional TV and radio, as well as online content. It will explore competition dynamics in this sector and identify whether there are any potential areas that require more formal examination. Its work will include analysis of consumer behaviour, future developments, as well as the role and business models of major player and their bargaining power with content providers.

Organisations working in this space may wish to respond to the call for inputs and should watch for more developments.