OFCOM, the Government's proposed super regulator for the TV and telecommunications industry, has had a poor press ever since the idea was first conceived, and it's not hard to see why. What's proposed is to fold five, or possibly six, existing regulators covering various aspects of content and economic regulation in TV, radio, advertising and telecommunications into a single all-encompassing body.
The idea has a certain eloquence about it which will appeal to those keen on streamlined government, but otherwise it's hard to see the point. The test has got to be whether regulation is improved by combining all these functions into one amorphous mass and the answer has got to be that it seems unlikely. Oblivious to criticism, the Government has none the less decided to forge ahead regardless with a "paving bill" for Ofcom's creation.
The Government's last big experiment in super regulation – the Financial Services Authority – has proved an undoubted success, and much of the same thinking lies behind the creation of Ofcom. As with financial services, media regulation needs modernising. There's also a superficial similarity with financial services in that the borderlines between previously distinct industries and services are becoming increasingly blurred. Media is converging with telecommunications just as banking has converged with capital market trading. But that's where the comparison stops.
Regulation of TV, radio and film content sits extremely uneasily alongside economic regulation of these industries and might in certain circumstances even come into direct conflict with it. Furthermore there is nothing that obviously links the economic regulation of telecommunications, which these days is mainly about the terms and conditions surrounding network access, with the decision on whether a particular broadcaster is fit and proper to deserve a terrestrial TV licence or what he should be required to pay for that licence.
As for the competition issues that surround these industries, what makes them so different that they cannot be dealt with like all other industries by the Office of Fair Trading and the Competition Commission?
No, the real problem with media regulation in Britain is nothing to do with its fragmented nature, but that it is a policy and political quagmire, which this Government, like all its predecessors, shows very little sign of escaping. Rather the reverse. The Government is delaying for yet another year any meaningful reform of broadcasting and cross-media ownership rules while it continues to dither this way and that.
The most logical solution is to make media and telecommunications subject to ordinary competition law, but the Government won't do that if it means interfering unduly with either the BBC or Rupert Murdoch's News Corp, both of which represent unfair competition, though for very different reasons. As things stand, cross-media ownership is banned beyond a certain size, but the whole industry is none the less riddled with anomalies and anti-competitive practice.
It's a terrible mess, and the chances of it being sorted out any time soon look to be about zero. Heaven forbid that telecommunications regulation, which has generally been rather good since privatisation of BT, should get tarred with the same brush as the confusion and fuzzy thinking that surrounds the Government's approach to the media.
Marconi's attempt to rebase its executive and staff share option scheme is turning into a public relations disaster. This is not so much because of the rebasing itself, disgraceful though some shareholders find it. The rebasing is fast becoming a largely pointless exercise anyway. The Marconi share price is receding with such speed that even the rebased option level of £4 a share is now so far underwater that it's scarcely worth having.
No, the real problem is that the episode has provided investors with a focal point for growing dissatisfaction with Marconi more generally. Up until recently, the relentless decline in the Marconi share price was regarded as just one of those things. Management couldn't be held responsible for the American slowdown, or for the sudden shift in sentiment away from New Economy stocks back to Old ones.
That view is now being challenged. Was it really sensible for Marconi to divest itself so swiftly of Lord Weinstock's legacy and then so expensively to invest the proceeds at the top of the market in the glamour industry of internet routers and other cutting-edge telecommunications equipment?
With the benefit of hindsight, it plainly wasn't. Marconi shares are now worth less than they were when Lord Weinstock reigned supreme at the former GEC. For the time being, the strategy stands condemned as flawed and, though things are not yet so bad that Lord Simpson, the chief executive, and John Mayo, the finance director, will be forced to fall on their swords, it was perhaps unwise of them to highlight their own failings by asking for their share options to be rebased.
When a company so exposes itself to criticism on the particular, it tends to get it in the neck on virtually everything and so it is proving with Marconi. Everyone else in these industries reports quarterly, while the rapid decline in the market is prompting regular trading updates from most. Not so for Marconi, which has stuck to the old format of half-year reports. It was only through gritted teeth that Mr Mayo recently bowed to market pressure and gave a trading update.
Earnings revisions from the company's house broker, UBS Warburg, are presumed by traders to be well informed, wrongly we must hope, but most of the time the City is left in the dark and assumes the worst. When a company gets on to a downer as bad as this one, it's hard to break out of. But Lord Simpson must find a way of turning the tide somehow or other.
Royal & Sun Alliance to the rescue, or let's hope so anyway. Royal was last night in negotiations with PricewaterhouseCoopers to take on approximately three-quarters of Independent Insurance's 600,000 policies. Details were thin on the ground, but it looks as though Royal is going to be good about it and honour unpaid claims made before the company went belly up. For the majority of policyholders, then, it looks like a happy ending after all, or at least an ending which makes no difference to them one way or the other.
None of this should diminish the enormity of what's occurred, which was referred to by one of the liquidators yesterday as the worst collapse since Robert Maxwell. Earlier on we described the Financial Services Authority as an undoubted success, but it's fair to say that the Independent Insurance débâcle, coming so soon after Equitable Life, has not shown the FSA in its best light.
There's probably a large amount of rewriting of history going on, but in the City everyone now claims to have known there was a bad smell about Independent Insurance from well before the balloon went up. Everyone, that is, apart from the City's shining new regulator, the FSA, which obviously has a lot of explaining to do.