The MT interview: Stephen Carter

Since taking on communications super-regulator Ofcom, he has quickly proved his skills as a pragmatic enabler - a watchdog who wants to deregulate.

by Andrew Davidson
Last Updated: 31 Aug 2010

Stephen Carter has an edge, they say. Sharp, decisive and intolerant of fools, he was the wonderboy of ad agency J Walter Thompson in the 1990s, before jumping ship in 2001 to join NTL, the collection of cable franchises with big ambitions and bigger debts.

That move became far tougher than anyone envisaged. Three years ago, he left with a large payoff and was plucked from the job-hunting queue to set up the Government's new media regulator, Ofcom, an amalgamation of five different authorities covering the broadcast arena. So far, it has been a success, winning plaudits for the way it has swiftly got down to business, though some are anxious at the power amassed and salaries paid. Carter himself - a brave choice, as NTL looked a disaster zone to outsiders - seems on the up again. Recent press coverage says he now has his sights set on a big job in a real business. He describes the speculation as 'unhelpful'.

But right now, on a clear afternoon in his steel-and-glass Thames-side office, he's in a pretty reasonable mood. 'Given we have messed you around, Andrew,' he says, settling at his desk, 'you take the time you want with this.'

Messed me around? He kept me waiting for 20 minutes but, in interview-land, that's pretty minor. Carter, however, is on full charm today - batting back the banter, using my name every five minutes, telling me slightly too often what perceptive questions I am asking, and speaking fast but eloquently on everything from the technical detail required in media legislation to the lack of things he spends his £400,000 salary on.

He also picks me up ever-so-nicely - no sharp ripostes here - on all the little misunderstandings I might have picked up from other journalists about him. Such as the idea that he is Britain's highest-paid public servant ...

'This is not working for Government, let's be clear about that - not that there is anything wrong with working for Government. This is an independent regulator, and we are largely paid by independent levy, and I am not appointed by Government, I am appointed by the board of Ofcom. The body is a creation of public policy, but one of the important things about it is that it is independent of political influence. That's a very important point.'

He smiles tightly. Carter does explication well - everything is kept simple, the arguments are logical, nothing techie or dull. Aged 42, with his oblong glasses and spikey hair, he looks more like a college lecturer than a business boss, but academic is not his style. Clipped and to the point, or brusquely meticulous when necessary, he has a mastery of his brief that, you imagine, is essential in an organisation that has to unpick minutiae with a regularity that would deaden the pulse of the rest of us.

And what's interesting about Ofcom is the speed with which he and his chairman Lord Currie - a real academic - have got it going. In telecoms, they've already pushed to reduce broadband prices by ensuring competitive access; in television, they've started to trace a road-map for the switchover from analogue to digital broadcasting. No sitting around thinking about options for five years.

For some, they are moving almost too fast. Should they have made it more academic in approach? 'Great question,' says Carter. 'You could make this an academic job, but we didn't, partly because I am not in the least bit academic.

And if you were to ask people here, one of the things they'd say is that I bring pragmatism, how things work in the real world and how they affect real people and real business, how we translate perfect analysis into the real world of implementation. Often, I think that's the difficult thing in public policy - how you bridge the two.'

It's an analysis that also strikes a chord with Currie, the Labour-friendly academic, the Dean of Cass Business School, who oversees Ofcom's board.

'We chose Stephen because he's a breath of fresh air,' says Currie on Carter's appointment. 'He had enormous experience of the communications industry and a fascination with public-policy issues. And he offered something new. There was never any doubt that the regulatory sector gene would be strong in Ofcom because we were taking a lot of people from existing regulators. Stephen introduced a different gene: he was results-driven.'

Pragmatism and speed of decision-making were Carter's trademarks in his rapid rise up JWT. Trained as a lawyer, but choosing a graduate traineeship in one of advertising's biggest firms instead, Carter learnt early that making your mind up was key in a business where choosing between good or bad ads can be a prolonged process. His contemporaries say he was also particularly skilled at finding a level with clients and colleagues - picking up on verbal tics and mannerisms and reflecting them back, setting people at ease, using language adeptly. That, combined with his love of business - the reason why he jumped out of advertising to join NTL - made him a clever choice to run a big regulator, where media coverage is constant.

Carter was lucky too. Unlike most regulators, he actually got to play a part in setting up the body he heads. 'One of the great things about it is that this' - he picks up a blank sheet of paper from his desk - 'is what we were offered. That comes along very rarely. There was a bill meandering through parliament but what the body looked like, what was its philosophy, how you interpret its role and responsibility, how to develop its presence in the mix of UK business and politics ... that was all a blank sheet of paper.'

The remit in the Communications Bill is actually inscribed on the wall in Ofcom's reception downstairs. The regulator will 'ensure the optimal use for the electro-magnetic spectrum; ensure that a wide range of electronic communications services - including high-speed data services - is available throughout the UK; ensure a wide range of TV and radio services of high quality and wide appeal, throughout the UK; maintain plurality in the provision of broadcasting; provide audiences with adequate protection against offensive and harmful material; and provide audiences with adequate protection against unfairness or unwarranted infringements of privacy'.

That's pretty broad. Carter says he got the regulator he wanted, with a bit of fudging. The remit doesn't include newspapers and is hazy on the BBC, for instance, having a say on some parts of the broadcaster's charter (spectrum pricing, production quotas) but not on others.

'It's slightly blurry,' he admits, 'but that is because when we were created, no-one had any idea what we'd be like, and handing over full regulation of the BBC to a body when no-one knew what it looked or smelt like ... well, that would have been a brave decision for a minister.'

Does he have a view about reining in the BBC empire? 'No, we don't, but we are the competition authority in the centre, and one of the reasons why Ofcom was created was the recognition that this is a fantastically important sector, and it's going to become more important: communications, technology, distribution, connectivity - these are going to be the roads and canals and railways of tomorrow. Creating a converged regulator that can make coherent economic regulation for that sector seemed sensible.

'We have tried from the very beginning to make as many of the markets we regulate as effectively competitive as possible. That is through aggressive deregulation,' he continues. 'And we have done that. We have aggressively deregulated the spectrum allocation - spectrum liberalisation, telecoms regulation and large chunks of traditional broadcasting - and the BBC fits into that.

'You want to have a healthy environment for the BBC, because that has substantial social and cultural benefits, but you don't want it to have completely free rein regardless of competition consequences, so you have to get that balance right. And we are, absolutely, an important part of that balance.'

When necessary, Carter does this broad-brush diplomacy as well as he does explication, but it's clear that he favours private sector over public, and that will mean preventing the BBC from unbalancing certain markets.

He has already reduced the fees paid for licences by ITV companies, and the regional programming obligations that go with those licences. And his reported response to the original Ofcom interview panel when asked why he wanted to be a regulator - 'I want to be a deregulator' - suggests that he may be more intent in freeing up the industry, rather than pegging it down.

That would fit in with the Government's aim, too: not to shackle what will be an important engine of growth for the UK economy. It's clearly why they appointed Currie to oversee Ofcom in the first place. As a former adviser to Guy Hands, the City financier, as well as to the Treasury, and with friends in adland, Currie seems to have signed off a more pro-business regulation style.

That's a change from the hard-nosed approach of some UK regulators in the past. Yet it's not laissez-faire - for good reason. In American telecommunications, for example, that approach led to a plethora of incompatible technical standards that left consumers in confusion.

Ofcom, it seems, is a Blairite middle way, led by a chairman and a chief executive who want to make things easier for business and consumer alike and ensure that as media and telecommunications converge, the UK is competitive internationally and commercially - within limits.

'They're trying to create something that is the best of all of these examples,' says 02's marketing director Russ Shaw, who worked with Carter at NTL. 'Something that's good for business but keeps the consumer in mind.'

Certainly, adland's fingerprints are all over Ofcom, and that may be no bad thing. Carter's communication skills, for instance, means he sells the regulator well. And he doesn't forget that his internal audience is as important as any external one. When I ask what Ofcom has done well so far, he cites inside first, outside second.

'I am proud of the body we have created. It works well, it is relatively lean - a lot leaner that what it replaced - and we are sensible and financially prudent in the way we spend other people's money. We have hired and retained very good people,' he continues, 'and already there is a sense of what an Ofcom person is like - professional, considered and internally collegiate.

We try to run an organisation where the idea or issue, or analysis and debate around that, is what wins out rather than corporate elbows or bullshit, and that culture is beginning to be recognised internally and externally.

'Outside, I think the changes we have made to the way in which the telecommunications market is regulated - the settlement we made with BT to set up a separate operating division called Openreach to allow competitive access at meaningful wholesale prices - that's a significant contribution to making our residential broadband and telecoms market far more effectively competitive. We've achieved in three years more than appeared to be done in the previous 20. But I emphasise the word "contribution".

'Then I would highlight a lot of the stuff we have done in broadcasting, the terms of trade between broadcasters and producers, redrawing the licence regime, the drive towards digital switchover and the creation of a roadmap to help move the country to 100% digital provision ...'

Some observers, though, are not convinced that Ofcom is a cheaper alternative to what went before. The new body has taken a headcount of 1,150 at five regulators down to 780. It spent £133 million in 2005-06, and is aiming for £129.5 million in 2006-07 - compared with the old regulators' combined running costs of £135 million (based on 2002-03 + RPI, figures supplied by Ofcom).

Yet how can it be prudent to be sitting in a prestige new development opposite the Financial Times on Southwark Bridge Road, with beautiful views of the Thames and City of London beyond? Surely a head office in Croydon or Stratford would have sent out a better message?

Carter bridles. 'We could have been in Croydon in a more expensive building, but it seemed to me to be better to be here in a cheaper building. These offices were empty. One of the virtues of setting up in early 2002 was that it was at the dip point in recession.'

He won't, however, reveal how much per square foot the glamorous new building costs. 'I am not sure that's in the public domain, nor do I think the landlord would thank me for revealing it. Let me put it another way: being here is not a huge driver of costs, and even if it were, we have made enough cost-savings in other areas of what we do to justify the expenditure.'

A more honest answer might be to admit that you need top digs if you are going to recruit top people. Carter, instead, reverts to a pinched steeliness that reminds you of his Scottish roots. He was born in Falkirk and educated in Edinburgh and Aberdeen, and you imagine that this granite-like resolve has been imbued with the surroundings.

The odd thing is that Carter - unlike his adland peer Adam Crozier, now CEO at the Post Office - carries not the smallest trace of Scottish accent, so his roots are pretty well covered over. His father worked for logistics giant Christian Salveson, and the family often came south, he explains.

'We spent my accent-forming years in London, before we went back north again,' he smiles. But he considers himself a Scotsman.

Born the middle child of three, Carter had intended to be a lawyer - his brother and sister both trained as accountants - but decided it was too expensive an option to pursue. 'I would have wanted to be a barrister, and I didn't have the financial wherewithal to do that. So I thought I'd come south and seek my fortune.'

Advertising seemed a more attractive opportunity. He was picked for JWT's graduate traineeship. 'I was one of the experiments,' he laughs, 'a trainee who wasn't from Oxbridge.'

The experiment worked. Carter was on his way up the ladder even before Martin Sorrell's WPP bought the famous old agency. By 1994, Carter, aged 30, was head of the UK agency. Those who worked with him then say he was very self-contained and very ambitious, a careful listener who quickly developed a 'clear and directional' style as he rose through the ranks.

'Stephen's skill was in seeing the agency as a business,' says Harry MacAuslan, now Leo Burnett's vice-chairman Europe, Middle East and Asia and an ex-JWT colleague. 'He set up things that were experimental; he was very interested in how we related as a media business. He also had a healthily confrontational relationship with senior management - he was his own man.'

At JWT, Carter worked closely with a range of clients, including Kellogg, Jaguar, Unilever, Merrill Lynch, Boots and the Daily Telegraph. He got his timing right, rising to the top between the recessions of 1991 and 2001, when business boomed. Then he was asked to go to New York, and decided that enough was enough.

'It wasn't what I wanted to do. I liked the hands-on running of the organisation, and my wife had a career and we had kids, so I didn't want to do it from the domestic point of view either. I was also keen to be a principal. As someone I once worked with put it pithily, in advertising you only have the power of proposition, not disposition.'

So he looked for a job at a media owner. He had two offers outside advertising.

One was the managing director's slot at cable company NTL, another client he'd worked closely with. 'They'd acquired a whole load of cable businesses, then bought Cable & Wireless's UK business, which itself was a collection of regional franchises. They offered me MD of UK and Ireland, which at the time of the brief was really about developing the marketing and content and customer service proposition. Actually, it turned out to be something quite different.'

In reality, it became a two-year period of intense operational restructuring as the company lurched into bankruptcy, hit by debt, over-expansion and the collapse of the equity markets. Carter spent more time firing than hiring, his career looking dead and buried along with NTL's reputation. He eventually left with a payoff rumoured to have topped £1.5 million - money that some tagged 'a reward for failure'.

Any regrets? 'You certainly learn who your friends are,' he nods.

Is he glad he took the job? 'I'm not sure I would use the word glad, but I would not be the person I am for good or bad now without the experience. It was intensive and challenging. Notwithstanding the shareholders who lost a lot of money, the business came out the other side intact and moving on and being developed by new management, and being developed well.'

And that payoff? Carter's eyes narrow when I ask if he regrets taking the money.

'I didn't take the money, Andrew, and I am not going to comment on it in detail, but I was paid a sum at the end of my contract, that contract had change of control on it, it was a two-year contract with certain contractual provisions in it and those provisions were honoured. Beyond that, I am not sure it is productive to comment.'

Those who watched him work through that gruelling time suspect he learnt as much there in two years as he ever did in a boom decade at JWT. 'It was incredibly demanding,' says 02's Shaw, another NTL veteran. 'You're on the front page of the FT every day, there are meetings with creditors and bankers and heavy analysis of where the company is going - it demands a lot of personal time and attention. I think it probably was a good thing for Stephen's understanding of himself as a leader.'

And now Carter has to decide what he does next. Currie, his chairman at Ofcom, has signed an extension to his own contract till 2009. That gives the impression that he will oversee any succession, if a new chief executive is needed. Carter looks slightly exasperated when I bring it up, implying that he's being backed into a corner by the press over this.

He has never said he wants to go.

'I am not looking for another job,' he insists. 'A journalist asked me what I would do next and I gave an honest answer: I think I will go back and work in another business. That's it.'

But it swiftly becomes self-fulfilling if all his employees think he's off. Others say he was in the running for a job at Trinity Mirror before Ofcom, but he won't comment on any offers made at the time.

So what does he do when he isn't working? 'I run and I read,' he says.

Media papers? 'Yeah, I reread the 1985 Peacock Report into BBC financing for light relief.' Just joking, he adds.

He lives in London's leafy Barnes with his wife, who works for a broadcast design business, and two children. 'My wife's an Aussie and one of the virtues of that is that she relishes the nearness of interesting places here. So we travel a lot too.'

And that's it. He could have talked for hours more, but there are photographs to be taken, and - let's be blunt - there is only so much about media regulation that you want to discuss at any one time.

One of his old chums told me that the interesting thing about Carter was that he wasn't super-brainy, but that he was quick and sharp - much more useful in the business context. He also likes being in control, and making a difference. And his career has been derailed, now it's back on track, so it'll be worth watching where he heads next. I'll go along with that.

FOUR CHALLENGES FACING CARTER

1. To encourage greater competition, choice and investment in broadband, digital television and digital radio services.

2. To continue deregulating the sector (and cutting costs) where choice, price-reduction and clear market information work better than the regulator.

3. To ensure protection for customers from technology scams and misleading information.

4. To take a leadership position internationally in this most global of industry sectors - and to continue to persuade talent to join, and remain at, Ofcom.

CARTER IN A MINUTE

1964: Born 12 February in Falkirk, Scotland. Educated at Aberdeen University (LLB Hons) and Harvard Business School

1994: Managing director and CEO, J Walter Thompson Company UK & Ireland

2000: Chief operating officer and managing director, NTL UK & Ireland

2003: CEO, Ofcom (Office of Communications).

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