Cloudnet Welcomes Ofcom Control on BT 8/12/2010
Posted by Cloud Net on Tue, Dec 07, 2010 @ 02:18 PM
Ofcom intends to place price controls on BT in broadband markets where the telecoms company has a near monopoly.
The controls are detailed in Ofcom's latest "Review of the Wholesale Broadband Access Markets", which discusses competition and markets.
The document says "Competition has driven the success of the current generation of broadband services. The result has been greater choice, innovation, lower prices and high levels of broadband adoption. We have found that there is effective competition in almost 80 per cent of the UK.
However, in just over one-fifth of the UK – covered by what we have called Market 1 and Market 2 – we have concluded that there is not sufficient competition and so have had to imposed regulation."
Ofcom names Market 1 as an area in which BT is currently the only provider of wholesale broadband services whereas Market 2 is an area with two or three significant providers, but where BT still has market share of 50 per cent or more.
The report says "In Market 1 there is limited prospect in the near term of any wholesale competition, therefore, we are imposing general access and non-discrimination obligations on BT, together with a requirement that charges should be based on the costs of provision,"
BT will be subject to a wholesale price cap, to ensure it does not pass on excessive charges to consumers.
"These obligations will ensure that other providers have the opportunity to use wholesale products supplied by BT to compete effectively at the retail level," Ofcom says.
To obtain transparency, BT will also have to publish information on the services it provides in Market 1. In Market 2 areas, BT will also be subject to other access, non-discrimination and transparency obligations. However, owing to the constraint on pricing provided by there being other operators in these areas, BT will not see strict price regulation here. Details of the charge controls being imposed in Market 1 will be outlined in a separate consultation at a later date.
This is all good news for the British consumer and, for once, I have to applaud the work of the regulator. It will be interesting to see in practice what difference this will make.
David Hill
