Rival ISPs Attack BT’s “network monopoly position” and Demand Change

The UK Competitive Telecommunications Association, which aims to foster a more competitive fixed telecommunications market and counts most of BT’s major rivals among its ranks (e.g. Virgin Media, TalkTalk, Vodafone, Sky Broadband etc.), has called on Ofcom to improve competition by among other things opening up BT’s passive infrastructure to all providers and launching another market review; although one is already underway.

According to the UKCTA, more than 80% of companies are unable to obtain business phone and broadband services based on competitive access for anything other than “residential style broadband products” (e.g. ADSL2+ etc.) and these businesses are thus said to “exist in something of a postcode lottery where access can be obtained in some towns and cities but not in others“. In particular the UKCTA noted that access speeds also tended to be higher in town centres than on business parks.

A separate YouGov study of 1,332 adults, which was commissioned by the UKCTA, claims that awareness of the BTOpenreach name is “generally high” but there are allegedly “much lower levels of awareness” of what Openreach actually does (no specific figures are given in the PR). Openreach is typically responsible for maintaining and upgrading BT’s national broadband and phone network across the United Kingdom.

The study notes how more than a quarter of business customers believe that the services available to them are restricted by Openreach and many refer to the lack of competition in the market. A majority of customers also blame their ISP and not Openreach when problems occur with their service, which is an issue that was partly touch on by a recent episode of the BBC’s Watchdog TV show (here).

UKCTA’s Domhnall Dods said:

“Thirty years ago we saw the start of a new era in the UK telecommunications market. Although increased competition now helps manage the issues of pricing and consumer protection in today’s broadband market, the greater issue of BT’s market dominance remains. We believe Ofcom and its new CEO should review its agenda and target the root causes of this remaining market power, including the way the core BT platform is regulated. The UK’s consumers and businesses cannot afford for Ofcom to ignore the problems identified in these reports.”

Overall the UKCTA said they wanted the telecoms regulator, Ofcom, to re-focus on improving competition and in order to help guide them in that endeavour the group has also issued a new report (.PDF 8MB) to highlight some of the improvements that could be made. Generally these boil down to three specific areas that the UKCTA want to see reviewed / changed.

The UKCTA’s Three Primary Requests

• Rebalance focus of Ofcom to prioritise the promotion of competition.

The regulator initially focused on forcing BT to reduce prices through a series of price caps. A period of promoting competition followed, which drove a range of innovations now seen as “the norm” by consumers and businesses alike. Ofcom’s focus has now moved from competition to intrusive sector-specific consumer protection measures, often duplicating general consumer protection measures. UKCTA calls on Ofcom to return its focus to championing competition, which will drive innovation and enhance choice and the protection of consumers.

• Improved service from Openreach will improve service quality and innovation.

Openreach, has control of the basic infrastructure which most other providers rely on to deliver their services. However, it has consistently failed to meet its own standards on delivery times, fault rates and fault repair times. This failure affects thousands of end-users of UK broadband and telephony services on a daily basis, and gives rise to substantial consumer detriment. The SPC reports outline six steps which are still needed to ensure a better service from Openreach, mitigating the effect of its effective monopoly position and creating a more competitive market which encourages innovation and quality service.

• Open up BT’s passive infrastructure to all providers.

While policymakers and regulator have focused on residential users, the needs of businesses have been left behind, with domestic areas often getting a better broadband service than their local business parks. As long as BT has control of the basic infrastructure, competition and innovation will be stifled. UKCTA calls on Ofcom to try and replicate its successful introduction of greater competition into the domestic market by allowing all providers to have regulated access to BT’s passive infrastructure.

It’s interesting to note that many of the gripes that the UKCTA raises have already been handled as part of Ofcom’s recent Fixed Access Market Reviews (FAMR), which among other things resulted in Ofcom imposing new Quality of Service requirements upon Openreach and that is a big part of the reason why they’ve recently had to hire several thousand additional engineers.

But the report suggests that Ofcom should have gone much further, such as by publishing more data about Openreach complaints, conducting another review of Openreach’s existing products to ensure fair prices and a request for Ofcom to make a commitment on using enforcement powers (including penalties) if Openreach falls short of their targets.

The UKCTA also wants greater control to prevent Openreach declaring a status of Matters Beyond Our Reasonable Control (MBORC) when not necessary. This is often used after a storm or flooding and reflects Openreach’s need to focus engineers on repairs over new provisions, which can impact their performance; allowances in the targets are made for this. Finally, the UKCTA wants Ofcom to set “clear and explicit guidance” on what constitutes a fair and reasonable Service Level Agreement (SLA) and Service Level Guarantee (SLG).

Elsewhere the demand that BT open up their passive infrastructure to all ISPs is already the subject of Ofcom’s latest Business Connectivity Market Review 2016 (here), although it should be said that the regulators previous reviews have tended to reject such ideas. Meanwhile BT itself has always rejected these demands as “unnecessary, intrusive and bad for customers“. In a canned statement a spokesperson for BT argued today that there is no need for change because the UK already has a “vibrant wholesale business connectivity market, with strong competition and innovation amongst a large number of providers.”

BT has also warned that some of the proposed changes would increase their costs, which would perhaps inevitably need to be passed on to ISPs and then consumers. Whether or not those increased costs would be outweighed by the benefit of a higher quality service and greater competition is a matter for Ofcom to judge.