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BT Agrees - Ofcoms Telecom’s Review

Posted: 23rd Jun, 2005 By: MarkJ
UPDATE: We've added a response from BT, including LLU price cut info. Ofcom has today published details of a new regulatory approach for the UK’s fixed line telecommunications market, which includes the agreement "in principle" by BT to fall in line and open up its network to true equality of access.

In short, BT has avoided a full-scale Enterprise Act investigation that would have lead to its break up. Sadly some industry experts fear that the changes favour larger operators to such a degree that smaller providers will be priced out of the market!

Ofcom has concluded that a new approach is necessary for the longer term, based on real equality of access to those parts of the fixed telecoms network which BT’s competitors cannot fairly replicate.

This new approach to regulation has six objectives:

* to drive down the price of calls, connections and services for consumers and businesses;

* to support more innovation through the growth of competitive products and services, such as faster broadband, television and voice over the internet and video-on-demand, from a range of credible companies;

* to provide regulatory certainty for providers and investors so that they commit to developing, marketing and extending these products and services for UK consumers and businesses;

* to re-focus regulation where it is truly needed, with swifter remedies to tackle anti-competitive behaviour and a structure which delivers equivalence to a timetable with real penalties and incentives;

* to remove regulation wherever competition is effective and the effect of open markets - rather than regulatory intervention - ensures the delivery of choice, value and quality for consumers; and

* ensure the necessary level of consumer protection through a combination of codes, sanctions and effective consumer information.

Proposed Undertakings

On Tuesday 21 June the Board of BT Group plc agreed in principle to offer to the Ofcom Board legally binding undertakings in lieu of a reference under the Enterprise Act. On Wednesday 22 June 2005 the Ofcom Board accepted this offer.

The proposed undertakings commit the company to substantive changes in organisation and behaviour; full detail of the proposed undertakings will be published on 30 June 2005.

A more detailed Ofcom Statement can be found online at http://www.ofcom.org.uk/consult/condocs/telecoms_p2/statement/

BT's Responce

BT chairman Sir Christopher Bland said today: “This has been a tough journey but it is important that we have regulation that encourages investment and innovation. The proposed settlement strikes the right balance and every player will benefit from the certainty and clarity it provides.”

BT chief executive Ben Verwaayen added: “This has been a meticulous process during which BT has engaged in depth with Ofcom and the industry. We came up with bold proposals in February that reflected the reality of the market and we have now committed to a framework to ensure others have confidence in the settlement.

It is time to draw a line under twenty years of micro-regulation and to welcome a new era where regulation is focused where needed and rolled back elsewhere.

BT submitted proposals in February that have now formed the basis of this proposed settlement. Central to these is the creation of a new business unit within BT to provide transparent and equal access to the nationwide local network. This unit – currently known as Access Services - will be highly regulated and its performance monitored and reported on by an Equality of Access Board (EAB). This Board will have a majority of independent external members appointed in consultation with Ofcom. Carl Symon, one of BT’s independent non-executive directors, is the chairman designate of the Board.

BT has also demonstrated its continued commitment to local loop unbundling (LLU) and wholesale line rental (WLR). In order to further stimulate the LLU market, BT is to cut the rental price for its fully unbundled local loop product from £105 per annum to £80 with effect from August 1, 2005. It has also agreed to a request from Ofcom that the rental prices for IPStream and Datastream[1] - the most popular wholesale ADSL products currently used by service providers - will not fall until there are 1.5m unbundled lines in the UK[2].
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