Since 2004, when the market was last reviewed, there have been significant changes in the wholesale market. BT has rolled out its broadband network to over 99.8% of the UK (excluding the Hull area) and Kingston covers the whole of the Hull area. Cable now offers broadband services in around 50% of the UK. The most significant change though has been the entry of LLU operators who have used local loop unbundling to offer retail and wholesale broadband services.

LLU operators have focussed their initial network deployments in more densely populated areas where the commercial case is strongest. Further roll-out is planned over the next year. This will result in competitive conditions differing between areas. By January next year, we estimate that at one extreme an area of over half of the UK population will be served by four or more operators. At the other extreme a quarter of the population will only be served by BT.

Regulation of this market must adapt to these changes in order to continue to ensure effective competition in the retail market. In particular, we need to avoid a ‘one size fits all’ approach to regulation that treats all these areas the same.