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Ofcom Deregulates 70% of the UK Broadband Market

Posted: 21st May, 2008 By: MarkJ
Ofcom has officially confirmed that 70% of the UK's wholesale broadband market will be deregulated. This represents all the areas that the regulator deems to be served by effective competition.

The measure will affect those parts of the country which are now served by four or more wholesale broadband providers and where no single company has significant market power.

Where there is less competition or a company still has significant market power, Ofcom will maintain regulation designed to promote retail competition. This requires BT and KCOM, in Hull, to provide a wholesale product to other providers on a fair and reasonable basis:

Ed Richards, Ofcom Chief Executive said, “This is a major step forward in the UK broadband market reflecting the success we have had in promoting effective competition. It shows that we are determined to deregulate wherever we can do so in a way that is consistent with the broader public interest.” He added, “We now need to build on these foundations and see timely investment and a competitive market emerge for next generation access as well.”

So what does this mean for you and me? Presently, not a lot; but that could easily change. It's conceivable that the removal of price controls might allow operators, such as BT, to start charging different amounts depending on where you live. For example, areas with larger populations could become cheaper due to simple economics of scale.

However, Ofcom has already warned before that deregulation will not give providers free reign to do whatever they please. We'd hope that disadvantaging rural residents would be high on their list of "don'ts".

Presently all we can do is guess and it remains to be seen whether deregulation will be a good or bad thing for consumers. Will it encourage investment or stifle it? Will broadband get cheaper or more expensive? Time will tell.

Ofcom has also published a map of market areas:
http://www.ofcom.org.uk/consult/condocs/wbamr07/statement/wbam.pdf

  • the Hull area; those areas covered by exchanges where KCOM is the only operator. This market covers 0.7% of UK premises.

  • Market 1; those areas covered by exchanges where BT is the only operator. This market covers 16.4% of UK premises.

  • Market 2; those areas covered by exchanges where there are 2 or 3 operators. This market covers 13.7% of UK premises.

  • Market 3; those areas covered by exchanges where there are 4 or more operators. This market covers 69.2% of UK premises.
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