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Oftels Broadband/Dialup Market Review

Posted: 29th Apr, 2003 By: MarkJ
UK telecoms regulator Oftel has published a market review for both the broadband and narrowband (dialup) Internet access industries.

First up we have Oftels press release for their broadband market review, which has been cut down to the most important part:

BT and Kingston will continue to have to provide operators with wholesale broadband access under the new EC communications directives, Oftel has proposed today.

David Edmonds, Director General of Telecommunications, said today: "Oftel’s review of the wholesale broadband market has found that BT and Kingston in the Hull area still have significant power in this market.

Oftel proposes to continue under the new EC communications directives with a number of obligations on BT and Kingston to ensure other operators can compete with them to provide broadband services.

Measures to promote competition include requiring BT and Kingston to provide access to their broadband networks on reasonable request, not to discriminate against other operators, and provide accounting separation between their wholesale and retail broadband services.
"


Typically there's precious little new information in Oftels narrowband review, although it does touch on the issue of broadband definition:

Oftel’s fixed narrowband market review consultation documents were published on 17 March 2003. The following market reviews came to the initial conclusion that there are separate narrowband and broadband markets, with the boundary between the two identified at a speed of 128kbit/s.

Since publication, ntl has announced that it is upgrading its 128kbit/s cable modem service to 150kbit/s and Oftel is also aware that Tiscali offers a 256kbit/s internet access product. The Director is now minded to consider that a speed distinction of less than or equal to 256kbit/s for narrowband access services captures the relevant demand side distinction for UK narrowband access services because it is still the case that products available at speeds in excess of 256kbit/s allow different content such as streaming video to be practically delivered.

The Director, however, acknowledges that as new Internet access services of different speeds are created and as broadband content develops, the speed boundary between narrowband and broadband Internet access services may need further consideration in future market reviews. Despite this change in the speed distinction between narrowband and broadband, Oftel remains of the view that narrowband services constitute a separate market to broadband services because:

* there remain significant price differentials between narrowband and broadband services:
- there is a £10-£15 monthly premium for broadband internet access compared to single line analogue unmetered internet access;
-there is a £8-£9 monthly premium for broadband access compared to ntl’s 150kbit/s service;
- there is a £6-£7 monthly premium for broadband access compared to Tiscali’s 256kbit/s service; and

* available consumer evidence suggests that at current prices narrowband customers do not value the extra functionalities and bandwidth of broadband services to a sufficient degree such that significant numbers of them are likely to switch to using broadband services if current narrowband prices rose by 10 per cent.
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