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Ofcom UK Allows BT to Offer Cheaper Broadband Bundles

Posted: 15th Sep, 2009 By: MarkJ
Ofcom has today removed one of the last pieces of regulation in the retail fixed-line telephone market, allowing BT to offer discounted bundles of services including line rental, voice calls, broadband, television and more. Ofcom concluded that BT no longer had 'significant market power' (SMP) and that competition from rivals (e.g. Virgin Media , Sky Broadband etc.) is strong enough that such tight controls are no longer required.

Today, more than 12 million UK households and small businesses use a telecoms provider other than BT, which is in large part thanks to Ofcoms push to remove BTs controls and allow rivals more access to the incumbent’s network (unbundled LLU lines etc.). This has made the market very competitive and also pushed prices down, with the monthly cost of residential calls from a land-line dropping from £25.04 in 2003 to £21.57 in 2008.

Many rival ISP and telephone providers now offer discounts when consumers bundle more than one service together. According to Ofcom's figures, in 2008 nearly half (46%) of UK consumers purchased a bundle of two or more services, up from 29% in 2005. Some 47% of people intend to buy a bundle of services in the future.

Of course there are some parts of the country where BT has no influence. Kingston Communications (KCOM) is still deemed to have SMP in the Hull area and Ofcom's regulatory controls have thus not been lifted. Indeed the regulator believes that more could be done and has threatened "a further review" in the future.

Ofcom comments on Hull:

We have reviewed the retail markets in Hull and concluded that KCOM retains SMP in all retail narrowband markets and that the existing retail remedies should be retained, that is:

• No undue discrimination in the pricing and provision of services;
• Price publication for all services.

Precisely what impact today’s news will have is hard to gauge, on the one hand BT will want to redress the value imbalance it has with some cheaper unbundled rivals, yet on the other it has been busy increasing the prices on "some" of its services; especially at the BT Wholesale level.
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