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Fibrestream UK Slams Ofcom as Not Fit for Purpose After KC Bundles Ruling

Posted: 11th Oct, 2010 By: MarkJ
fibrestream ukA community network specialist in Next Generation Access (NGA) and fibre optic broadband ISP services, Fibrestream ( NextGenUs ), has questioned whether the UK communications regulator ( Ofcom ) shouldn't also be chopped in the governments imminent Comprehensive Spending Review after it allowed KC ( Karoo , KCOM ) the ability to bundle services in the Hull and East Riding (Yorkshire) area (here).

KC, an incumbent telecoms operator and broadband ISP, has long resisted calls to offer truly BT comparable wholesale services (WLR3 or even SMPF/MPF wholesale access) in the area and, due to this, local competition remains weak.

The Boss of Fibrestream, Guy Jarvis, said:

"OFCOM is failing Hull customers by allowing the incumbent K-C to use its SMP (Significant Market Power) to further entrench its position and reduce any prospects of competition by tieing subscribers into bundled deals.

In fact, OFCOM should have prevented K-C from ever offering any contracts beyond rolling monthly until K-C provides a wholesale product set that is equivalent to that offered by BT in the rest of the UK, if OFCOM was serious about protecting the consumer interest.

An inevitable result of OFCOM’s decision is that Hull will come out of recession much slower than other areas that do have competition and choice for telecoms services. The long term future prospects of the city and the surrounding areas of East Yorkshire are at risk."

Ofcom claimed last week that, "the existing restrictions on KCOM bundling have a negative impact on consumer welfare". This appears to be at odds with the strong opposition to last week's move from both rival operators and many KC customers, which claimed that failing to encourage effective competition would be even worse. TalkTalk in particular described the regulatory change as an "admission of defeat" (here).

A year ago Fibrestream revealed ambitions to enter the Hull area itself (here) and held a number of meetings between local residents, Ofcom and Hull North MP Diana Johnson. Since then there has been little progress.

Ofcom are still said to be consulting separately on enhancements to the processes involved in securing wholesale access to KCOM assets, although we've yet to see any real progress on that front.

Guy Jarvis noted:

"This issue raised is nationally important beyond the Hull area due to the precedent it sets, namely that the SMP de-facto monopoly control of telecoms infrastructure in a given area is no barrier to operators to offer bundled services without first offering any wholesale products to its competitors."

Fibrestream now believes that the time may have come for a legal challenge under EU Competition Law, which would not only address the KC/KCOM situation but also whether Ofcom "in its present form is actually fit for purpose". The operator is known to be seeking support for such a move from other providers.
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