Ofcom makes a solid start

One question overshadows all others when the new telecoms regulator Ofcom is under discussion: will it have more bite than its predecessor, Oftel?

Oftel was often derided as the watchdog that lacked the teeth to either break or control BT's domination of the UK telecoms market, and was criticised for its tardiness in promoting broadband, flat-rate fixed-line tariffs and wireless communications.

Until recently, few observers held out much hope that matters would change when Ofcom assumed Oftel's duties at the close of 2003, even though Ofcom's responsibilities are significantly broader, comprising radio communications, media and broadcasting as well as telecoms.

However, early signs are encouraging. In mid-December, Ofcom announced it will conduct a thorough review of the regulatory landscape for telecoms over the next 12 months - intended to be the most in-depth examination of the local telecoms industry for 13 years.

The review will assess whether past regulations have delivered sufficient choice of competitive, high-quality telecoms services, and will explore emerging technologies. Intriguingly, Ofcom has hinted that less regulation might be the best way to proceed - its chief executive, Stephen Carter, said that some current regulations might be withdrawn after the review to make competition more effective.

Richard Sweet, head of regulation and interconnect at broadband service provider Thus, said, "As BT continues to dominate, particularly in broadband access, the need for tight regulation is still pressing. We see the review as an opportunity for Ofcom to give the industry a good idea of how it will regulate."

Meanwhile, Ofcom's decision to sell licences for the 5.8GHz Band C spectrum for rural wireless broadband access has been welcomed. Band C services will share spectrum with TV broadcasts and UK military radio communications but will use Dynamic Frequency Selection (DFS) technology to minimise the risk of interference and allow downstream speeds of up to 1Mbit/s.

The same multipurpose usage principle is behind tests currently being conducted by US regulator, the Federal Communications Commission (FCC). In another US-style tactic that is at odds with the bureaucratic image of UK regulatory bodies, Ofcom is promising "light touch" licensing that will let service providers offer the service at a token licensing cost of £1 per terminal installed per year.

The telecoms industry will want to see more action, most notably in reining in BT and ensuring that activation and migration charges are not hidden. Steve Horley, general manager for access and voice at service provider Tiscali UK, believes the regulator should start by removing the imbalances between BT's wholesale broadband services, which he believes have limited the ability of rival providers to offer more diverse packages.

"Ofcom needs to continue its support for DataStream and other alternative technologies," said Horley. "If the wider industry is allowed to innovate, rather than just relying on BT, it provides a more competitive and dynamic market for everyone. We are hoping that Ofcom will act swiftly and decisively in the case of any intervention."

Nobody expects Ofcom to solve the complex problems of telecoms infrastructure overnight, and online lobbying group OfcomWatch has already questioned how well Ofcom's consultation process will work.

But Ofcom chief executive Carter had experience of the sector in his previous role as chief operating officer of cable firm NTL, and Ofcom is at least well-resourced.