Ofcom delivers review of telecoms market

Ofcom's long-awaited proposals to regulate the UK telecoms market will create a standard wholesale line rental product for both BT Retail and alternative operators in 2005.

But its attempts to make the process of reaching consumers fairer by delivering 'real equality of access' has met with mixed industry responses so far.

The watchdog says it considered three options to release BT's stranglehold on national network access: fully de-regulating the market; instigating a market investigation under the Enterprise Act 2002, which might lead to its referral to the Competition Commission; or to force BT, as the dominant incumbent, into organisational change.

As expected, the review falls short of radical surgery on BT's organisation or devolving the issue to more legislators. Instead, it gives BT a mandate to produce proposals for offering competitors wholesale products and prices similar to the ones it currently supplies to its own retail arm.

And it is offering decreased regulation as an incentive. 'The delivery of genuine and lasting competition at the wholesale level would allow the removal of regulation, particularly at the retail level,' it said.

But the UK Internet Federation (UKIF) went the furthest in its objection to this approach, saying: 'Ofcom appears to be avoiding regulation itself and leaving it to BT to propose the way forward. If Ofcom will not regulate then what is its function?'

But Purvi Parekh, telecoms expert at law firm DLA told Computing: 'Ofcom has done a very good job showing it understands the issues. If you'd put the decision out for the industry to take, they'd have done the same.'

BT's wholesale arm currently makes its network available to rival operators, like Cable and Wireless or NTL. But, unless it can treat its wholesale and retail businesses separately, and offer other operators equivalent deals, Ofcom will resort to heavier-handed tactics afforded it by the Enterprise Act.

'To date, the manner in which BT has controlled access to the economic bottlenecks in its network has had an impact on the roll-out of important wholesale products with the potential to offer greater choices to the consumer than would be provided by the incumbent alone,' it said.

It is hoping today's review will encourage more competition by making access methods that do not restrict connections speeds or the numbers of users who can share a connection at one time more price competitive with those that do.

This would allow operators to upgrade their own network technology to offer services, such as always-on broadband and content-rich media through new services like video on-demand.

Ben Veerwayen, BT chief executive welcomed the prospect of reduced regulation and said: 'We [are] looking forward to achieving regulatory certainty that will encourage investment and innovation.'

Justin Fielder, business development director of operator Easynet said: 'Ofcom is being very pragmatic. BT is a big beast and it will take a long time to change. Doing completely radical stuff now may jeopardise the end game.'