Ofcom sees more mergers on cards

Network capability issues will prompt tie-ups between current operators, according to the regulator

Ofcom expects yet more mergers in the UK telecoms sector as firms strive for profitability while seeking to build out new network capabilities. The regulator also plans to make clear its position on voice over IP, next-generation networks and the use of 0870 numbers in contact centres this year.

Speaking at the Communications Management Association (CMA) annual conference in London last week, Ofcom executive director Sean Williams said, “My worry is that the corporate market has got to the point where it’s very difficult for suppliers to drive profitable services. I don’t think that’s something the regulator can change. They have to trade their way out of quite a negative position through innovation and differentiation. That, I suspect, means that consolidation is not at an end, particularly as 21st-century networks are needed.”

In the next month, Ofcom will create a new body with telecoms industry advice to provide a level playing field for next-generation networks (NGNs).

Rival operators are “waiting to see what BT is going to do [with its 21CN plan but realise that] that gives BT first-mover advantage,” Williams said. “We want to establish what the NGN looks like and make incremental regulatory change by looking at markets in the round and being flexible enough to accommodate changes in the NGNs.”

Also in the next month, the regulator is to give its position on voice-over-IP. “We want to provide enough clarity for these services to emerge and find their way in the market,” Williams said.

Ofcom will also participate more in Europe to make cross-border spectrum and regulations decisions effective across borders, he said.

A speech by industry minister Alun Michael, delivered in his absence, said that the government would seek to redress the stalling effect of the EC’s appeals process. “It makes no sense for any incumbent to appeal decisions to hold up the market.”

Nigel Hickson, head of European e-commerce and telecoms at the Department of Trade and Industry, said that part of the problem of implementing European decisions was the quality of regulators.

“Not all regulators are as competent and well-resourced as Ofcom,” he claimed. “One of the reasons is that a lot of regulators among member states are not completely independent [of their governments].”

Separately, Ofcom said it would later this year make a decision on 0870 numbers and whether firms with contact centres should be able to use them for profit.

“There’s quite a polarisation of views and consumer concern,” said Williams. “Public-sector bodies should not need to get revenue sharing from 0870 numbers. Others legitimately should.”

Ofcom is also looking at ways to make the meaning of such numbers more transparent to users, Williams added.

The Communications Management Association (CMA) has launched two new ventures designed to help network chiefs.

The CMA Benchmarking Club is intended to help members assess the value of carrier contracts by sharing information on services so firms can compare their deals with those of peers. A spokesman said that the complexity of fixed and mobile markets had prompted interest in such a scheme.

The scheme is open only to end-user organisations and is recommended for firms spending over £100,000 per year on voice and data services.

The CMA is also creating Best Practice File, a web-based depository of independently authored case studies.