The long-awaited follow-up review of the telecommunications sector looked at BT’s ownership of the bulk of Britain’s fixed phone lines. The main conclusion it reached was to call for BT to provide its rivals with real equality of access to its network. It warned that failure to act will bring competition investigation, and added that BT would have to make both behavioral and organizational changes to boost competition in the sector.
Specifically, the regulator is looking for BT to boost the growth of broadband services by allowing competitors access to its local telephone exchanges. Local loop unbundling, opening the last mile of household connections, allows rival operators to install their own equipment into BT local exchanges, giving them cheaper wholesale internet rates.
Earlier this year BT was warned it faced being split up into to separate entities, after the option was included among five fundamental questions to be considered by Ofcom. BT had strongly opposed any moves to split its wholesale arm BT Wholesale, which looks after its line network, from its customer-facing unit BT Retail, claiming it would put investment in new products such as broadband at risk. The move by Ofcom seeks to ensure that BT offers rivals the same wholesale products, prices and processes it sells to its own retail arm, and particularly mentions broadband products and wholesale line rental.
It is safe to say that many smaller players were keen on the idea of a BT break-up, but Ofcom’s report says the move would be unpopular with most of the rest of the industry because of the disruption it would cause. It concludes that the move is not appropriate. The regulator also unveiled consultation proposals to improve consumer information and simplify the process of switching phone supplier.
The report will come as a relief to BT, which agreed that providing equal access is preferable to being broken up. BT had warned last week that any break-up of its organization would affect future funding of the network.
Consultation on the plans will close in February next year, and interested parties have until then to submit their views on Ofcom’s phase-two proposals for overhauling telecoms regulation.
