Ofcom, the official telecom market regulator for the UK, is launching a wide ranging Strategic Review of the UK telecommunications sector. The Review will assess the options for enhancing value and choice in the sector and will have a particular focus on assessing the prospects for maintaining and developing effective competition in UK telecommunications markets, while having regard for investment and innovation. The Review is expected to consider whether and how BT might be required to open up its network, as well as rules for VoIP.
The UK government licensed the first competitor (Mercury) in 1980s and encouraged the company to build its own network. From 1994 to 1997, the regulator at that time (Oftel) favored competition between fixed-line companies that owned their own networks – and particularly those with networks that actually came into homes and offices, such as cable operators. Oftel also licensed two extra mobile networks, so that there were four network operators competing from the mid-1990s. However, in the mid-1990s Oftel was less favourable to companies that did not own a network. In fact, it has only been since 1998 that regulation has made it easier for service providers such as Centrica and Carphone Warehouse to launch phone-call services.
Ofcom noted that telecom competition today is alive and well in some sectors, but less available in others. For example, there are five mobile network operators, plus others which offer services by using another company’s network. On the other hand, BT has an 80% share of the residential phone market, and supplies most business lines as well. For Internet access, it seems at first glance that there’s a whole variety of internet service providers (such as AOL and Freeserve) supplying narrowband and broadband services to homes and offices. However, almost all of them use just one of two networks to bring those services to you – the cable networks, upgraded with cable modems, or DSL, provided by BT.
Public input is sought by 22-June-2004. http://www.ofcom.org.uk/consultations/current/telecoms_review/
- In response, BT said it welcomes Ofcom’s comprehensive review of the UK telecoms sector, noting that the UK market is one of the most highly competitive in the world with over 350 other licensed operators as well as a host of successful mobile operators. BT observed that the country also has a vibrant cable infrastructure passing 13 million homes. BT claims that it currently accounts for 35% of the total UK calls market by value.
- BT believes that one of the key issues for Ofcom must be to create the proper environment to encourage investment. “Those who take the risk must have some certainty about the level of reward. A proper investment environment is crucial if the UK is to have a communications infrastructure fit for the new technologies and services that people and businesses want. The next generation of networks, enabling communications between a variety of devices, will not build itself.”