BT promises to give competitors equal access to its local network

Posted on 3 Feb 2005 at 14:42

BT is promising to slash prices and give competitors equal access to its local network providing Ofcom promises to roll back regulations governing its behaviour in the market.

The proposals were part of BT's response to Ofcom's Strategic Review of the Telecoms market. Today was the final day for responses to Phase 2 of Ofcom's review set out last November.

In that document, Ofcom shied away from the break up of BT but said that the telco would need to take further action to accelerate local loop unbundling (LLU) and provide competitors with a level playing field.

Ofcom has admitted that 20 years of regulation of BT - by its predecessor Oftel - had failed. By a combination of foot dragging and avoidance, BT has managed to stay firmly in control of telecoms in the UK by making life difficult for rivals. For example, there have been complaints by competitors that BT's 'transactional processes' such as billing and payments were made smoother for its own divisions than for rivals.

Ofcom has now told BT that it wants to establish a more efficient regulatory framework which creates a fair market in telecoms without the regulator having to micromanage BT's business.

In response, BT has proposed that it set up an Access Services Division (ASD) that would oversee equal access to the local loop. Although still part of BT, the Access Services Division would itself be overseen by a separate Equality of Access Board, chaired by Chief Executive Ben Verywaayen, which would have two independent members chosen in consultation with Ofcom.

The ASD would control their part of the network between the house and the exchange. It will have around 26,000 employees, £8bn in assets and £3bn in revenues. BT hopes that the 'transparency' this board would bring would end what it sees as carping by rival operators.

As part of the quid pro quo, Ofcom would roll back the host of restrictions surrounding BT's operation and instead concentrate its regulation on the ASD.

`All of this is part of a package,` BT spokesman Mike Bartlett told us. `In order for thes things to happen, Ofcom should press ahead with its deregulation and allow us to compete fairly`.

David McConnell, chairman of the UK Competitive Telecommunications Association said `BT's submission seems to demonstrate a willingness to engage with Ofcom. [But] words are one thing and action quite another matter. We will need to see detailed milestones put in place and successful delivery against agreed targets.`

Ofcom says it will publish all non-confidential responses to the Strategic Review on its website in the coming weeks. The watchdog says it will now study the various proposals and hopes to start Phase 3 of the process in the spring of this year.

To prove that it really does mean it when it says it welcomes competition, BT also announced today that it intends to run a series of trials of faster broadband speeds with a view to a national roll out this autumn.

The company says that it plans to run trials on lines that support 2Mbit/sec of up to 8Mbit/second. It also plans to run trials of ADSL2+ which can support speeds of up to 18Mb/sec.

BT has also promised to cut the price of its wholesale offerings from April. Wholesales prices of BT IPStream Home user prices will be cut by £1.10 per user and by £1.40 per user of BT IPStream Office. BT says that these are the only cuts that will be made to IPStream rental prices for another 12 months.

In accordance with existing regulations BT will also have to cut prices of BT Datastream by the same amount.

Author: Steve Malone