BT strikes deal with Ofcom over future of UK telecoms

Ofcom wants to deregulate the business telecoms market as part of its strategic review for the industry.

Ofcom wants to deregulate the business telecoms market as part of its strategic review for the industry.

 

The government’s telecoms regulator believes the market should decide prices for leased lines, broadband access and other services as part of its plan for UK telecoms, which it has published today.

 

As BT still controls most of the national telecoms network – 20 years after privatisation – much of the focus for Ofcom’s reforms is on that company.

 

To improve flexibility in the market and open it up to wider competition and more alternative services, BT has agreed to give competitors easier and cheaper access to its network.

 

In return, BT will not be broken up by Ofcom, and the regulator will instead use the Enterprise Act and the threat of High Court action against BT if it deems the company is discriminating against its rivals.

 

BT has agreed to a number of open market initiatives with Ofcom, the full details of which will be published next week, before going to consultation. These include BT setting up an independent operating arm called Access Services, employing 30,000 BT staff. 

 

Access Services will handle competitor access to the BT-controlled network, to allow alternative services to be rolled out to customers more easily and cheaply. 

 

An Equality of Access Board (EAB), which will include non-BT directors, will supervise the work of this arm of BT, along with the progress of other measures designed to open up the market.

 

Ofcom chairman David Currie said, “We believe these proposals have the potential to encourage more sustainable competition, more services, lower prices and greater consumer choice.”

 

BT chief executive Ben Verwaayen said, “This has been a meticulous process during which BT has engaged in depth with Ofcom and the industry. We came up with bold proposals in February that reflected the reality of the market, and we have now committed to a framework to ensure others have confidence in the settlement.

 

“It is time to draw a line under 20 years of micro-regulation and to welcome a new era where regulation is focused where needed and rolled back elsewhere.”

 

Ofcom aims to:   

  • Drive down the price of calls, connections and services for customers
  • Support more innovation through the growth of competitive products and services, such as faster broadband, television and voice over the  internet and video on demand
  • Provide regulatory certainty for providers and investors so that they commit to developing, marketing and extending these products and services for UK consumers and businesses
  • Refocus regulation where it is needed, with swifter remedies to tackle anti-competitive behaviour and a structure which delivers “equivalence” to a timetable with real penalties and incentives
  • Remove regulation wherever competition is effective and open markets - rather than regulatory intervention - ensure the delivery of choice, value and quality for customers
  • Ensure the necessary level of customer protection through a combination of codes, sanctions and effective customer information.

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