Oftel lays out the broadband rules

Posted on 29 Apr 2003 at 12:16

Oftel has laid out the ground rules for the future of broadband in its latest market review.

In short, the 151-page document finds that BT remains a significant market power in the UK and thus hobbles effective competition in the broadband market, according to EU benchmarks.

This was concluded because of BT's growing market share of 57 per cent, it's potential to expand the broadband market within its existing market and the significant cost barriers to potential rivals setting up in competition.

What this means is that Oftel will have to come up with methods of curbing any abuse of this power, to satisfy new EC Directives on electronic communications that come into force on 25 July.

What it is proposing is a list that promotes honesty, transparency and fairness in the way BT does its business, protecting both ISPs and consumers.

It suggests that it should make details of terms and conditions, technical information, and quality of service information fully available.

Additionally Oftel will require BT to lay out a statement of requirements for new access to its network, publish a reference offer, and offer network access to ISPs on reasonable request, without undue discrimination.

More significantly, BT will have to separate its accounting practices between its wholesale and retail broadband services.

Finally, BT must provide ATM interconnection on a 'retail minus basis'. This sets out the pricing structure BT must follow in selling its DataStream products, where it must offer them on the basis on maintaining the same margin, not on how much it can sell them for.

David Edmonds, Director General of Telecommunications, said today: 'These measures will support the continued growth in broadband take up by ensuring that consumers have access to a wide range of broadband services at some of the cheapest prices in Europe.'

Oftel also looked at the way BT prices its products, with particular interest in whether the company was engaging in pushing up prices in small steps to just under level where broadband customers would revert to cheaper narrowband services.

However, Oftel stated it 'does not believe that there exists any evidence of excessive pricing of wholesale asymmetric broadband services, whether these prices are explicit or implicit within retail service prices.'

This may also have a bearing on the recent decision by the Competition Commission Appeals Tribunal that handed back to Oftel a complaint it dismissed from Freeserve - that BT had engaged in predatory pricing.

Although hailed as a victory for Freeserve at the time, it does not oblige Oftel to find that BT had engaged in such practices, only to reconsider it. And given Oftel's outlook on BT pricing from today's announcement, it would seem rash to predict a new decision on this from Oftel would be in Freeserve's favour.

Author: Matt Whipp