Ofcom to deregulate 70% of UK broadband

 

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Posted on 22 May 2008 at 09:39

Ofcom has announced that it will no longer be regulating broadband access across 70% of the UK wholesale market. The industry regulator is fulfilling its commitment to remove regulations in markets where there is effective competition.

Deregulation will affect those parts of the country which are now served by four or more wholesale broadband providers and where no single company has significant market power. Where there is less competition and where a company still has significant market power, Ofcom will maintain regulation designed to promote retail competition. This requires BT - and KCOM in Hull - to provide a wholesale product to other providers on a fair and reasonable basis.

This maintains the regulatory environment that Ofcom, with much justification, has resulted in significant competition, said Ed Richards, Ofcom chief executive.

"This is a major step forward in the UK broadband market reflecting the success we have had in promoting effective competition," Richards said. "It shows that we are determined to deregulate wherever we can do so in a way that is consistent with the broader public interest."

Deregulation will largely be confined to ares where a high population density - particular large towns and cities and business districts - attracts multiple providers. Ironically this does not seem to have had a marked impact on broadband adoption. Ofcom's latest regional communications market report reveals that for the first time broadband is more popular in rural areas - 59% of rural homes now have broadband, compared to 57% in towns and cities.

BT welcomed Ofcom's decision, saying that it will make it easier to compete for big contracts.

Under regulation, the company is obliged to publish its prices and keep these fixed, making it easier for other wholesale providers such as Carphone Warehouse and BSkyB to undercut it and take business.

But BT will not be permitted to raise prices for local loop unbundling (LLU) as it would like, as the Ofcom decision only covers wholesale access.

Author: Simon Aughton