UK telcos call for BT dominance review
November 25, 2014
By Colin Mann
Expressing concern that former incumbent telco BT still holds a network monopoly position 30 years after privatisation, and ten years after the formation of regulator Ofcom, the UK Competitive Telecommunications Association (UKCTA) has called on the watchdog to review the market and reassess its priorities for the next ten years to ensure the UK communications sector remains competitive.
A recent YouGov survey for UKCTA – which counts the majority of the UK fixed telecommunications market’s main players among its members – has highlighted low awareness amongst consumers over the role that Openreach, BT’s network business, plays with many confused over who is actually responsible when things go wrong with their broadband or telephone service. A significant proportion of businesses also believe that Openreach has restricted choice in the market meaning the needs of business users have often fallen behind domestic customers.
UKCTA urges Ofcom to return its focus to improving competition, which will empower consumers and deliver a better quality of service. It has issued three reports which consider how the market could be improved for consumers and businesses. The reports, which were prepared for UKCTA by SPC Network, the strategy, policy and economics consultancy specialising in electronic communications markets, recommend three specific areas for review:
- Rebalance focus of Ofcom to prioritise the promotion of competition. The regulator initially focused on forcing BT to reduce prices through a series of price caps. A period of promoting competition followed, which drove a range of innovations now seen as “the norm” by consumers and businesses alike. Ofcom’s focus has now moved from competition to intrusive sector-specific consumer protection measures, often duplicating general consumer protection measures. UKCTA calls on Ofcom to return its focus to championing competition, which will drive innovation and enhance choice and the protection of consumers.
- Improved service from Openreach will improve service quality and innovation. Openreach, has control of the basic infrastructure which most other providers rely on to deliver their services. However, it has consistently failed to meet its own standards on delivery times, fault rates and fault repair times. This failure affects thousands of end-users of UK broadband and telephony services on a daily basis, and gives rise to substantial consumer detriment. The SPC Network reports outline six steps which are still needed to ensure a better service from Openreach, mitigating the effect of its effective monopoly position and creating a more competitive market which encourages innovation and quality service.
- Open up BT’s passive infrastructure to all providers. While policymakers and regulator have focused on residential users, the needs of businesses have been left behind, with domestic areas often getting a better broadband service than their local business parks. As long as BT has control of the basic infrastructure, competition and innovation will be stifled. UKCTA calls on Ofcom to try and replicate its successful introduction of greater competition into the domestic market by allowing all providers to have regulated access to BT’s passive infrastructure.
UKCTA’s Domhnall Dods said: “Thirty years ago we saw the start of a new era in the UK telecommunications market. Although increased competition now helps manage the issues of pricing and consumer protection in today’s broadband market, the greater issue of BT’s market dominance remains. We believe Ofcom and its new CEO should review its agenda and target the root causes of this remaining market power, including the way the core BT platform is regulated. The UK’s consumers and businesses cannot afford for Ofcom to ignore the problems identified in these reports.”
An Ofcom spokesperson said: “We make no apology for protecting consumers. For us, that work goes hand-in-hand with promoting competition. The UK already has the most competitive broadband market of any major European country. Our job is to ensure that customers benefit not only from innovation, but also from good quality of service and a fair deal.”