U.K. TELECOM REVIEW TO CONSIDER REMOVING REGULATIONS

The sector has been regulated by the Office of Telecommunications (OFTEL) since 1984, when BT was privatized. OFCOM, OFTEL’s successor, takes over at the end of the year. Telecom revenue as a proportion of gross domestic product rose to more than 4% in 2002 from 2,4% in 1985, OFCOM said, and investment in the industry represented 11% of all the capital expenditure in the U.K. economy in the period 1999-2002. Moreover, it said, the sector has undergone major change since 1991, driven by new technologies and consumer demands. Those factors and others make “2004 the right time to conduct a review of the U.K.’s strategy for regulating telecommunications,” OFCOM said.

OFCOM’s 3-phase approach includes reports on: (1) Current position and prospects for the telecom sector. (2) Options for its strategic approach to regulation. (3) Its approach to telecom regulation, including the possibility of deregulation. The review will consider options for giving U.K. consumers better value and choice in the telecom market, OFCOM said. It will address key questions such as how the position of U.K. telecom consumers compares with that in other countries; what the major barriers to competition are and how they can be lowered; and how successful past regulatory policies have been.

The U.K. telecom sector is an “exciting and dynamic one, and certainly one of the most competitive in the world,” a BT spokesman told us. BT looks forward to the results of the review, he said.

A spokeswoman for business communications provider COLT said the review was what was to be expected from a new regulator, and praised its rigorous approach. Among other things, she said, COLT wants OFCOM to level the playing field for telcos by, among other things, ensuring that BT’s retail arm competes on the same basis as others’. Telewest said it welcomed the review. “We believe it is necessary given the level of change in fixed telephony and the emergence of broadband as a key consumer and business product,” the company said. “Regulation needs to reflect the new dynamics in the marketplace.”

But the chmn. of the Telecom Users Assn. (TUA), Bill Mieran, said the study appeared to be mostly about OFCOM’s attempt to educate itself about the market, and he wondered why the new regulatory body didn’t pick up that information from OFTEL. The review is fine, Mieran told us, but before OFCOM takes any new regulatory action it should ensure that current initiatives are enforced.

OFTEL conducted a market review of the mobile industry some 2 years ago after consumers complained that costs for calls from one mobile network to another were too high, Mieran said. OFTEL found that prices for both mobile-to- mobile and mobile calls to fixed lines were too expensive, he said, but the industry has refused to lower them, even after a further adverse ruling in another venue. British consumers also are unhappy about the fact that, while national and local phone rates have dropped, the 0845 number (that allows national calls at local rates) and the 0870 number (for national rate calls) haven’t, Mieran said. “Coincidentally,” he said, nearly all the number providers charge the same rate.

The TUA also would like OFCOM to enforce a European Union directive on number portability that has been in effect for several years, Mieran said. And, he said, the group would like to see the regulator do something about international roaming charges, something he said OFTEL said it wouldn’t tackle because it was an international issue. An official of the U.K. Telecom Industry Assn. wasn’t available for comment.