Ofcom Action Could Help New Entrants in Other Markets

Europe’s competition law was updated last year to let competition authorities break up incumbents when attempts to reform their behavior fail, said Andy Tarrant, former ECTA dir.-regulatory affairs. Ofcom is the first national regulatory authority to raise the issue of structural remedies, he said. If BT doesn’t modify its behavior, however, it won’t be Ofcom that decides whether the incumbent’s retail and wholesale arms should be split; the recommendation will come from the U.K.’s Competition Commission.

Structural remedies are exceptional and must be imposed only based on a cost-benefit analysis, said La France. There are no European cases dealing with such a remedy in the telecom arena, she said, but the AT&T divestiture is instructive. There, the question was whether local operators would survive. As it turns out, they're in much better shape than the original company, she said. Divestiture is difficult, she said, but the U.S. experience proves it’s possible.

New entrants often complain about the state of competition in Germany, where Deutsche Telekom dominates the market. A national association of mobile operators -- including Colt Telecom, Cable & Wireless, BT Global Services and Tiscali -- banded together to lobby Parliament during the debate on the country’s new telecom law, said Caroline de Cock, Colt dir.-EU regulatory affairs. The group hasn’t been as successful as U.K. counterparts, she told us, because RegTP is headed by a political appointee and the regulator lacks the political will to reform the country’s markets.

De Cock labeled Ofcom’s BT decision “nondiscrimination rebranded.” Incumbents aren’t supposed to discriminate between their own retail arm and other retail suppliers, she said, but Ofcom has expanded that to mean that equality should apply to operators’ behavior as well as prices. Ofcom’s market review shows “20 years of liberalization in the U.K. haven’t delivered,” de Cock said. At least Ofcom admits competition isn’t there yet, she said. Real equality of access to BT products can come down to problems as simple as entrants having to wait for a BT employee to show up to a site with a key, de Cock said. If Ofcom’s action helps harmonize wholesale products from incumbents, she said, it'll be “earth- shaking.” But if the decision is limited to the U.K., it won’t matter. -- Dugie Standeford

ECTA Notebook…

The European Commission (EC) should do more to combat competition problems hampering entrants into telecom markets, several speakers said Tues. at the European Competitive Telecom Assn. (ECTA) regulatory conference. France has seen expanding competition in broadband services, but the market hasn’t stabilized and strong regulation is needed to spur more growth, said Katia Duhamel, managing dir. of Aforst, a French new entrants’ association. Aforst wants separation of France Telecom’s retail and wholesale branches, but Duhamel admitted it’s politically unlikely. Aforst also seeks interim controls on markets in which competition is lacking, because some countries have been slow to carry out the European Union’s new e-communications regulatory package. By contrast, Slovenia’s telecom market is extremely competitive, and its customers very satisfied, but there’s no “fairness” in awards of investment, said Zoran Thaler, CEO of Si.mobil, the country’s #2 mobile operator. Slovenia is a “perfect laboratory” of all possible incumbent uses and misuses of its dominant position, he said. The lack of standardized regulation means companies like IDT choose to enter markets with the fewest regulatory barriers, said Jon Peters, managing dir.-IDT Europe. Whether it’s the U.K. or the global market, it’s about “access, stupid,” said Lloyd Salvage, Equant vp & country mgr., U.K. & Ireland. Asked what the EC should do to open telecom markets, several panelists urged it to push countries that have been slow to carry out the new regulatory package. Salvage said the EC should begin to look at global regulation. It’s difficult to find the level of interactivity and interconnection multinational companies want, he said, so harmonization should be taken to the global level.