Give Competitors Access Before Easing BT Retail Price Controls, UKCTA Says
The U.K. Office of Communications (Ofcom) is “muddying the waters” of the U.K. telecom market by proposing to ease regulation on some British Telecom (BT) retail products and services before ensuring that rivals have adequate access to underlying wholesale offerings, the U.K. Competitive Telecom Assn. (UKCTA) said Fri. With 3 consultations underway or recently closed that will have a “fundamental impact” on competitors and consumers, Ofcom is sending alternative telcos confusing signals, said UKCTA Dir.-External Relations Christine Roberts in an interview. BT, however, disagreed that the issues should be kept separate.
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UKCTA’s worry flows from a recent Ofcom proposal to let BT bundle certain retail services for offer to customers at unpublished deregulated prices when their provision meets defined standards, Roberts said. One is “replicability” whether competitors can replicate, technically and commercially, each element of BT’s service bundle. The idea dates to a 2003 consultation in the context of whether to let BT bundle services in markets where it held significant market power in regard to other services if other operators could copy end products such as low speed leased lines and exchange lines. The consultation slipped to the back burner when Ofcom saw that BT rivals wouldn’t be able to replicate those offerings any time soon, Roberts said.
Ofcom later began a comprehensive strategic review of U.K. telecom. That exercise focused on the notion of making BT provide competitors “equivalence” of outcome and input to avoid an antitrust inquiry. But, said Roberts, equivalence has to do with wholesale, not retail, services.
Since then, Ofcom has launched 3 consultations with big implications for competition, Roberts said. One, as noted, examines whether other operators can replicate BT’s business customer retail services. A 2nd looks at whether, if those services are replicable and products with significant market power can be bundled and offered by other operators, BT can offer the same services to its customers bundled and at preferential undisclosed prices. In the 3rd consultation, Ofcom proposed to relax retail price curbs on BT wholesale line rental product if it’s “fit for purposes” to the extent that competitors can offer the same business inland calls, business exchange lines and low bandwidth leased lines to their own customers.
The proposals create the potential for confusion and inconsistency between equivalence, which looks at wholesale services, and replicability, a retail element, Roberts said. Replicability seems to set a lower threshold for gauging whether BT’s market behaviour is acceptable. UKCTA wants Ofcom to make sure BT is meeting its obligations to provide equivalence, and then conduct a full market review before considering replicability and, perhaps, deregulation. Competitors aren’t “out of the woods yet,” she said.
Replicability is a “major principle in the entire process of equivalence” and ensuring equivalence across the industry, a BT spokesman said, adding the consultations are interlinked and should be taken together. Ofcom is proving itself an “evidence-based regulator,” the spokesman said. BT doesn’t accept the regulator is “looking at things in the wrong order.”