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Green light to scrap telecom rules in parts of UK
Thursday 14 February 2008 12:25:30 by Andrew Ferguson

It looks like deregulation is to be the next big thing in the parts of the UK where competition has meant the old incumbent BT has lost a lot of its dominance.

So far other than the comments in the Reuters UK article there is not much concrete information on what any of the interested parties expect to happen next. Ofcom has welcomed the news and looks set to start a public consultation on the subject.

"We deregulate part of the UK broadband market in places where there is competition,...

Only regulate where regulation is necessary, where there are bottlenecks,...

This is a decision which will not only allow Great Britain to scrap a very big part of its regulation on the broadband market, but will also give the rules under which this can happen in other member states

EU Telecoms Commissioner Viviane Reding at a EU Parliament hearing

What the effects would be of removing a lot of rules and obligations from we presume mainly BT are hard to predict, it could see the two tier pricing becoming more pronounced and an end to the single price across the UK to the consumer for BT Wholesale based products. Conversely it may allow BT and competitors to seriously start on deploying fibre into the last mile with less need to consider the desires of its competitors. There is even an outside chance that a new entrant to the UK Telecoms arena may see a chance to create its own fibre local loop to compete with the BT metallic and Virgin Media fibre/co-ax hybrid.

"Ofcom proposes to tailor regulation in these sub-national markets according to the level of competition in each,

The area covered by this proposed deregulation accounts for approximately 65 percent of UK premises

Statement from Ofcom

Ofcom published a review of the wholesale broadband markets in November 2007 which defined the main sectors of the market in the UK, it looks likely that the deregulation would apply to the "Market 3" area where four or more principal operators are operating or expected to operate.

Comments

Posted by TLMC over 9 years ago
does this not mean that areas where money can be made will be open to anyone, where as areas where the costs to provide are higher are being forced on one company and therefore having anegative impact on the overall user base?
Posted by edajc1964 over 9 years ago
I would suggest that users look at the deregulation of the energy industry . The smaller companies will be sueezed out with the larger, less user friendly services dominating.
No doubt pricing will also be just as customer (un)friendly, and the products will be increasingly substandard.
The free market at its best!
Posted by AndrueC over 9 years ago
"There is even an outside chance that a new entrant to the UK Telecoms arena may see a chance to create its own fibre local loop to compete with the BT metallic and Virgin Media fibre/co-ax hybrid."

Well, I laughed :D
Posted by AndrueC over 9 years ago
@TLMC:Pretty much, yes. It gives a green light to BT to charge people what it costs. That's good news for BT because now it can fight back against the LLU crowd.

Not so good news for those exchanges that the LLU operators have turned their noses up at. It'll just encourage BT to adjust the prices there and/or pull out.
Posted by AndrueC over 9 years ago
I suppose it depends what areas will be deregulated and whether BT take the hint about the future.
Posted by Dawn_Falcon over 9 years ago
Andrue - Well from the details, it looks like only the major citys will be affected anyway..
Posted by AndrueC over 9 years ago
@Dawn_Falcon:Yes but those exchanges are subsidising the remote ones. This allows BT to join in the cherry picking. Large exchanges might get fibre but the remote exchanges don't stand a chance. They will just look even less viable than they do now. This will be compounded by the fact that BT will be getting less income from broadband as a result of the price reduction.

Basically as I currently see it this will just increase the digital divide and reduce the pot of money available for future investment.
Posted by Dawn_Falcon over 9 years ago
21CN allready has differential pricing so nothing has changed.
Posted by c_j_ over 9 years ago
21CN may have differential pricing, but for voice there is a USO. There is no USO for broadband. As already pointed out, the likely effect of this is not investment in fibre, more likely BT cuts its prices in easy-to-serve areas (which will already have LLU). What then for the non-LLU areas? Lose their broadband altogether, like BT payphones are disappearing, because they're not profitable on their own and there's no obligation on BT to provide that service?

Another regulatory victory for BT :(
Posted by CARPETBURN over 9 years ago
What a coincidence this news comes only a short period of time after a recent story on here about BT losing 35 million to LLU providers.
Posted by herdwick over 9 years ago
it is actually a complete coincidence, this derives from OFCOM's Wholesale Broadband Review consultation (open to all) which proposes that BT doesn't have significant market power in some defined markets. The EU have responded to that consultation positively which effectively underwrites OFCOM's opinion that they can selectively deregulate a geographic market.

Could theoretically be the end of IPStream in big cities as BT would no longer be obliged to offer a Wholesale product there, putting them on a par with Virgin Media's cable network.
Posted by andrew (Favicon staff member) over 9 years ago
In the bigber view a loss of £35 million is peanuts compared to the money spent by the LLU providers to cause this sort of loss
Posted by Guzzo over 9 years ago
edajc1964 has a VERY significant point indeed. Remember how wonderful people cheered for privatization. Little Freddie got 100 shares and big Fat City Cat got 100,000. Years later we are being raped by the City for keeping warm

Does anyone think Telecoms is going to be different? We have seen prices tumble for ADSL 8mb speed from £32.00 Pipex 2mb to £24.99 for 8mb. But what happens when there are few providers left after all the coming mergers and buyouts?
Posted by Guzzo over 9 years ago
Don't think it isn't coming. If there is money to made hand over fist they will take it. With Oftel having no real teeth what is to stop the Companies from charging what they like. It could be like the old days when you had BT or OneTel and thats your lot!
Posted by Guzzo over 9 years ago
You have to remember that the idea of providing a service is incompatable with high profit. The appointed managers of such companies have only the one responsibility and that's to the major shareholders, and that's not little Freddie with his 100 shares.

How about scrapping the lot of them and bringing back the good old PO with Fibre to every house in the UK and all you have to do to fund it is scrap the Pensions and Payrises to Gordons army of Penpushers/lackeys recruited to do nothing productive for the last 10 years?
Posted by AndrueC over 9 years ago
@Guzzo:Investment in a national high-speed network is also in conflict with making a profit.

Bringing back the PO is not the answer though. No-one that knows the state of the UK telephone network when BT took over could possibly want the PO back in charge.
Posted by edajc1964 over 9 years ago
I agree with both Guzzo and AndrueC.
Big business will kill competition at the first chance and then squeeze us all for profit, its basic business economics.
Public investment in Japan, South Korea and others has been very successful in creating a productive service in many areas. Returning to the PO, NO, but learning from our competitors, YES.
The best option appears to be a semi-public infrastructure which the private sector can work over. It would not stop innovation, but it would ensure that a universal structure is in place.
Posted by CARPETBURN over 9 years ago
quote"it is actually a complete coincidence, this derives from OFCOM's Wholesale Broadband Review consultation (open to all) which proposes that BT doesn't have significant market power in some defined markets."
LOL like i and many are gonna believe a single word that leaves Ofcoms lips, they still havent even solved MAC issues for some a whole year on.
BT doesnt have 'market power in some markets' surely thats good, isnt it?
Posted by CARPETBURN over 9 years ago
quote"In the bigber view a loss of £35 million is peanuts"
If that is the case and 35 mill a year loss is peanuts/acceptable (call it what you will) Why didnt they start to roll out fibre? They could have atleast gave some rural areas a decent service at last. Of course 35 mill to BT may be peanuts. However ask them if they mind losing it to LLU though and i imagine you will get a blank angry look. They knew when LLU started they would lose money (remember them whining?) Looks to me like around mid last year they went to ofcom crying again and this is the result.
Posted by Somerset over 9 years ago
So where would you start to roll out firre, at what cost?
Posted by CARPETBURN over 9 years ago
quote"So where would you start to roll out firre, at what cost?"

As i dont own BT infrastucture i couldnt comment of the "BEST" place in the country to start obviously. If they can suck up a 35 mill loss to llu which may continue year on year though i dont see why they couldnt start fibre.
Posted by herdwick over 9 years ago
"i dont see why they couldnt start fibre."

nobody has produced a business case that shows it makes sense. Is there extra revenue and/or cost savings to match the scale of the investment ?
Posted by Somerset over 9 years ago
It will work in new build areas like Ebbsfleet.
ISDN and private circuits have been provided by fibre for many years although this is usually for businesses.
Posted by CARPETBURN over 9 years ago
quote"nobody has produced a business case that shows it makes sense. Is there extra revenue and/or cost savings to match the scale of the investment ?"
I doubt they have made a business case to show it wouldnt make sense either, that was not the point though.... The point was if they dont blink an eye at losing 35 mil a year and that loss year on year may continue then there is no real reason they couldnt take a lost setting up fibre and over time expand its roll out. (CONT)
Posted by CARPETBURN over 9 years ago
This would make some sense also. In a way where you can actually see real time loss or gain in areas rather than just have some bit of paper from some agency saying it will or wont make sense. You can more accurately predict loss or profit from one area having the service and predict loss or profit if you fibre another area more accurately. Theres no reason they couldnt start fibre in say a single rural and single city area and watch what happens, especially if they are losing 35 mil a year already anyway.
Posted by Somerset over 9 years ago
This says a bit about fibre deployment:

http://www.openreach.co.uk/orpg/products/newproducts/fttp/fttp.do

Fibre to the home will not help lost of BT business to LLU. It enables all providers to route over fibre rather than copper.
Posted by comnut over 9 years ago
well will this enable BT to *reduce* their standard prices(note the usual 'spin' - 8.95, then 17.99, PLUS the new line rental of 12..) - if they can reduce this to *less* than 15 inclusive(or even just say £4 a month, as some do!!), then they will have lots running back to them.... those prices were why people left in the first place..

In the second place, though, CS needs to be drastically improved - another reason people leave....
Posted by chrysalis over 9 years ago
BT arent about to pull out of areas that have no LLU but I expect to see some pricing changes, this does possibly open the way for local loop investment in cable areas although I still think its very unlikely.
Posted by chrysalis over 9 years ago
guzzo its not all about prices, low prices are the primary course of current problems.
Posted by CARPETBURN over 9 years ago
quote"Fibre to the home will not help lost of BT business to LLU. It enables all providers to route over fibre rather than copper."
This was not my point, my point is if they are losing money anyway, why not slowly roll out fibre. They are losing money anyway, think of it as putting a finger in a hole fist size in a bucket... The water is still gonna flow free so theres no point trying to stop it or save it.
Posted by Somerset over 9 years ago
Slowly roll out fibre - is that starting with Ebbsfleet which probably getting it's own code of 01987?

And then existing areas - but how fact to make a difference?
Posted by CARPETBURN over 9 years ago
Ebbsfleet is a joint project, it is completely different to what i just suggested.
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