Ofcom reconsult on wholesale broadband access markets
Friday 20 August 2010 17:26:51 by John Hunt

Back in March, Ofcom published a consultation on their review of the wholesale broadband access (WBA) market. Since that time Orange signed an agreement with BT to supply wholesale broadband access which effectively reduces the number of large operators in the market from seven to six (BT, C&W, O2, Sky, TalkTalk and Virgin Media). Ofcom's original proposal to define the markets were as follows:

• The Hull area: (0.7% of UK premises);
• Market 1: exchanges where only BT is present (14.2% of premises);
• Market 2: exchanges where two or three POs are present or forecast (13.8% of premises); and
• Market 3: exchanges where four or more POs are present or forecast (71.3% of premises).

The changes to operators has repercussions on these definitions of the WBA markets which are used to determine if BT has significant market power (SMP) and this is used as a basis as to how BT sets wholesale prices for broadband. In addition, the European Commission questioned whether the geographic definition of markets based on number of operators was sufficient to identify differences in competition. As such, Ofcom is proposing new market definitions and these are based upon current confirmed roll-out plans from the relevant operators.

• The Hull area: (0.7% of UK premises);
• Market 1: exchanges where only BT is present (11.7% of premises);
• Market 2: exchanges where two POs are present or forecast and exchanges where three POs are present or forecast but where BT’s share is greater than or equal to 50 per cent (10.0% of premises); and
• Market 3: exchanges where four or more POs are present or forecast and exchanges where three POs are present or forecast but where BT’s share is less than 50 per cent (77.6% of premises).

The increase in premises within Market 3 means that BT is treated the same as any other operator in this area and so is free to set pricing at a level of choosing. This could mean reduced pricing for some broadband users, if their broadband operator uses BT wholesale services and if they offer price reductions if you are in a Market 3 area. The consultation is open until the 1st October and can be found here.