Ofcom releases its Phase 2 proposals
Ofcom has published its Strategic Review of Telecommunications Phase 2 Proposals. This phase of the Strategic review is open to consultation by all stakeholder groups, who can submit replies until the 3rd February 2005.
This review is the first review of this size for 13 years which has seen lots of changes in the UK telecoms market. In fact the UK telecoms market is now much broader than before, since it has cross-overs between multiple technologies and services. Also with the recent news that the first calls are going over the 21CN network, a review of both how the regulator operates, and the rules it imposes on the industry are needed now.
Ofcom themselves do recognise the problem that is probably keeping the UK broadband market back from being truly market leading and that is "These changes bring uncertainty as well as opportunity, particularly for investors; yet companies have a limited opportunity in time to make the significant, long-term commercial decisions required if they are to remain competitive in the future." Many countries were lucky and started much of their broadband and IP network expansion in the heady 90's, unfortunately the UK was a bit slow off the starting block, and now has to convince investors at every step that a reasonably fast return on investment is almost guaranteed.
We have read many commentaries highlighting the stick that Ofcom is beating BT with, about ensuring equal access to its services. Our concern here is that, this may lead BT to focus on satisfying this need, at the expense of new and future product development. If other providers are going to meet the challenges head on, of taking the UK into the 21st Century, and give consumers products they want and can afford then the Ofcom stance is fine. We would raise the concern though, that while things like local loop unbundling can bring 8Mbps to many households, it is unlikely to reach anything like universal coverage for many years, and more importantly the UK copper local loop is not upto bringing 8Mbps to more than about 50% of households. The 20Mbps and 50Mbps of countries like Japan will need new network infrastructure, either piecemeal upgrades, or a universal UK plan. A big question needs to be asked by Ofcom, of who is going to be able to afford this, should Ofcom and the government help with these upgrades and how should it be regulated?