Trade and Industry committee report on Ofcom reviewThe Select Committee on Trade and Industry (TISC) has issued its latest report on the strategic review of the Telecommunications market by the industry regulator Ofcom. The HTML version of the report can be read here. For those that found the recent Ofcom report hard work and lengthy, this TISC report is much more to the point and makes easier to follow points.
The report is mainly concerned with the two aspects of the UK broadband market, Local Loop Unbundling (LLU) and Equality of Access. We found the comments in section 2.12 very interesting and have reproduced it below:
A while ago, we reported on a plan by BT Wholesale to provide a rebate on the exchanges where it is making cost savings due to the high demand in an area, the rebate was something like 8% to the ISPs, i.e. around £1 per month. The TISC in section 2.21 raises a concern that has been voiced in our forums, that this may actually harm the chances of real competition to BT. It seems amazing that what looks like a relatively small reduction could cause so many problems, but this highlights the uncertainty in investing in LLU services. Perhaps the UK will only see wide-spread LLU on 1000+ exchanges if a foreign teleco comes to these shores to escape its own regulator.
The report also comments on the reliance in the UK on the current BT Wholesale IPStream products, which are the core of the 5 million ADSL users in the UK. This has to a great deal of similarity between providers broadband services, though in terms of quality of service there is still plenty of variation. Though the last 12 months has seen products diverging slowly, as providers explore different niches, e.g. bolt-on VoIP (Voice over IP ) options, extra broadband content subscriptions, metered packages as a way to lower basic monthly fee, user selectable speeds of service. As yet the providers using BT Datastream services have done little to set them apart from the BT IPstream users. The small but growing band of LLU providers are starting to make larger ripples, but currently there is only 40,000 LLU lines in the UK, which is a very small percentage.
At the end of the day, for all the regulation, prodding and poking by Ofcom, LLU is only going to succeed if people buy it, and for this to happen the providers need to ensure that their quality of service at least matches the IPStream products and often exceeds them. It is most likely that the early adopters of LLU services at 4Mbps, 8Mbps and maybe faster later in 2005, will be the most vocal, and thus form a core that will then encourage others to sign up.