Ofcom consults on changes to rules for telephone market
Consultations from Ofcom are something that most people do not ever expect to read, but the decisions taken as a result of the consultations can have far reaching effects that affect us in the telephone and broadband markets.
Today sees Ofcom publish three consultations, the one most clearly of concern to the consumer is the review of narrowband retail markets. Narrowband refers to telephone and ISDN services, and the proposal on the table is to deregulate BT Retail in the areas of the UK where Ofcom has found competition to be healthy. The main effect of deregulation would be to allow BT Retail to offer bundles comprising, voice, broadband, mobile or TV, just as other providers do. BT Retail already markets all these products but with the removal of price controls, there is scope for deals whereby you get free calls if you take the broadband and TV package along with line rental. Additionally regional pricing may come into play.
The other consultations look at BT Network Charge Controls, and a proposal to allow BT to increase its charges above the Retail Price Index, whereas for the last few years cost reductions have been used to allow BT's competitors to get a good foothold in the market.
The third consultation considers the removal of some regulations for wholesale telephone products (e.g. Wholesale Line Rental - WLR) where Ofcom feels the market is competitive.
The narrowband market has been a fairly steady market in terms of overall numbers, but what has happened over the last few years is that BT has lost out on customers as products such as full LLU have taken off. One example is the rapid growth in size of Opal and its retail offering TalkTalk. Virgin Media has had a pretty static showing in terms of telephone lines, with no significant rise or fall. The mobile market is said to be killing off the traditional telephone line but there is no widespread evidence of this, although some interesting data does arise from the reports. 24% of households with an income of £11,000 or less do not have a landline, but for households with an income of £30,000 or greater this drops to 5%.
To reassure anyone who is panicking that these proposals may mean a removal of the USO for landlines, that is not under consideration. Unleashing the marketing power of BT Retail may however set alarm bells ringing at providers who have, to date, competed on just value for money- BT Retail may be able to pull a 'free' broadband option out of the bag.