Wednesday, February 2, 2005

BT Issues Equal Access Proposal, Seeking Settlement with Regulator

BT unveiled a set of proposals to offer competitve operators lower wholesale prices, faster broadband services and transparent, highly regulated access to BT's local network. BT hopes the proposals could form part of a regulatory settlement between itself, the national telecoms regulator (Ofcom) and the industry. Key points of the proposal include:

  • BT to set up an Access Services Division to provide transparent and equal access to BT's local network. This "fenced off" part of the business would remain within BT and would have responsibility for ensuring equal access to the services and assets associated with the local loop. Equality of Access Board, with two independent members chosen in consultation with Ofcom, would oversee its operations.

  • BT to cut a range of wholesale broadband prices and introduce faster services

  • BT to reaffirm its commitment to local loop unbunbling (LLU). BT also proposes a further price cut to the fully unbundled LLU product

  • BT to increase the commercial attractiveness of Wholesale Line Rental

  • BT to provide fair access to its 21st Century Network

As part of this proposed settlement, Ofcom would:

  • Focus regulation on BT's local network through its Access Services Division

  • Roll back other regulation on a progressive and rapid basis

  • Allow successful investment in next generation networks to be properly rewarded

  • Allow BT to compete on a level basis with other operators in the market

BT said its chief aim was regulatory certainty to invest and innovate with confidence. BT has plans to invest up to £10 billion in the creation of a 21st Century Network over the next five years.However, BT said these plans are dependent upon receiving assurances it can generate appropriate economic returns from its investment.

BT chief executive Ben Verwaayen said: "The United Kingdom has the opportunity to create the most exciting and innovative telecoms market in the world. Ofcom has recognised this and has initiated a Review with the aim of creating a new regulatory framework to make this happen. BT has a critical part to play, and today we are making a set of far-reaching proposals towards that framework."
  • In November 2004, Ofcom, the official telecom regulator in the U.K., published its proposals to support the growth of greater competition, innovation and investment certainty in the UK telecommunications sector. The proposals are intended to prepare the ground for a new regulatory framework as the market undergoes a migration to next-generation networks based on IP. Following a strategic review of the market, Ofcom said it has identified two key problems:

    Firstly, an unstable market structure in fixed telecoms, dominated by BT and with alternative providers that are, in the main, fragmented and of limited scale.

    Secondly, the continuance of a complex regulatory mesh, devised over twenty years of regulation and in many areas dependent upon intrusive micro-management to achieve its purposes, yet which, in aggregate, has failed effectively to address the core issue of BT's control of the UK-wide access network.

    Rather than a breakup of BT, Ofcom said it prefers an approach that requires BT to deliver real equality of access. Ofcom is proposing that the most effective way to deliver the changes required will be for regulation to address head-on the barriers preventing competitive wholesale access to BT's network. Real equality of access would mean that BT must offer competitors the same or similar wholesale products and prices, as are made available by BT to its own retail businesses, and; transactional processes, as are made available by BT for the use of its own retail businesses

  • In June 2004, BT outlined a five-year timetable for migrating its circuit-based voice services to IP. The mass migration of customers from PSTN to IP will begin in 2006 and, by 2008, BT expects a majority of the transformation will be completed. BT's 21CN initiative aims to migrate the company's existing multiple, service specific networks to a single converged multi-service IP based network. It includes work towards increasing the bandwidth of services provided over the copper access network as well as the trials of FTTP.

See also