February 7, 2005 – BT has submitted its response to the telecom regulator Ofcom´s Strategic Market Review of the UK Telecommunications market, which among other things called on BT to deliver equivalency or equal access to the local loop or face the consequences i.e. an Enterprise Act market investigation, and referral to the Competition Commission. BT has proposed to set up a regulated Access Services division with independent board members appointed by Ofcom to manage equal access to BT´s local network for BT Retail and competitors.

Sandra O´Boyle, senior analyst of Telecom Services Europe states “The biggest beef of UK competitors to Ofcom is that BT Retail gets preferential treatment from BT Wholesale and they complain they don´t get the same products, pricing and guarantees on provisioning times, quality of service and fault resolution. BT has proposed setting up a new regulated division that would sell local access products fairly to BT Retail and competing operators but whether this goes far enough in practical terms to change BT internal processes remains to be seen.

On paper BT´s approach sounds reasonable, but it’s short on details. Whether this goes far enough to get BT a settlement depends on how the new group will work in practice, how much teeth the Equality of Access board will have, whether all local access products (even DSL) sit within the new group and how transparent product development, pricing, transactional processes will be.

BT is giving some ground but nothing comes without a price. BT expects Ofcom to reduce regulation in other areas such as fixed voice and wants a clear idea on future regulation before it invests heavily in a 21st Century IP network. So, has BT gone far enough for Ofcom? At this stage, probably. BT has thrown in a blinding number of sweeteners such as price cuts in wholesale DSL, faster ADSL speeds up to 8Mbps, ADSL 2 trials, an expanded SDSL footprint, price cuts on wholesale line rental and its full LLU product. BT is covering all the hot buttons in order to get a settlement from Ofcom. Not all competitors will be happy with these proposals, BT´s IPStream price cut of 8% will only happen in its busiest exchanges, which is where LLU operators (e.g. Cable & Wireless) also plan to compete against BT with their own-loop DSL products. LLU operators e.g. Easynet focus on higher ADSL speeds and SDSL, which BT is now ramping up. So it’s give and take from BT’s perspective, and the jury is still out on whether the big cat really can change its spots.”

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Published on: 12:00AM on 7th February 2005