23 June 2005 UK telecoms giant BT is to provide competitors with greater access to its local networks, raising the possibility of cheaper telephone calls.
BT agreed a deal with communications regulator Ofcom that will see competitors gain access to its local networks, and wholesale prices drop. In exchange, Ofcom has mothballed threats to break up BT.
The final arrangement – details of which are due to be published on 30 June 2005 – will break BT’s effective monopoly of the national telecoms network by introducing several reforms enabling free market access to competing telcos.
Among the objectives that Ofcom has stipulated are price reductions of business and consumer calls, connections and services; a support for faster broadband and voice over IP (VoIP) and the provision of regulatory support for new competitors.
“Guaranteed equality of access is the real underlying issue in the strategic Review as far as BT’s competitors have been concerned. They will see this as a step in the right direction,” said Tony Lavender, director of telecoms research at analyst house Ovum.
As part of the reforms, BT has agreed to the creation of a new operationally independent business unit called Access Services. This unit will employ 30,000 BT staff currently responsible for BT’s local access network and provide both BT and other telcos equal access to all products at uniform prices.
It is proposed the new division will have separate headquarters, as well as new branding on vehicles and uniforms to emphasise the separation from BT’s operational services. Both BT and Access Services will be monitored by a new Equality of Access Board (EAB) and will include non-BT directors.
BT chairman Sir Christopher Bland said today: “This has been a tough journey but it is important that we have regulation that encourages investment and innovation. The proposed settlement strikes the right balance and every player will benefit from the certainty and clarity it provides.”
While Ofcom has withdrawn its threat to take BT to the Competition Commission, it has strengthened its powers to deal with BT should it fail to live up to this new agreement. In future Ofcom would be able to take BT to the High Court for any breach of the agreement; third parties would then be entitled to seek damages.
“This is a considerable strengthening of the powers available to impose remedies on BT; something the rest of the UK industry had been seeking. In short, Ofcom have will have the stick to enforce equality of access,” said Lavender.
