Ofcom Amends Network Charge Controls For BT

by Robin Pilgrim, LawAndTax-News.com, London

22 August 2005

UK telecoms regulator, Ofcom on Thursday published new limits to the wholesale prices that BT Group can charge its competitors.

The details of the network charge controls (NCC) for BT narrowband products are designed to cover a four year period from 1 October 2005. The decision follows consultation earlier this year and will limit BT’s prices for some key wholesale telecoms charges.

In a statement, Ofcom announced that:

"The regulatory approach proposed by Ofcom’s Strategic Review of Telecommunications seeks to deliver sustainable and effective competition across the sector. Ofcom estimates that these controls on BT's wholesale network charges, when combined with effective retail competition, could potentially reduce telecommunications costs for UK businesses and consumers by around £350-400m over the four year period."

"Ofcom has also concluded it can deregulate in particular areas of the wholesale narrowband market, specifically in inter-tandem conveyance and inter-tandem transit. This is the market in which communications providers carry narrowband calls and data between the main UK telephone exchanges. Ofcom has found that BT no longer has Significant Market Power (SMP) status in this market and is therefore removing charge controls and other relevant regulation."

"Ofcom is also replacing BT's charge control for carrying traffic between local and main exchanges (local-tandem conveyance) with a ‘safeguard cap’ that will limit charge increases for that service to below inflation. This change recognises the continuing growth of competition in this market."

"The same broad approach to regulating BT's narrowband services has applied since 1997 but may need to change in the future. As Next Generation Networks (NGNs) – including BT’s new 21CN – are developed, new interconnect products will also be introduced. In the future Ofcom will consider the impact of these changes both in terms of how markets are defined and how wholesale services should be regulated."

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