Ofcom Warns BT Of Potential Competition Commission Probe

by Robin Pilgrim, LawAndTax-News.com, London

22 November 2004

Presenting its Strategic Review of Telecommunications Phase 2 Proposals last Thursday, the UK's telecommunications regulator, Ofcom warned BT that it must provide "real equality of access" to its infrastructure for rival firms, or face a Competition Commission probe.

In its review, which follows several complaints about access to and pricing of the former monopoly telecoms provider's wholesale services, Ofcom put forward three potential solutions to the problem, namely:

• Full deregulation. Removing the existing mesh of regulation entirely and relying instead on ex post competition law to resolve complaints in order to significantly reduce intervention in fixed-line markets. However, given BT's continued market power, this would be unlikely to encourage the growth of greater competition and as such would not serve the best interests of the consumer;
• Enterprise Act investigation. Ofcom could investigate the market under the Enterprise Act 2002, with the potential for a subsequent referral to the Competition Commission; or
• BT to deliver real equality of access. Ofcom could require BT to allow its competitors to gain genuinely equal access to its networks. This option would also require BT to commit to behavioural and organisational changes to ensure that its competitors benefited from access to products and processes which were truly equivalent to those offered to BT's own retail businesses.

According to the telecoms regulator:

"The large majority of respondents to Ofcom's Phase 1 consultation suggested that Option 2 would be too disruptive and expensive, favouring instead the swift introduction of real equality of access. Ofcom shares that view. However, if real equality of access is not delivered, Ofcom will consider an investigation under the Enterprise Act and potential subsequent referral to the Competition Commission."

Continued comment on the proposals is invited until February 2005.

BT last week professed itself "pleased with the direction outlined in the report". Chief executive Ben Verwaayen confirmed this, telling the BBC that:

"We welcome Ofcom's call for a new settlement - where regulation is tightly focused on the parts of the market that need it, with deregulation elsewhere."

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