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BT let off broadband leash |
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Friday, 15 February 2008 |
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Europe backs UK proposals to remove price regulation constraints in specific wholesale broadband markets where sufficient competition is established.
The European Commission yesterday came out in support of proposals by the UK telecom regulator, Ofcom, to lift incumbent regulation on BT in roughly 65% of the UK wholesale broadband market. The deregulation is being applied on an area-by-area basis with the benchmark of four or more suppliers competing in population centres with 10,000 or more homes and businesses.
The result is a move from sector-specific regulation to a reliance on general competition law principles in these areas. It also marks an end to ex-ante regulation of UK broadband which is the norm in most EU telecom markets. Indeed, the EU is stressing its belief that this decision will act as an incentive to other European regulators to foster full broadband competition in their markets in exchange for a lighter regulatory workload.
"Ofcom's finding of effective competition in a substantial part of the UK broadband market shows that the more effective a national telecoms watchdog regulates, the faster can be the move to competition law, inbuilt in the EU's telecoms rules", said Viviane Reding, the EU's telecom policy supremo. "I therefore welcome the precedent set by Ofcom's proposal to define sub-national geographic markets. The proposal at the same time has enabled the Commission to provide clear guidance and policy principles for all national regulators in this important area. This should now be a solid basis for a coherent European regulatory approach to regional markets and give the required legal certainty to the market."
Some have interpreted this as an endorsement of BT’s decision to separate its wholesale and retail arms under regulatory duress in 2005 (click here). The EU is certainly hoping to spin it that way, with countries such as Italy close to following suit for various reasons. It may not galvanise the incumbents, but it might just spur other independent national regulators to follow suit. Always assuming that they are ‘independent’, of course.
Jim Chalmers
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