Ofcom shames BT

Ofcom has detailed BT's misdemeanours in detailed documents published yesterday. Strip away the jargon and what's revealed are "substantial delays" to the introduction of wholesale products that would allow rivals to compete and consumers to get a better service.

As BT, Ofcom and the industry look to reach some kind of settlement, perhaps it is reminding ourselves exactly why the regulator has threatened to break-up the UK's dominant telco.

"Ofcom suspects that competition is being restricted in markets for the supply of wholesale access and backhaul network services in the context of electronic communications in the United Kingdom and on directly related downstream retail markets," said Ofcom in the document entitled Notice under Section 155(1) of the Enterprise Act 2002.

"In the wholesale markets identified, BT has and will continue to have a substantial degree of market power. BT is also a vertically integrated provider with a presence in the directly related downstream markets.

"Ofcom believes that the combination of these features (upstream market power and vertical integration) provides BT with both the ability and the incentive to discriminate against its downstream competitors, who are also its wholesale customers.

"Moreover, Ofcom suspects that BT may have engaged in conduct which has had the effect of restricting competition."

Hang on a mo, "conduct which has had the effect of restricting competition"? Is Ofcom gonna dish the dirt on BT? You bet...

Ofcom says that delays to the introduction of some wholesale products have been "very substantial" not least in local loop unbundling (LLU), which enables rivals to install their kit in BT exchanges and compete head on with the telco.

For example, says Ofcom, in November 1999, Oftel [the former telecoms regulator] ruled that BT must offer LLU products that could be used by rivals to provide competitive services.

"In June 2005, five and half years later, the Telecommunications Adjudicator is still working with BT to resolve problems with many important features of the LLU products. As a result of such problems, the LLU products continue to suffer from inferior functionality to those that BT supplies to itself."

Tut tut. But there's more.

"Four years have passed since BT was directed to negotiate the terms of PPC (partial private circuits) provision on a commercial basis, yet there remain a number of areas in which BT's wholesale customers consider that PPCs are inferior to the network inputs used by BT's downstream divisions."

Oh dear.

And what's this? BT has been dragging its heels over wholesale line rental (WLR) - a product that enables rivals to compete directly with BT Retail? And still it's not right?

"Oftel's determination that BT must offer WLR as a remedy was taken in August 2002. BT's WLR product has been repeatedly redesigned to resolve problems identified by wholesale customers. Release 14.1 of WLR, which will address many (but not all) of the remaining issues, is expected to be launched in December 2005, nearly three and a half years after the original determination."

A spokesman for the giant telco told us: "BT doesn't agree with everything that Ofcom says, but we do agree that we need to address the perception in the industry by providing total transparency. That's why we're setting up a new business unit to do just that."

In March, BT boss Ben Verwaayen told the rest of the UK's telecoms sector to "get on with life" as he sought to explain how the UK's monster telco and Ofcom had managed to "get the level of discussion going to a level of much more intelligent debate". Elsewhere within the company BT is busy trying to convince the world and his dog that it really is committed to change.

But on the basis of Ofcom's observations about BT's behaviour, the regulator and the rest of the industry would be wise to carrying keeping a sharp eye on the UK telco. ®

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