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UK poised for broadband choice

Decisions, decisions...

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2005 in review BT chief exec Ben Verwaayen described it as the "biggest change since BT was privatised more than twenty years ago" while John Pluthero, chief exec of Energis (which is now owned by Cable & Wireless) said it was a "good start point".

The 'it' both men were talking about was BT's regulatory deal with Ofcom earlier this year which was billed as a new chapter for the UK's telecoms sector helping to create a level playing field for operators in the UK.

Verwaayen described it as "historic" while Pluthero was more cautious preferring instead to wait and see whether BT's actions matched its rhetoric.

The last 12 months have been dominated by the Telecoms Strategic Review (TSR), an in depth examination of telecoms services in the UK which sought to increase competition by providing rivals with greater access to BT's network. The reason is that operators have long complained that BT stifled competition, failed to develop new services fast enough and gave preferential treatment to its own businesses.

Competition

Of course, all that nastiness is history. For in the end, a deal comprising 230 "legally-binding undertakings" was completed with BT promising never again to engage in the kind of behaviour that "restricts competition" and "discriminates" against its competitors. The deal - which the regulator reckons will encourage investment in infrastructure by other operators and promote innovations while leading to greater competition, lower prices and improved services - meant BT was spared an investigation that could have led to the break-up of the dominant telco.

Key to the new deal was the creation of a new access services division within BT called Openreach which will ensure that all telcos get equal access to BT's network.

Ofcom is confident that the new separate division - which will provide access to the local loop, for example and be overseen by an independent body from January - will allow "all communications providers to gain real equality of access to critical BT infrastructure on fair and equal terms".

The real impact of the TSR will only be known in years to come when consumers are able to pick and chose from a range of different services and providers. For while the TSR may be "historic", to use Verwaayen's description, it is also riddled with jargon such as "equivalence of inputs" and "replicability" which makes all but the most die-hard followers of telecoms regulation glaze over.

However, if the regulator has got it right, the TSR should lay the foundation for an increasingly competitive landscape and the signs are that things are already beginning to change.

If 2005 was about regulatory deals, then 2006 should be about seeing this translated into new products and services for consumers with major players looking to secure a sizeable chunk of the marketplace. For punters, the choices on offer could be all too tempting with telcos and ISPs falling over themselves to flog broadband services bundled with internet telephony, broadband TV as well as fixed and mobile packages.

Battle of the brands

What's more, consumers will be courted by some heavyweight brands keen to hold onto existing punters but eager to swell their ranks by poaching people from other providers. In this looming battle of the brands, punters could stick with BT, which is looking to increase broadband speeds next year ahead of the launch of its internet TV service next summer.

Wanadoo, the ISP formerly known as Freeserve, is due to rebrand as Orange in the new year making the mobile phone outfit a single brand for all mobile, broadband and other converged telecoms services. As services continue to converge, it means that punters will be able to get their mobile, broadband, video-on-demand and fixed line services all from the same company charged on the same bill.

Or punters could source all their communications services from Virgin - if NTL succeeds in buying out the mobile operator. NTL is already merging with Telewest but the buy-out of Virgin Mobile would give the cableco the chance to adopt the powerful Virgin brand and flog TV, phone, mobile and broadband services. Then there is Sky's decision to buy broadband LLU operator Easynet, giving it the opportunity to offer its eight million satellite punters the triple play of TV, phone and internet in a move to rival merging cablecos NTL and Telewest.

Indeed, local loop unbundling (LLU) also looks set to take off in the next year with the UK on target to hit one million unbundled lines during 2006 with AOL UK just one of a number of major players keen to begin providing broadband services direct to end users next year.

Time to switch?

The big question, though, is whether consumers want to switch providers. After all, there's the hassle factor of moving provider, although Ofcom has already signalled that it wants to make switching providers much easier for consumers. Even so, there's always the danger that new providers might not be able to live up to their own hype.

After all, confidence in this new era of competition took a real hammering in the summer after a cock-up by LLU operator Bulldog. The C&W-owned operator looked to steal a lead and launched a major marketing operation to recruit new punters. Its blanket coverage was impressive and the offer compelling - but Bulldog was unable to meet the demand it created. Consumers were left without phone lines and broadband connections while the firm's support lines were swamped with calls from angry consumers. In the end, it led to an investigation by Ofcom and assurances from Bulldog that such problems would not resurface.

But it serves as a lesson to all operators that while the TSR has created real opportunities to challenge the dominance of BT by providing real choice, real competition - get it wrong and they will be confined to the doghouse. ®

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