Feeds

Price war looms if BT price controls relaxed

Fight, fight, fight, fight...

5 things you didn’t know about cloud backup

Ofcom's plan to scrap price controls for BT after 22 years of having its hands tied could lead to a price war, industry watchers said today.

And while that could be good news for consumers in the short term, a price war could see some competitors losing out and sparking another round of consolidation.

"It is unclear how BT will structure their prices, but if they drop, it will inevitably spark intense competition in the home phone market, with BT's existing 12.9m customers benefiting from lower prices," said Blair Wadman, telecoms expert at price comparison service uSwitch.com.

"If the company slashes prices to entice those two million consumers who switched away in 2005, this would certainly see the five major home telephony companies in the UK engage in a price war in an attempt to gain additional market share. Increased competition would in turn lead to falling prices and greater choice for consumers."

But he warned that if prices decrease significantly, "smaller providers would struggle to compete, which might lead to further market consolidation".

Then again, with restrictions lifted, it could decide to increase prices...or do nothing. Publicly, at least, BT is playing today's announcement with straight bat.

Gaby Heppner-Logan, BT's Director of Regulatory Affairs said: "BT welcomes this consultation as further evidence of the highly competitive market in the UK. Residential call charges in the UK are already amongst the lowest in the world...and BT has already saved its customers more than £1billion over the past decade and this trend looks set to continue. We look forward to responding formally to Ofcom in due course."

But there are those who believe that plans to relax BT price controls are too hasty.

Four months ago, Ofcom was warned not to relax the rules that govern BT, despite its regulatory settlement with the UK's dominant telco following last year's Telecoms Review. UKCTA - the telecoms trade group that includes operators including Cable & Wireless, Colt, NTL and Thus - said competition in the sector would be put at risk if regulatory constraints are removed from BT too early.

UKCTA was concerned that plans to sweep away BT's regulation would be introduced even before rival operators have had a chance to go head-to-head with the dominant player.

As part of the Telecoms review and key to Ofcom's announcement today, BT created a new separate access services division - Openreach - responsible for providing equal access to BT's network for all providers. Within a month of its launch, Openreach faced its first investigation by Ofcom concerning charges for fully unbundled lines. Last month it emerged that Openreach didn't have enough staff to handle enquiries from rival operators. ®

5 things you didn’t know about cloud backup

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
So, Apple won't sell cheap kit? Prepare the iOS garden wall WRECKING BALL
It can throw the low cost race if it looks to the cloud
EE fails to apologise for HUGE T-Mobile outage that hit Brits on Friday
Customer: 'Please change your name to occasionally somewhere'
Time Warner Cable customers SQUEAL as US network goes offline
A rude awakening: North Americans greeted with outage drama
Shoot-em-up: Sony Online Entertainment hit by 'large scale DDoS attack'
Games disrupted as firm struggles to control network
We need less U.S. in our WWW – Euro digital chief Steelie Neelie
EC moves to shift status quo at Internet Governance Forum
BT customers face broadband and landline price hikes
Poor punters won't be affected, telecoms giant claims
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?