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BT gets EU backing to raise (and cut) wholesale broadband prices

Ofcom deregulation plan a goer thanks to unbundling

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European regulators have backed a move by Ofcom to drop regulations that force BT to offer competitors fixed-price wholesale broadband nationwide.

Ofcom wants to relax rules serving more than 10,000 premises in exchanges where there are four or more unbundled communications providers who offer wholesale broadband. BT's obligations look set to be scrapped on the grounds that the local market is competitive.

Ofcom says this will mean de-regulation for about 65 per cent of the UK market. The proposals are based on a review of UK wholesale broadband, published by the national communications watchdog in November last year.

Supporting the plan, EU competition commissioner "Steely" Neelie Kroes said: "In the more densely populated areas of the UK, consumers have the choice between different broadband suppliers which have rolled out their own infrastructure. For many of these areas ex-ante regulation is no longer warranted."

For the 35 per cent of lines not set to be deregulated, Ofcom proposes to define three other sub-markets, where BT (or Hull's Kingston Communications) still has "significant market power":

  • Local exchange areas with two or three wholesale providers and forecasts for four or more, but where the exchange serves less than 10,000 premises (15.7 per cent of UK premises).
  • Local exchange areas where only BT is present (19.2 per cent of UK premises).
  • Hull - local exchanges where Kingston Communications is the only operator (0.7 per cent of UK premises).

In these areas it plans to maintain regulations that will be "tailored" to each sub-market. The consultation on the deregulation moves closed yesterday. Ofcom will announce final proposals in spring.

BT's struggling Wholesale division will particularly welcome news it'll be able to charge more, or more likely less, to compete in many areas. Its results last week showed an 11 per cent revenue slide caused by the ramp up in unbundling by Sky, Carphone Warehouse, and Tiscali. ®

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