Ofcom pulls plug on wholesale broadband regulation
For most of the UK
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Communications regulator Ofcom is ending regulation for the majority of UK wholesale broadband.
Some 70 per cent of exchanges, about 10,000 premises, which have four or more providers of wholesale internet access will be freed from regulation.
Areas with less than four providers such as Hull will continue to be regulated - BT and Kcom in Hull will still have to provide a wholesale product to retail suppliers at a fair and reasonable rate.
A spokeswoman for BT welcomed the changes, and said it could mean better deals and more flexibility from BT Wholesale. Whether price cuts are passed onto consumers will of course be the decision of retail broadband providers.
James Blessing, chair of the broadband sub-group at Ispa (Internet Services Providers Association), told the Reg: "It is good that Ofcom has recognised the market has changed. But what happens next depends on what BT does with this freedom. Most observers see the price of the last mile, and therefore the headline price, falling. But the real concern for Ispa members is the price of bandwidth because catch-up TV means bandwidth usage by subscriber has gone up by 40 to 50 per cent. We're likely to see more mergers and acquistions in this market."
The move was backed by EU regulators in February. Ofcom's statement is here. ®
COMMENTS
Open Retch look after their own
In a rural area a customer lost sync on his long line. No amount of tinkering with different routers or filters or wiring would fix it. The line used to work unreliably but eventually broke. Customer was with Breath or someone. They had reported the fault to BT many times. On the advice of their tech support they switched to BT. BT gaurenteed to get the Broadband working, which they did, after they had installed 13 new telegraph poles along the street.
@Chad H
So, using your logic, the water companies don't run monopolies because you can buy bottled water from other companies?
"the price of the last mile ... falling"
James Blessing has either been misquoted or misunderstood.
For any ISP using BTwholesale-provided connectivity (which is lots of them, as BTwholesale is likely to remain the only national connectivity provider for ISPs who want to provide nearly-national coverage), the biggest part of the ISP's costs is not the cost of the "last mile", but the cost of the few hundred yards across a BTwholesale datacentre, with the BT national network on one side, and the ISP's own network on the other. (This bit is logically what BT call a "BT Central"; each BTw-based ISP needs at least one, some have lots, see [1] for rough prices).
It is the outrageously high price of the bandwidth across this "BT Central" which has led many/most BTw-based ISPs to impose caps, traffic management, PAYG tariffs, etc in recent years.
If an ISP wants customers to be able to comfortably shift more data than the 20kbit/s per customer average (6GB per customer per month) which was the design centre for BTw's ridiculous Ofcom-permitted Capacity Based Charging [1] proposed back in 2004 (before 2Mbit home broadband was even available!), an ISP has to pay BTw for more Central bandwidth. (This changes, but only slightly, in BT's much over-hyped and now-delayed 21CN).
In contrast, the cost of the last mile is independent of the amount of traffic it carries, and it's already a smaller cost to the typical ISP than the cost of Central bandwidth. If the last mile price does go down, all it does is allow that money to be used elsewhere (straight to the bottom line, or maybe on more bandwidth at the narrowest point somewhere else eg the Centrals, or maybe on price cuts in a death match with the "free" LLU outfits??).
So given that Ofcon's regulation of the broadband market is now to be based on where the end user connection is, what does that do to the nightmarish BTw Central pricing (which *isn't* geographically based)? Nothing, as far as I can see.
That is the *wrong* answer for broadband users, and for ISPs, but as it's BTw and Ofcon, it's the *expected* answer. (If there is any positive effect on BTCentral pricing, I'd be pleased to see the details).
[1] http://www.thinkbroadband.com/news/i/1620.html (2004, remember)
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