Oftel unlikely to demand broadband cost cuts – report

Telecoms watchdog Oftel is expected to conclude that there is little need for further regulatory interference to force down the wholesale cost of broadband.

The regulator is due to publish next month the findings of its latest review into high speed Net access in the UK. However, according to an interview in the Financial Times with Oftel boss David Edmonds, it seems the regulator is happy with current wholesale cost levels and with the state of the broadband landscape in the UK.

Oftel, it appears, is concerned that any further cuts to wholesale prices would dissuade the dominant telco from investing further in broadband. And it also believes that further cuts in wholesale charges for ADSL would also make it even more difficult for operators to introduce other technologies - such as satellite or wireless - into the marketplace.

The conclusion must be that Oftel is happy with the status quo.

Edmonds told the FT: "The UK is the most competitive in terms of price and the range of services in the whole of Europe. I'm thrilled that we're looking at [broadband] prices half the level they were three years ago and that we're looking to have three million broadband connections by the end of the year when there were only 50,000 three years ago."

What's more, Edmonds' "hope and expectation" is that four million punters will have broadband by the end of 2004.

Snag is, Edmonds' optimism is unlikely to chime with those in the industry who claim BT's stranglehold on ADSL is screwing both rival operators and consumers.

Only last week trade body the Internet Service Providers Association (ISPA) submitted a report to the Trade and Industry Select Committee calling for the cost of broadband to be reduced in order to stimulate demand for broadband.

"ISPA believes that regulation will almost certainly be required in a market where a single operator continues to hold a significant market power," said the outfit.

And later this month a new broadband industry group - called The Broadband Industry Group (BIG) and made up of the likes of Brightview, Cable & Wireless, Centrica, Energis, Freeserve and Tiscali - will unveil itself as it "speaks with one voice about the need for true competition in broadband". No doubt it will have something to say then about Oftel's decision to pass the buck. Effectively, that's what the regulator has done.

Oftel will cease to exist at the end of the year as it is rolled into the new, unified communications regulator, Ofcom. To start a major regulatory battle within weeks of the watchdog being put down wouldn't make much sense. According to one industry insider, Oftel doesn't want to "rock the boat" ahead of the handover. It seems it is just looking to clear its desk, tie up the lose ends and turn off the lights.

Until Ofcom carries out its own assessment of the broadband market, it will have to rely on Oftel's soon-to-be-published review for guidance. For those operators calling for cost cuts, the fight goes on. ®

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