Ofcom deregulates two-thirds of UK broadband

• Tags:
• Competition,
• Deregulation,
• Wholesale

David Meyer ZDNet.co.uk

Published: 23 May 2008 13:23 BST

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Ofcom has announced the deregulation of almost 70 percent of the UK wholesale broadband market.

The plan, which received approval at the European level in February, will see competition-boosting regulatory restrictions lifted in areas of the UK where there are now four or more broadband providers. Ofcom announced the implementation of the move on Wednesday, but said there would be a 12-month notice period for affected internet service providers (ISPs) who have existing contracts with BT, so they "can continue to operate while they make any necessary alternative arrangements".

"BT will be required to continue to offer supply of wholesale broadband access (namely DataStream and IPStream) to all providers which are currently a customer of BT," the regulator said in a statement. "These providers will however be able to change supply at any time (subject to any restrictions in their contracts with BT). In addition, they can seek to negotiate continued supply with BT beyond the expiration of the transitional measures ie beyond 12 months' time."

Ofcom's statement added that it "would not expect these providers to be subject to any unreasonable price rises or service degradation over the period".

The rules that have been lifted in the affected areas forced the incumbent operator, BT, to offer wholesale broadband at a capped price to other operators, to allow them to enter the market in a competitive way.

However, Ofcom pointed out in a statement that there are still many areas in the UK where one broadband provider has what it calls "significant market power", because it has no effective competition.

"Where there is less competition and where a company still has significant market power, Ofcom will maintain regulation designed to promote retail competition," the statement read. "This requires BT and KCOM, in Hull, to provide a wholesale product to other providers on a fair and reasonable basis, thus allowing these providers to offer retail services."

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