Ref: 45/01
Date: 29 June 2001

Oftel has today revoked a Direction that prevents British Telecom from subsidising its telephone equipment business.

The Telephone Equipment Direction, which came into force in 1995, prevented BT from subsidising areas of its telephone equipment business such as the sale of telephones, answer machines and faxes.

Following a consultation earlier this year, Oftel has concluded that the Direction should be removed as BT no longer has market power for any cross subsidy to have a material effect on competition in this market.

Since 1995, BT's share of this market has decreased by over 10% and consumers have access to a variety of products from a number of companies from major High Street Retailers.

David Edmonds, Director General of Telecommunications said today:

"The proposal to remove this Direction is in line with Oftel's strategy to regulate only when necessary.

"The Direction played an important part in establishing a more competitive market in the provision of telephone equipment which has benefited consumers by lowering prices and promoting innovation in product development.

"Competition in the market has now increased to such an extent that this level of regulation is no longer appropriate. In addition, the Competition Act now provides a strong deterrent to anti-competitive behaviour.

"I have therefore removed the Direction following consultation with the industry and other interested parties."

Note to Editors

1. Oftel's statement A Review of the Telephone Equipment Direction is available on Oftel's website at www.oftel.gov.uk/publications/licensing/ted0601.htm. Hard copies are available to the media from Oftel's press office on 020 7634 8991 and to the public from the Research and Intelligence Unit on 020 7634 8761.

2. Oftel's strategy is one of 'appropriate regulation'. Appropriate regulation means regulation adjusted to the level of competition in the market and focused on the area of concern. Too much regulation, as well as too little regulation, can work against consumers' interests by deterring investment and innovation.