Ref: 60/01
Date: 31 August 2001

Oftel has today announced the initial findings of its review of competition in the Internet connectivity market.

Internet connectivity is a network link that enables Internet service providers to connect up to the Internet.

This review has been carried out in response to a request from BT to reduce regulatory obligations that apply to its wholesale dial-up Internet services - SurfPort; SurfPort24; WebPort and WebPort24 - because it believes that the relevant markets are competitive.

BT’s services allow Internet service providers to connect their customers to the Internet and combine two or more of three wholesale products - call origination, Internet call termination and Internet connectivity.

Before a decision can be taken on whether to remove regulation on these services, the level of competition in each market must be assessed to ensure that it is sufficient to continue to protect consumers’ interests.

Competition in the markets for wholesale call origination and Internet call termination are being assessed in Oftel’s effective competition review of dial-up Internet access.

Oftel is now reviewing the Internet connectivity market so that it is able to respond to BT’s request.

Oftel’s initial analysis shows that the market for Internet connectivity is effectively competitive. Oftel is now consulting on its initial conclusions and will consider responses as part of its effective competition review of dial-up Internet access.

David Edmonds, Director General of Telecommunications said today:

"Oftel’s strategy is one of appropriate regulation according to the level of competition in a particular market. Too much regulation, as well as too little regulation can work against consumers’ interests by deterring investment and innovation.

"In this case our initial findings are that the Internet connectivity market is effectively competitive. But we need to assess the level of competition in the call origination and Internet call termination markets before we make any decision on BT’s request to remove regulation.

"We will set out our final conclusions on competition in all three wholesale markets and the retail market along with our proposals for future regulation in the statement on the dial-up Internet access review to be published towards the end of this year."

Note to Editors

1. The consultation document, Oftel’s 2001 effective competition review of Internet connectivity, is available on Oftel’s website at www.oftel.gov.uk.htm/publications/internet/icmr0801.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. Internet connectivity is the ability to access the entire Internet from a point of interconnection with the Internet, ie a connection to one of the backbone networks that comprise the Internet. A supplier of Internet connectivity, normally an Internet backbone operator, has an obligation to transport their customer’s IP (Internet Protocol) traffic to and from any destination on the Internet. The corresponding wholesale product is IP Transit.

3. BT has made a request to Oftel to modify the regulatory obligations that apply to its generic wholesale dial-up Internet services to reflect the extent of competition in the markets for Internet call termination and Internet connectivity from the UK.