Ref: 11/03
Date: 17 March 2003

Proposals for a new framework for regulation that puts competition at the centre of the UK telecoms market were set out today by Oftel.

Oftel has set out proposals to replace existing regulation with new measures under the new EC Directives on electronic communications.

Some of the key changes that Oftel proposes to introduce are:

• A reduction in regulation that covers the unmetered Internet termination market, due to the level of competition created by the FRIACO product;

• A reduction in regulation on a number of international call routes to reflect the growth in competition in UK. Seven years ago regulation covered all international calls – these new proposals will reduce the level from 17 per cent to five per cent of calls volume;

• A reduction in regulation that covers services for business customers, to allow BT to offer more bundled services and discounts. However, BT will have to offer wholesale versions of retail bundled services offered to businesses;

• Maintain regulation to allow other operators to compete in retail calls market through carrier pre-selection, indirect access and the new wholesale line rental product;

• New regulation to require BT to provide a wholesale ISDN service for operators that want to compete in the business market; and

• Tighter regulation to require Kingston to offer wholesale unmetered Internet products in order to introduce competition and choice for consumers in Hull.

David Edmonds Director General of Telecommunications said today:

"This process will bring significant changes to the regulation of the UK’s telecoms market.

"Oftel will put in place new measures that will bring choice, innovation and competitive prices to consumers.

"Oftel is carrying out reviews across the telecoms market, and where competition is increasing, unnecessary regulation will be withdrawn. But where competition has not yet taken off, Oftel will put in place firm regulation to support competition and protect consumers.

"Oftel proposes to reduce regulation in unmetered Internet termination, on a number of international call routes and certain business products offered by BT.

"Regulation on BT is proposed to encourage competition in the retail calls and business ISDN markets."

David Edmonds said that Oftel’s approach to regulation is in line with the new EU Directives.

"The new EU Directives bring a consistent approach to regulation across Europe, emphasising the need to promote competition and roll back unnecessary regulation.

"Oftel supports the EU’s increased emphasis on competition, which reflects Oftel’s current approach to regulation in the UK.

"Oftel’s work to promote competition has delivered many benefits to consumers. The price of calls has fallen by 50 per cent in real terms since 1984 and the UK has some of the lowest prices in Europe for Internet access.

"Oftel’s surveys consistently show that UK consumers pay less for their telecoms services than consumers in France or Germany. "

Notes to Editors

1. The five market review documents are:

• Wholesale services – wholesale charges for access, call origination and transit of calls across fixed networks;
• Retail markets – the prices paid by consumers for line rental and calls;
• Fixed geographic call termination – the wholesale charges paid by operators for terminating calls onto individual fixed networks;
• Wholesale international services – the level of competition in 242 wholesale international call routes; and
• Unmetered Internet call termination – wholesale charges for unmetered narrowband Internet termination.

Later this month Oftel will publish further market review documents covering broadband, mobile and broadcast transmission networks.

2. The new EU Directives were passed in April 2002 and should be implemented in member states by 25 July 2003. Separate economic markets are the subject of individual reviews to assess the level of competition and set the appropriate level of regulation if markets are not competitive.