Ref: 49/03
Date: 26 August 2003

Oftel today notified the European Commission of its proposals for regulation in several key telecoms markets.

Oftel published initial conclusions of a number of market reviews, which set out Oftel's proposals for replacing existing regulation with new measures under the new EC Directives on electronic communications.

Promoting competition is at the heart of the EC Directives – and the market reviews will ensure that, consistent with Oftel's existing approach to regulation, the level of regulation reflects the level of competition in a particular market.

Responses to the consultations confirmed Oftel's initial view that competition in some areas is developing, but that in others firm regulation is still necessary.

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

• A reduction in regulation in wholesale international call routes. Seven years ago regulation covered all international calls – these new proposals will mean that only five per cent of call minutes are regulated;
• A reduction in regulation in wholesale unmetered Internet termination, where the availability of FRIACO means that other operators are able to compete with BT in the market supplying services to Internet Service Providers and hence regulation on BT can be withdrawn;
• The maintenance of price controls in retail markets to ensure the lowest spending consumers remain protected as competition develops;
• The maintenance of regulation to allow other operators to compete in retail calls market through carrier pre-selection, indirect access and the new wholesale line rental product; and
• New regulation to require BT to provide a wholesale ISDN service for operators that want to compete in the business market.

The documents also set out Oftel's view that the definition of narrowband Internet access used in the market review documents should be restricted to dial-up services which do not offer always-on connectivity or the ability to access the Internet and use voice services simultaneously.

The Commission now has one month to comment on Oftel's proposals before Oftel publishes its final decisions. UK industry and consumer groups also have a further opportunity to comment on Oftel’s proposals during this period.

David Edmonds, Director General of Telecommunications said today:

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

"Oftel supports the EC's increasing emphasis on competition, which is consistent with Oftel's current approach to regulation in the UK.

"This process of market reviews means that 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.

"I believe that this approach will ensure that consumers of different phone services continue to benefit from a wide range of services at competitive prices." 

Notes to editors

1. Oftel has today published the following market review statements and notifications:

• 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 235 wholesale international call routes; and
• Unmetered Internet call termination – wholesale charges for unmetered narrowband Internet termination.

These documents are available on the Oftel website at www.oftel.gov.uk/publications/eu_directives/index.htm

Further statements on leased lines, wholesale broadband access, financial reporting obligations and mobile call termination will be published in the next two months.

2. In July 2003, Oftel published continuation notices to continue licence conditions in telecommunications licences after the licences themselves were revoked on 25 July. Under the new regime, the Communications Act provides for conditions to be attached to specific providers, but only after the completion and implementation of the market reviews. The continuation of these licence conditions ensures that a regulatory gap is avoided whilst the market reviews are completed. More information about the continuation notices is available on Oftel's website at www.oftel.gov.uk/publications/eu_directives/cont_notices/index.htm.