Oftel investigates BT pricing

The UK telecommunications regulator has launched an investigation into pricing schemes by British Telecommunications (BT) for some of its unmetered -- or flat-rate -- internet access pricing packages under the Competition Act of 1998.

          The UK telecommunications regulator has launched an investigation into pricing schemes by British Telecommunications (BT) for some of its unmetered -- or flat-rate -- internet access pricing packages under the Competition Act of 1998, the Office of Telecommunications (Oftel) confirms.

          Specifically, the unmetered internet access for BT's Surf Together and BT Talk packages are being investigated to determine if BT is undermining effective competition, Oftel says in a statement. The investigation was launched after BT notified Oftel on November 2 of price changes and new packages for residential customers that are supposed to come into effect on December 1, Oftel says.

          The investigation announcement by Oftel comes a week after the telecommunications regulator upheld complaints that the dominant operator is unfairly restricting access to its local loop network by rivals wanting to use its lines to offer high-speed internet access. [See Oftel pushes BT to open local loop to rivals].

          Under the regulator's rules for unbundling -- the separation of infrastructure ownership and service delivery -- BT is obliged to allow competitors to install equipment in its local exchanges. However, in some cases BT has told operators that they cannot offer service because there isn't room for their hardware.

          Oftel ruled on November 24 that rivals be allowed to commission an independent survey if BT claims there is insufficient space in one of its exchanges for other operators to install the equipment necessary to run their broadband services. If the survey finds there is room for the equipment after all, BT must pay its rivals compensation.

          Oftel has been weathering heavy criticism of late that it has not been doing enough to regulate BT, allowing the UK to fall behind the rest of Europe in ramping up for the so-called New Economy.

          Most damaging, Oftel has been fending off media reports since September that it is so badly mishandling its efforts to speed deregulation in the internet sector, senior officials in the UK government no longer trust the agency to promote UK internet growth.

          "The UK is definitely behind the rest of Europe in terms of getting onto broadband, at least by six months. BT's whole attitude towards broadband has been 'Oh, what a reckless step,' which is the opposite of inspiring. BT persuaded Oftel to try and get everything perfect before attempting to roll out broadband which was a mistake," says Tim Johnson, principle analyst for market research company Ovum.

          "Oftel is trying to tighten up on BT now" with the new regulations, but the regulator is taking actions and learning lessons that it should have come last year, Johnson says

          "Oftel has been surprisingly weak," agrees Neil Rickard, research director, networking for Gartner Group.

          Gartner "believes that Oftel swallowed BT's party line about getting the system perfectly operational before making it public, but BT would say that, wouldn't they? Oftel have given BT a couple of extra years of monopoly," Rickard says.

          But both Johnson and Rickard believe that the heavy criticism Oftel has come under may finally be forcing the regulator, and specifically its director general of telecommunications, David Edmonds, to turn a corner.

          "Oftel is starting to make some progress and starting to do stuff but they should have come up with the directive for assuring the BT was unbundling the local loop a year ago," Rickard says.

          "Broadband is entering reality in the UK and operators are finding that it's expensive and difficult. Oftel and the UK government in general need to encourage everyone possible to do trials and to solve some of the problems on the ground.

          "Belgium and Denmark had the same problems but they started a lot earlier than the UK and now they are (rolling out broadband) very fast after hitting and solving those problems," Johnson says.

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