MPs tell Ofcom to push broadband

And put the boot into Oftel on the way…

MPs have called on Ofcom to smooth the way for increased take-up of broadband by being firmer than Oftel, but they have ruled out splitting up BT to increase competition.

The Department of Trade and Industry Select Committee fingered the lack of certainty about the regulatory regime for the slow rise in competition in broadband services.

But it said that both Ofcom and the government must make it clear whether the immediate priority in broadband is to be competition or the extension of broadband coverage.

Its report says that lack of confidence in the regulatory regime had stopped competitors from making investments to challenge BT's domination of the market.

And it took a sideways swipe at Oftel on the way, stating: "It may be that the advent of Ofcom gives the opportunity to re-establish confidence in the regulatory regime where currently it is lacking."

MPs pointed particularly to the high costs in migrating from IPStream to BT's newish wholesale product, DataStream, and the lack of guarantee through firm regulation that the price differential between the two would be maintained at a level to justify investment in services based on DataStream.

The MPs said that this confidence would be essential if companies were to invest "the heavy sums" required by local-loop unbundling.

The report said that the disruption that would be inevitably caused if BT were forced to split into its wholesale and retail arms outweighed any potential benefits.

The committee noted that the government was not going to commit large sums of money to rolling out broadband and that therefore it was difficult to say how far it would go and how much people would use it.