A Year Ago: Oftel to take on new role, industry reacts

Just when the industry wants Oftel to stay firm in its dealings with the telco giant, Oftel says it's about to loosen its leash

Telecoms watchdog Oftel is due for the biggest shakeup in its 15 year history in an attempt to hasten the deregulation of telecommunications market, it emerged Monday.

Oftel has long been criticised for its slow reaction to government, industry and consumer calls for cheaper Internet access in the UK. Under new plans, Oftel will relax regulation in some areas, although it will continue to review BT's pricings.

Details of the plans will not be available until Tuesday but an Oftel spokesman admitted the plans will change the watchdog's role dramatically.

The spokesman denies the changes have come about due to pressure from the industry but offers a thinly veiled apology to BT. "We don't want to stunt competition. BT is a major player and if we have treated them unfairly, we need to look at that," he says. It is expected that BT will be allowed to set its own charges for international calls in the light of the shakeup. The spokesman adds: "It is about relaxing regulation. There are areas where we have decided we no longer need to be involved."

Telecoms analyst with research firm Yankee Group, Shairon Hill is bemused by Oftel's comments and argues the telco has not been treated unfairly. "Incumbent PTO's in France and Germany have lost more market share than BT in the UK." Chris Lewis, telecoms research director at Yankee agrees. "I don't think Oftel's view would gain much support from others in the market. It is a very strange comment."

Oftel maintains that a less regulated telecoms market is the best environment to allow new entrants, which in turn will benefit consumers with lower phone bills. Lewis thinks that Oftel's view is flawed. "Oftel believes that by stepping back it will allow more competition but the majority of users are still reliant on BT for Internet connection. In theory competition is the best way but in practice we are not dealing with equals," he says.

Lewis believes the best boost for Internet access in particular would be for Oftel to keep pressure on BT -- to unbundle the local loop and open the market. He believes BT's monopoly position means it should be treated differently. "You could argue that the best way forward is to regulate BT and leave new entrants to the free market," he says.

Chairman of ISPA (Internet Service Providers' Association) Tim Pearson agrees that now is not the time for Oftel to take a back seat. "I think that whilst BT remains the vastly dominant telecom provider, it is essential that we have a regulator. Rather than winding back, Oftel needs to take a more active role," he says.

Pre-empting Tuesday's announcement with a note of caution, Pearson took the opportunity to offer a warning to the watchdog. "The industry won't sit quietly by to see Oftel take a more relaxed role."

BT welcomes any move to deregulate the telecoms industry. "Absolutely. It is something that we have been crying out for, for a long time. Competition should be left to its own devices," the BT spokesman says.

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