Ofcom's BT deal wins cautious support

The creation of an access services division to ensure BT plays fair is a step in the right direction, say rivals and analysts

The agreement struck between Ofcom and BT this week on the future of telecommunications regulation in the UK has been given a cautious welcome.

Rival telecoms firms and industry analysts are in broad agreement that the plans, announced on Thursday morning, would mean greater competition -- which should ultimately benefit individual customers.

The creation of a new access services division to handle access to BT's 'local loop' -- the part of the network that connects homes and offices to local telephone exchanges, has received widespead approval. Even Energis, which had demanded BT's break-up, has made positive noises.

"We made clear our support for full structural separation as the only real solution to bring to an end BT's fundamental conflict of interest between its dual roles of competitor and supplier. However if Ofcom's solution addresses the problems it originally identified, we will work hard with both BT and Ofcom to ensure that it is implemented effectively," said an Energis spokeswoman.

Although Ofcom and BT revealed some information on Thursday, a more detailed account is expected at the end of this month. As such, some of BT's more trenchant critics are keen not to let it off the hook prematurely.

"The benefits to consumers that have been talked about will only be delivered if there is effective implementation and policing by Ofcom. However, we definitely see today as a step in the right direction," said Christine Roberts, director for external affairs at the UK Competitive Telecommunications Association, which represents many of BT's competitors.

"It’s a bit like buying a car: we like the look of what’s being offered, but need to look under the bonnet before we provide an informed response," she added.

The Ofcom Consumer Panel, which represents the interests of individual citizens and businesses, echoed Robert's point.

"Ofcom's approach, based on real equality of access, has the potential to deliver better and cheaper products and services in the market place. But the devil will be in the detail," the group stated. 

An important aspect of the deal is that Ofcom could take BT to the High Court if it fails to deliver on its commitments.

"This is a considerable strengthening of the powers available to impose remedies on BT; something the rest of the UK industry had been seeking. In short, Ofcom have will have the stick to enforce equality of access," said Ovum analysts Tony Lavender and Mike Cansfield in a research note.