“Structural separation may seem a logical solution for competition but won’t necessarily get the best outcomes for consumers or quality of services”

 

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was at the very timely Digital Regulation Forum in London this week and discussions were heating up. I was eagerly listening to a panel of senior policy directors from KPN, Vodafone, ECTA, Ofcom and TeliaSonera (or Telia should I say) battle it out on the panel “How can policy makers create conditions encouraging investments in the deployment of very high speed connectivity networks?”

Obviously one of the first topics which was quick to be raised was the recent call for a full separation of Openreach from BT. As you are aware, UK ISPs including Sky and Talk Talk have made their argument clear that allowing BT to own Openreach stifles competition and prevents prices for consumers falling further.

In response to the interest in this topic, Ofcom first started by making it clear that they care about the consumers and the quality of service that they receive. They then elaborated that their role in the telecom market going forward is to enable competitive companies to enter the market, and reducing upfront costs may be one way of doing this. They stated CityFibre (as many do) as a great example in the UK of a new market entrant already being very successful in building their own networks rather than renting lines from the incumbent.

But the conclusion, which we know, is that Ofcom believe although structural separation may seem like a logical solution for competition in the UK, it won’t necessarily get the best outcomes for consumers or quality of services, which arguably is the most important.

The discussion then moved into the seemingly age-old debate of “do users really need more speed?” vs. “networks need to be ready for future demand now”.  One of the panellists stated that 15% of the UK population doesn’t want any more than a telephone line and traditional TV services, as a justification that not everyone will pay for gigabit services. In response there was some agreement that this 15% is mostly made up of the elder population who do not make up the future generation of users.

Vodafone was first to say that we should be “raising our ambitions to create demand” and regulators should be asking themselves what they need to do in order to make this happen. Whilst there has been a whole range of products stimulating demand from users, we should also be looking at pushing and stimulating demand from the public sector, using applications like voting, healthcare, education etc. and set some high goals for 2020.

In this vain, the panel concluded with some comments on vectoring and a heated discussion on if the use of similar technologies leads to re-monopolisation and simply helps incumbents rid competition for now. However there were some very opposing views from the audience (possible incumbents!) who said the benefits to consumers were being ignored.

PANEL

Read “Making communications work for everyone: Initial conclusions from the Strategic Review of Digital Communications” fore more insights from Ofcom.

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