UK MPs say no need to break up BT

A General Election has been called in the UK and will take place on May 5th. Parliament has now been dissolved for the duration of the campaign and of the Members going back to their constituencies and the hustings, thankfully not all will be re-elected and returning in due course to the Palace of Westminster. Ain`t democracy wonderful?~ ~ When the election was called, several parliamentary works in progress went by the board, including the contentious Bill to introduce compulsory identity cards for the UK population and another controversial measure to relax the country’s gambling laws to allow the construction of Las Vegas-like super-casinos in Britain’s high streets. Lovely.~ ~ And one of the last reports of the current parliament, the Trade and Industry Select Committee (TISC) enquiry into the massive and massively comprehensive Telecoms Review presently being undertaken by Ofcom, the UK’s uber-regulator of telecoms and media, shows that a group of MPs remains “unconvinced” about pressures to break British Telecom into several pieces.~ ~ Basically the Select Committee is in agreement with Ofcom’s position that there is currently no real need to cut BT in two and separate its retail and wholesale businesses on the grounds that competition is open and working well.~ ~ In a Parthian shot, Martin O’Neill, the chairman of the Committee said, “We reiterate our opinion that the case for forcing BT to structurally separate has not been made, and that Ofcom’s pursuit of genuine equality of access is the best way forward.

It may be however that equality of access might prompt BT to voluntarily separate at some time in the future, but that would be a matter for BT’s management and shareholders.”~ ~ The Committee also agrees with Ofcom that the application of the much-vaunted theory of ‘equivalence’ (allegedly whereby BT’s competitors will get guaranteed equal access to the entire range of BT’s wholesales products) is the way to spur competition in the local loop.~ ~ The report says, "The Committee remains unconvinced by the case for forcing BT to separate and agree with Ofcom that pursuing genuine `quality of access` is the best regulatory approach to take. Only if this proves unworkable should forcible separation be considered."~ ~ It continues, “In the absence of substantial investment in end-to-end networks or alternative access networks, Ofcom`s pursuit of Local Loop Unbundling (LLU) is the best way of introducing a more varied broadband market."~ ~ So, on balance good news for BT and also for its would-be rivals in the local loop. But (and there’s always a ‘but’ isn’t there?) the Committee did express some concern at BT’s latest LLU wheeze which is to do away with the current regime of nationwide pricing and to replace it with a sliding scale of variable tariffs.~ ~ Earlier this year BT announced selective price cuts beginning with 8% being lopped-off its IPStream wholesale service. Now it turns out the price cut will apply only in areas where there is “a combination of high customer demand, high take-up and lower costs”.~ ~ In other words the price cuts will only apply where BT determines the above criteria are met, and where they are not prices will remain high, thus making LLU a riskier financial prospect for rivals.~ ~ As the Trade and Industry Select Committee reports, "BT`s decision to `de-average` wholesale prices has created uncertainty which may jeopardise future LLU plans."~ ~ No change there then.~