Price Control Review: A consultative document issued by the Director General of Telecommunications on possible approaches for future retail price and network charge controls- March 2000
| i. | The Service Provider Interest Group, SPIG, promotes the value of services competition and the need for fair and effective competition in the provision of communications services in order to provide the best value and services to consumers. SPIG welcomes the consultation by Oftel on the price control review and the opportunity to respond. |
| ii. | SPIG welcomes Oftel's recognition of the importance of competition in services in serving customers. |
| iii. | We agree with Oftel's conclusion that competitiveness in telecommunications markets is insufficient to remove retail price controls and that continued regulation of BT's retail price well beyond July 2001 is needed. This is as a result of continuing significant barriers to entry arising from the lack of separation between BT's access, network and retail businesses. |
| iv. | Our experience is that BT has an unfair advantage in the retail market as a result of bundling, product development and integrated branding, which regulation ought to address. |
| v. | BT also has first mover advantage in Internet and high bandwidth markets, with its proprietary ADSL service rolling out one year ahead of potential competitors. |
| vi. | We caution Oftel neither to pull away from regulation in these market sectors nor to give the expectation that this will occur in the near future. Oftel's own analysis in the consultative document illustrates the dominance of BT across residential and business markets, and, if the current trends in the mobile market continue with limited access for service providers, effective competition from that sector will be slow to arrive as well. |
| vii. | We support and welcome the move towards cost orientation as a step towards a fair competitive environment. However we would prefer to see a clarification of Oftel's economic arguments behind each of the options to constrain BT's retail prices set out in Chapter 2. |
| viii. | We believe that cost plus a reasonable return should be the basis for all service provider products from BT or any other operator. |
| ix. | SPIG supports Oftel's intention to reassess and publish the cost allocation between BT's network and retail activities to remove existing cross subsidies. |
| x. | We are fully supportive of Oftel's proposal (3.27) that BT should be required to provide an access service at cost based rates equivalent to the current Calls and Access. For the first time competitors to BT Retail would be treated in an equivalent manner in pricing. However this should be accompanied by equivalent quality of service in all other aspects such as winback, whose use has been damaging to potential new entrants to this market. To improve transparency there should be a clear separation between BT's access, network and retail businesses. |