Broadband surge in UK shows need to breakup Telstra, says CCC

Stuart Corner
Wednesday, 12 August 2009 09:47

IT Industry - Strategy

The Competitive Carriers Coalition has seized on a statement from UK telecoms regulator Ofcom about a surge in broadband delivered over unbundled local loop services to renew its calls for structural separation of Telstra.

Ofcom has issued a press release saying "Competition in the UK's broadband market has reached a significant milestone. The number of unbundled lines has reached the six million mark...Today there are over 30 different companies offering unbundled services to homes and small businesses. This has helped to drive up broadband take-up and drive down fixed-line prices. In September 2005, 37 per cent of households and small businesses had broadband; today the figure is over 65 percent."

Ofcom attributed this surge in the number of broadband services supported by unbundled local loops to "a set of legally-binding undertakings that Ofcom agreed with BT Group plc in September 2005."

These undertakings required BT to set up a new division, called Openreach, to provide services to rivals. At the time, according to Ofcom, "there were just 123,000 unbundled lines in the UK and the majority of people could only get their broadband and landline telephone service from one provider - BT."

According to CCC executive director, David Forman, "Ofcom directly credits greater competition resulting from these reforms for the dramatic improvements in broadband price and availability. The UK has gone from a laggard to a leader in five years thanks to the separation of BT's retail and network business, and consumers have been the big winners," he said.

He noted that "Over 65 percent of households and small businesses now have broadband, up from 37 percent in 2005 when the reforms were introduced. But more dramatically, prices for broadband services [have] fallen by a dramatic 40 percent, from ₤23.30 a month to ₤13.61 for the same service...The UK has gone from a laggard to a leader in five years thanks to the separation of BT's retail and network business, and consumers have been the big winners."

However the reality is not quite so simple. Although an Ofcom press release did attribute the outcome solely to the BT undertakings, the explanation given in the report itself suggested other factors as being significant.


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