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Regulation

Carriers Question BT's Sanity

The decision by BT Group plc (NYSE: BT; London: BTA) to provide legally-binding equality of access commitments to its rivals and U.K. regulator Office of Communications (Ofcom) has led other major carriers to question its sanity, according to one of the operator's senior executives (see BT Let Off the Hook and BT Supports Ofcom Proposal).

Clive Ansell, BT's Group Strategy Director, who has responsibility for regulatory issues at the U.K. incumbent carrier, says he has received calls from two major European operators and one major North American carrier saying "Have you gone mad?" because of the legal nature of BT's commitment to providing equal access for all service providers to its network.

It seems likely those carriers are more worried about their own regulators copying Ofcom's approach than they are about the mental health of BT's management.

Making legally binding commitments that could land BT in court if the terms are broken is a move without precedent, as the U.K. carrier will face the prospect of High Court appearances and damages if it veers from the straight and narrow.

And that appears to be a model other major carriers, renowned for flouting regulations and using their market and financial muscle to hold back rivals, are not keen to see adopted.

"We're taking a risk here. If we step one iota outside our commitments then we can be called to account," admits Ansell. "But we had to do something radical, and we believe that this will benefit everyone in the future. By enabling tough regulation now in some parts of the business, it should enable some other areas to be deregulated," such as retail and business service pricing, says Ansell.

But he notes that while the U.K. regulator has "signaled some of the areas where [deregulation] might take place," BT is "not on a promise from Ofcom" about any deregulation moves. He also stresses that the creation of a separate unit within BT, called Access Services, to operate BT's access and backhaul networks and ensure equal access, is definitely not a step towards a full spinoff of such an operation from the parent company. "Not a chance. Not on this watch," says Ansell firmly.

A more immediate impact of the agreement with Ofcom is that BT feels it "now has the freedom and capability to fully invest in 21CN," as the carrier is now confident it'll be operating in a regulatory environment that will enable a return on its £10 billion ($19 billion) 21CN capital investment. That, in turn, spells good news for the eight lead vendors chosen to help BT build its next-generation IP network (see BT Unveils 21CN Suppliers).

The next move for BT is the publication of its "undertakings in all their legal glory" that will form part of Ofcom's consultation document to be issued on June 30. That document will then be open for consultation for six weeks, before Ofcom makes a concluding statement at the beginning of September.

All of which sounds very positive for the U.K. telecom industry. But because of past experience, BT's competitors, which are now being promised they'll be treated by BT's wholesale business in exactly the same way as BT's retail division, are retaining some skepticism.

For example, the UK Competitive Telecommunications Association (UKCTA), which represents BT's main U.K. service provider rivals, including , , , , and Energis plc (OTC: ENGSY), has welcomed BT's move, but likens the national carrier to a second-hand car dealer.

In a statement issued yesterday, UKCTA spokeswoman Christine Roberts said: "We definitely see today as a step in the right direction. It’s a bit like buying a car: we like the look of what’s being offered, but need to look under the bonnet [English for hood] before we provide an informed response. The consultation period will give us the opportunity to do just that."

And if UKCTA finds BT CEO Ben Verwaayen lurking under the bonnet in greasy overalls, we've asked them to give us a call.

Other industry bodies and operators are equally as cautious, while praising the approach of Ofcom and BT in general. The Internet Services Providers' Association (ISPA UK) says it "welcomes Ofcom’s statement announcing a new regulatory approach… without the enforced breakup of BT. However, ISPA eagerly awaits the full detail of the new arrangements, as concerns remain about the practical arrangements to accompany the behavioural changes required of BT."

And operator noted that "Ofcom must be prepared to take firm and swift action if BT fails to deliver on its undertakings. The most pressing issue facing the industry today is next-generation networks, and how to ensure that BT's 21st Century network supports full and fair competition. We urge Ofcom to engage actively with BT to provide greater clarity regarding the regulatory regime for NGNs." (See THUS Welcomes BT Ruling.)

BT's Ansell says he understands why some parties have complained in the past about unfair treatment from BT, but he claims to have talked to a number of representatives from other U.K. carriers in recent weeks who are pleased and positive about the progress made and the future outcome. The new deal, he reiterates, includes legally binding "controls to ensure that we don't ride roughshod" over competitive service providers.

— Ray Le Maistre, International News Editor, Light Reading

issey 12/5/2012 | 3:09:23 AM
re: Carriers Question BT's Sanity Despite what other incumbent carriers say.. OFcom and BT have come up with a plan which will put Britain above Europe in terms of Competition and value for money eventually for the consumer.
You only have to look at Japan and the way NTT was forced to open up their access networks.. Inlcuding both Fiber and copper. Where else in the world can you find the Incumbent trumped by a new competitive carriers like Softbank Yahho BB ?

Those questioning the sanity of BT obviously have an agenda to maintain the status Quo, whoever and whereever they are in Europe or USA..
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