Broadband

Ofcom has today announced that it will deregulate 70% of the UK’s broadband market. The news was widely expected following the European Union green-lighting the process in February of this year.

The changes will see pricing restrictions placed upon BT Wholesale being removed in 1197 of the 5592 exchange areas. These “Market 3″ exchanges are those where there are four or more ‘principal’ operators capable of offering broadband services (Principal operators are deemed to be BT Wholesale, Virgin Media, Carphone Warehouse, Cable and Wireless, Orange, O2, Sky and Tiscali). A full definition of the different market areas can be found on page 32 of the 115 page Ofcom document.

So, what does this mean for Joe Average? Well, the possibility of two tier pricing is certainly real and has been the focus of much of the press today. However, we’ve had two tier pricing in the UK for quite some time already. TalkTalk famously started this practice two years ago by offering broadband for “free” in areas they had unbundled and at a charge of £10 per month in areas that they had not. Since then many other LLU operators have followed suit. BT Wholesale also operates exchange “banding” that sees wholesale services on 1016 exchanges being provided at a lower cost than other exchanges. This gap is already set to widen with the introduction of Wholesale Broadband Connect.

The change could also ignite innovation and may be the first stepping stone towards the kind of regulatory change that BT’s new CEO spoke of last month when discussing the requirements for a fibre-optic roll out.

For those amongst you interested in things closer to home, we’ve now included Ofcom’s market definition for each exchange on the exchange pages. For example, my home exchange of Greenwich has been classified as Market 3 (see the bottom right of the page). To find your exchange I’d recommend heading over to the exchange search page.

Tags: OFCOM