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Ofcom: UK market "fragile"
Telecoms' "foundations are unstable in parts"

By Graeme Wearden

Published: Thursday 18 November 2004

Ofcom has admitted that BT is still failing to give its retail rivals fair and equal access to its telecommuncations network, and threatened the telco with a full legal investigation.

In a damning indictment of the performance of the former telecoms regulator, Ofcom said on Thursday that competition in the UK telecommunications market is "fragile", despite two full decades of regulatory intervention.

Ofcom is proposing that BT changes its existing mechanisms and processes to give its competitors the same access to its wholesale network, at the same price, as BT's own retail arm.

If BT doesn't play ball, Ofcom will launch an investigation under the Enterprise Act, which could result in the Competition Commission getting involved.

BT has argued in the past that it provides a level playing field - but many rivals have disputed this claim.

Ofcom chief executive Stephen Carter said: "Twenty years after liberalisation, the market has made good progress. However, its foundations are unstable in parts, overly dependent on intrusive regulation and with limited sustainable competition."

Carter's comments were delivered in the phase two proposals of Ofcom's Strategic Review of Telecommunications, which was published on Thursday morning.

This review is a major investigation into the UK telecoms market. It has concluded that the market is flawed in two ways - its structure is "unstable" and dominated by BT, and 20 years of regulation have resulted in a "complex regulatory mesh".

BT said early on Thursday morning that it was still examining Ofcom's full report and recommendations, and is expected to respond soon.

Graeme Wearden writes for ZDNet UK.