1 / 26

TELECOMS REGULATION IN THE UK

TELECOMS REGULATION IN THE UK. Communications Act introduced 25th July 2003 This implemented the new European Directives in the UK and gave powers to a new regulatory body: Ofcom (Office of Communications) formally functioning on 29 December 2003

cassia
Download Presentation

TELECOMS REGULATION IN THE UK

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. TELECOMS REGULATION IN THE UK

  2. Communications Act introduced 25th July 2003 • This implemented the new European Directives in the UK and gave powers to a new regulatory body: • Ofcom (Office of Communications) formally functioning on • 29 December 2003 • Ofcom was created in response to the rapid convergence of telecoms and broadcasting. Headed by chairman, Lord Currie, and chief executive, Stephen Carter, and supported by executive and non-executive board members. • Ofcom combines the roles of five previous regulatory bodies, Office of Telecommunications (Oftel); Independent Television Commission; Broadcasting Standards Commission; Radio Authority and Radiocommunications Agency.

  3. Main changes brought in with the Communications Act • The Communications Act introduced the possibility of fines being imposed for breach of regulatory obligations, and the implementation of the new EU Directives for general authorisations instead of individual licences. • General authorisations permit network or service provision on the basis of a set of specific conditions (defined in advance in a general manner) without requiring an explicit decision by the regulatory authority. Therefore network and service providers no longer have to obtain an individual licence to operate.

  4. BT’s regulatory Obligations • BT is subject to a set of general conditions • (which apply to all providers of electronic communications networks or services) covering:- • Consumer Protection • General Access and Interconnection obligations • Standards • Emergency Planning • Numbering

  5. BT’s regulatory Obligations • BT is subject to a Universal Service Obligation (USO) for the UK, (excluding the Hull area) • Covering:- • Provision of access to the telephone network • Schemes for consumers with special social needs • Call Box Services • Maintenance of a directory information database

  6. BT’s regulatory Obligations • BT has been designated with Significant Market Power (SMP) in a number of markets, which also brings regulatory obligations including:- • To meet reasonable requests to supply certain services to other communications providers • Not to unduly discriminate • To notify price changes • Price control

  7. BT’s regulatory Obligations • Competition Law • BT is also subject to general competition law. The Competition Act 1998 came into effect in March 2000 bringing the UK in line with European Community Law. • The Act prohibits anti-competitive agreements and the abuse of a dominant market position. • Breach of prohibitions could lead to fines of up to 10 per cent of turnover in the UK for each year of infringement up to a maximum of three years.

  8. BT’s regulatory Obligations • Competitive Environment • Under EU rules to encourage liberalisation, as regulated markets become competitive there should be a move away from sector-specific regulation to greater reliance on the Competition Act. • Ofcom is required to have regard to the principles of good regulation, under which regulation should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed.

  9. BT’s regulatory Obligations • Regulation outside the UK • Since January 1998, the provision of infrastructure and all telecommunications services has been liberalised in the European Union. • Specific directives imposed rules for things like voice telephony, leased lines and interconnection. • There has been an emphasis on organisations with significant market power and on establishing a common set of principles for licensing and enforcement.

  10. BT’s regulatory Obligations • New Regulatory Framework for Telecommunications in the EU from 2003 • In December 2001, the European Union finalised a new set of regulatory measures for the communications industry which was due to be implemented in all member states by 25 July 2003. It was implemented in the UK on 25 July 2003 with the Communications Act.

  11. BT’s regulatory Obligations • The new framework aims to:- • Be technologically neutral • Allow for reduced regulation as competition develops • Tailor regulation to the minimum required to deal with identified problems • Align the significant market power trigger for market-specific regulation more closely with the competition law concept of dominance.

  12. BT’s regulatory Obligations • BT Price Regulation • Since British Telecom was privatised in 1984 its prices have been subject to a price cap imposed by the regulator Ofcom (Oftel until December 2003). Price controls are enforced at network and retail level.

  13. BT’s regulatory Obligations • Retail Price Regulation • BT are subject to retail price regulation which covers some public-switched telephony calls and exchange line rentals. • The prices BT can charge for services used by the lowest 80% of customers by average bill spend is regulated by Ofcom using the formula RPI – X (RPI being the measure of inflation and X being a percentage set by the regulator). • The current level of the price cap sets the X factor as RPI, making the cap RPI - RPI (meaning no price rises are allowed).

  14. BT’s regulatory Obligations • Network Price Regulation • BT also face network price regulations to control the prices BT can charge other operators via their interconnection agreements. • The cap is set using the RPI – X formula. • The level of the X factor is set each year and varies for different services (between 7.5% and 13%) depending on the degree of competition faced.

  15. BT’s regulatory Obligations • Wholesale Access Charge Control • The prices BT can charge for wholesale access services are also subject to regulation. Charges for line rental, line transfer and new line installation have been set at RPI – 2% and will remain so until September 2006.

  16. BT’s regulatory Obligations • Mobile call termination charges • In 2003 the competition commission ruled that the current level of mobile call termination costs were too high and recommended cuts of 15% in real terms. • The current level of the price cap is RPI – X (where X is 15% for Vodafone and 02 and 14% for T-Mobile and Orange).

  17. Ofcom Reviews • Strategic Review of Telecommunications • Ofcom has begun carrying out its duty to encourage competition in the telecoms market by performing a large scale Strategic Review of Telecommunications. • It will establish Ofcom's principles and approach for the future regulation of the UK telecommunications industry. • It aims to enhance value and choice in the telecommunications market. • It aims to maintain and develop effective competition, whilst having regard for innovation and investment

  18. Ofcom Reviews • Phase 2 of Ofcom’s Strategic Review Gives three options for the future of telecommunications in the UK: • Option 1: Deregulation: remove sector-specific regulation and rely on using the Competition Act to address any remaining problems; • Option 2: Reference under the Enterprise Act: assess whether any feature or combination of features of a market prevented, restricted or distorted competition in a way which requires remedies going beyond Ofcom’s powers under the Communications Act and the Competition Act; and consider making a reference under section 131. • Option 3: Real equality of access: focus regulation on enduring economic bottlenecks, and tackle the problem of inequality of access head-on.

  19. Universal Service Review • Currently BT has responsibility for providing a range of services across the UK (and Kingston Communications must do the same in Hull), that meet the Universal Service Obligation to ensure that everyone has affordable access to a basic fixed-line telephony. These services include:- • A phone line on demand at speeds that allow internet access (the customer is required to pay any costs above £3,400). • Special low-cost schemes to help people on low incomes to afford a phone service; • Enough public call boxes (‘payphones’) where they are needed; and • Special services for people with disabilities.

  20. Universal Service Review • Ofcom recently conducted a consultation with regard to the Universal Service Obligation for telecoms in the UK, and is currently considering the responses. • Ofcom is likely to favour:- • A review of the special low-cost schemes to simplify tariff structures and focus directly on households with low incomes, rather than low call users.

  21. Universal Service Review • An improvement of the consultation process between BT and local government about the retention of public call boxes. At the present time Ofcom feels there are too many public bodies to consult (12,000), and wants to reduce this number. • Improvements of services for people with disabilities to take account of changes in demand and technology.

  22. Universal Service Review • The continuation of the USO being the sole responsibility of BT and Kingston at the present time. This is because Ofcom believes that the costs and benefits of providing the USO are broadly matched. BT disagrees with this view, and thinks that there are no financial benefits to providing the USO.

  23. Access Services Division • To prove that BT is serious about working with Ofcom to achieve equality of access to its network, when responding to phase 2 of Ofcom’s Strategic Review BT proposed the creation of an Access Services Division (ASD).

  24. Access Services Division • The ASD would be a new operating division comprising the assets and manpower associated with the access network, from the termination point in the home or business to the Main Distribution Frame in the exchange. • The Access Services Division would bring together all the engineering resources supporting the local loop; it would be staffed by up to 26,000 people and have an asset base of up to £8 billion.

  25. Access Services Division • BT also made the following proposals in its response: • BT to cut a range of wholesale broadband prices and introduce faster services • BT to reaffirm its commitment to LLU. BT also proposes a further price cut to the fully unbundled LLU product • BT to increase the commercial attractiveness of Wholesale Line Rental • BT to provide fair access to its 21st Century Network

  26. Access Services Division • In return for taking these measures, BT expects Ofcom to: • Focus regulation on BT’s local network through its Access Services Division • Roll back other regulation on a progressive and rapid basis • Allow successful investment in next generation networks to be properly rewarded • Allow BT to compete on a level basis with other operators in the market

More Related