'Monopolistic' BT kicked where it hurts

molinaalexis

By Tim Richardson
Posted: 08/05/2003 at 10:10 GMT


BT was left with little option but to cut the cost of its Datastream wholesale broadband product - or face regulatory action from Oftel.

Confirmation that BT was effectively threatened by the regulator has given heart to rival operators to continue to pursue actions against the dominant telco.

In a statement Oftel boss David Edmonds said: "Our initial findings were that these price changes, relative to the Datastream product, could have prevented other operators from competing to provide broadband services to Internet service providers. I therefore held urgent discussions with BT, and I asked them to make reductions in the price of the Datastream product.

"Maintaining the commercial viability of the Datastream product is crucial if other operators are to be able to compete fairly in broadband connectivity.

He added that the price cut announced by BT "is of the same level as I would have imposed using my statutory enforcement powers at this stage of the investigation".

For its part, BT is playing down the cut by insisting that it was made following "representations from customers" and "talks with Oftel".

But an Oftel spokesman told The Register that BT's decision to not cut the wholesale cost of Datastream "did constitute a margin squeeze".

"Unless BT did something about it, Oftel would have taken regulatory action," he said.

The row began last month when BT cut the cost of its wholesale IPStream product, which provides an end-to-end ADSL service solely using BT's network.

Rival telcos argued that the cuts did not apply to DataStream products, which use competing national networks from alternative, rival carriers.

They complained to Oftel accusing the dominant telco of anti-competitive behaviour and margin squeeze - something with which the regulator agreed.

Despite this initial victory, rival operators claim the price cut is not enough and are urging Oftel to maintain pressure on BT.

Ian Hood, a director at Thus, said: "The price cuts announced by BT yesterday appear to be the minimum required to prevent the immediate imposition of a provisional order by Oftel.

"We do not the believe the price cuts go far enough but we welcome Oftel's rapid intervention into what we see as yet another abuse by BT of their market dominance.

"We look forward to further changes to the DataStream product, including additional price cuts, upon the completion of Oftel's investigation."

His words were echoed by Energis chief exec John Pluthero: "This is another illustration of BT’s monopolistic behaviour and failure to open up wholesale broadband to full competition.

"BT have to be compelled to give ground yard by yard and their late, reluctant and modest price reduction does nothing to redress the competitive balance.

"The complaint is still open, we urge Oftel to conclude it rapidly and insist on a full price reduction to Datastream."

Oftel is expected to publish the findings of the full investigation next month. ®

Paddy20

Goody, goody, gum drops!.

Lets hope Comreg or the Government or the EU legislators kick *Eircom in the same place!.

Paddy20;)

ednwireland

Do you really beleive that eircom will be forced to provide a realistic service around the country i doubt our gov. has the balls to do anything, they seem to think that saying = doing.
I don't beleive that there is any political will to sort any problem out especially if it involves hard decisions.(see waste management, alternative energy, health service, education etc. etc.)
remeber BT only started seriously rolling out broadband and flat rate after a good hard kick from oftel eventually they got an MD which decided that if he had to roll out broadband he'd rather have 10 million subscribers rather than ten thousand.

Do you really think FF/PD are interested in real competition (despite liar harney's utterances) i do't think so unless it has some self serving aim (apart from reelection which is the obvious one)

or maybe irelands market isn't big enough to have real competition (see new zealand re privatising air new zealand, setting up a national bank to compete with privatised banks cos they closed all their branches)

end rant

sceptre

Originally posted by ednwireland
Do you really think FF/PD are interested in real competition (despite liar harney's utterances) i do't think so unless it has some self serving aim (apart from reelection which is the obvious one)

One of the central beliefs of the PDs is that privatisation and competition make the market (pick a market - any market) self-regulating. Hence their core belief is that competition is the solution (the only solution) to all our ills. Personally, that's complete cod (it's the kind of thing you believe in only if you worship at the Church of Milton Friedman™ and believe all markets strive towards economic equilibrium). Any fool can see (even just by looking at the Irish supermarket or telecoms trade) that a small economy is going to have all markets run as effective cartels, even with the magic three (or more) major suppliers.

So, despite my own belief that it's a piss-poor economic philosophy (regulation is a necessity, if only to protect the consumer), it is their core belief, one that FF have also taken on (partly because in a relatively closed economy it tends to protect the supplier rather than the consumer).

I'm not embarking on an economic debate btw.

ednwireland

Its just this say anything and do nothing attitude that annoys me its like mary harney announces 300 jobs for north dublin fails to mention that they are to be brought in over the next seven years

anyway this is way off topic and i should shut up now

SkepticOne

Originally posted by ednwireland
remeber BT only started seriously rolling out broadband and flat rate after a good hard kick from oftel eventually they got an MD which decided that if he had to roll out broadband he'd rather have 10 million subscribers rather than ten thousand.

There was also competition from cable companies (which we don't have) and flat rate ISPs. This meant that there was very little money in dial up (unlike Ireland) and BT were forced to respond.

In Ireland the consumer is at the mercy of ComReg's decisions. Unfortunately the regulations (including those in the 'New Regulatory Framework') assume a level of competion that does not exist here.