Media watchdog unveils plans for major telecoms review

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The Independent Online

Stephen Carter, the chief executive of the embryonic media watchdog Ofcom, said yesterday that the new regulator would spend its first year conducting a strategic review of the telecommunications industry.

This is the first comprehensive review of telecoms for 13 years, and it will complement a parallel review of broadcasting. Mr Carter said: "The arrival of the new converged communications regulator, 19 years after the privatisation of BT and the creation of Oftel, presents a unique opportunity to look afresh at these important and dynamic markets."

The results of the review will determine the regulatory framework for telecoms in the future. Meanwhile Ofcom will continue with the regulatory structure it will inherit from Oftel, one of its predecessor regulators. Ofcom will formally come into being on 29 December.

The main focus of the review will be on the role of competition in delivering benefits for what Ofcom calls "citizen-consumers". However, the study will not deal directly with detailed issues of consumer protection. The review will explore the importance of telecommunications to the UK economy, and the extent to which the sector benefits from competition in the fixed, mobile, narrowband and broadband markets. It will also look at the extent to which competition and/or regulation has delivered the goals of lower prices, higher quality of service and wider choice for service providers.

Looking ahead, the study will examine scope for effective competition in the telecommunications markets and the extent to which that competition is likely to be sustainable in the foreseeable future.

Ofcom said the approach would be evidence-based. There will be a detailed analysis of the scope for the further development of effective competition and the scope for changes, including the possibility of removing regulation. "There are some big changes coming, like voice-over IP [internet protocol]," said Rod Hall, telecoms analyst at Dresdner Kleinwort Wasserstein. "They need to consider how that fits into their regulatory framework."

The spokesman for a leading telecoms provider, who did not wish to be named, said: "It is a positive that they are conducting a review ... but it depends what they come up with."

Ofcom promises to consult all interested parties, and to hold seminars and workshops. More details about how Ofcom is going to conduct the review will be published when it gets under way in January.