1 Regulating the fixed-line telecommunications
market
1. BT continues to dominate the fixed-line telecommunications
market.[4] In some parts
of the country, such as rural areas, BT may be the only practical
choice for most consumers. Oftel sought to introduce competition
to BT in this market with:
a) the development of cable networks as an alternative
to BT's fixed-line services;
b) indirect access, enabling consumers to route
a call through an alternative supplier even though the call originated
on BT's fixed-line network;
c) carrier pre-selection, where customers can
opt for certain defined classes of call to be carried by an operator
selected in advance without having to dial a prefix;
d) wholesale line rental, where other suppliers
rent an exchange line from BT and offer an integrated service
to consumers.[5]
2. These developments have brought important benefits
to consumers. About 60% of households have access to cable and
can switch from BT to cable and vice versa.[6]
Oftel informed us that liberalisation has led to a fall in prices
and that rates of switching in telecommunications were comparable
with energy markets; for example, 2.5 million consumers have switched
to carrier pre-selection.[7]
3. Competition has brought greater choice and more
information for the consumer to assimilate. This has presented
the regulator with a strategic challenge over the extent to which
it should be more pro-active advising consumers about
the choices available to them, encouraging them to switch supplier
where this is in their interests, and requiring suppliers to provide
clear and consistent information to help consumers make sound
decisions.
4. Oftel saw the whole of its work as aimed at providing
benefits to consumers[8]
and one of its four objectives was to have well-informed consumers.
To meet this objective, it published four information leaflets
advising consumers how they might choose the right telecommunications
provider.[9] It was, however,
reluctant to provide direct assistance to consumers. It preferred
to leave the provision of support to the private sector, for example
by accrediting price comparison websites such as www.uswitch.com,
which provides practical help to consumers keen to investigate
switching supplier.[10]
5. Oftel assumed that consumers conformed to a model
of 'rational' behaviour: if it provided information about products,
which were explicitly priced and advertised effectively, people
would choose the most appropriate. Its perception of how consumers
behaved was based on limited research. It was only in 2002 that
Oftel launched a significant research programme to look at consumer
needs in a different way, an exercise it could have undertaken
earlier.[11]
6. Oftel's approach contrasted with that of other
regulators. In the energy market Ofgem and Energywatch have actively
encouraged consumers to switch suppliers, as in their view this
has provided the best way to take advantage of competition. Oftel
was reluctant to follow this example because it considered that,
while Ofgem and Energywatch were giving out good and effective
information, the telecommunications sector was not such a simple
industry.[12]
4 Qq 3, 5 Back
5
C&AG's Report, paras 1.3, 1.7 Back
6
ibid, p7, footnote 2 Back
7
Qq 6, 30 Back
8
Q 12 Back
9
Q 11 Back
10
Q 33 Back
11
Q 16 Back
12
Q 29 Back
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