Examination of Witnesses (Questions 37-39)
1 MARCH 2005
Mr Francesco Caio, Mr Ian El-Mokadem, and Mr David
Rowe
Q37 Chairman: Good morning, Mr El-Mokadem.
Perhaps you could introduce your colleagues.
Mr El-Mokadem: Could I perhaps
just introduce our Association first and I will let my colleagues
introduce themselves?
Q38 Chairman: Yes.
Mr El-Mokadem: We represent UKCTA,
which is the UK Competitive Telecoms Association. It is the trade
association committed to establishing a genuinely competitive
landscape in the telecoms market in the UK. We represent basically
most of the major players who compete against BT and each other
and also have the privilege of buying services off BT in this
marketplace. Between us we are well placed to comment on the topic
under investigation. Our primary objective is to deliver a level
playing field. Our firmly held view is that that is the way in
which investment will be maximized in this industry and that will
ultimately be to the benefit of customers and the economy; that
is our objective. We have been working with Ofcom, Government
and other stakeholders as hard as we can to that end. There are
some 23 members of our Association. I am Ian El-Mokadem. I run
Centrica's telecoms division. Committee members will be very familiar
with the main brand we operate in the UK: British Gas, and perhaps
less familiar with One.tel. Between One.tel and British Gas we
have established ourselves as the largest service-based competitor
to BT in the fixed line market in the UK.
Mr Rowe: My name is David Rowe.
I run Easynet group, which is an alternative telecoms operator
in the UK. It is probably best known for pioneering the local
loop in the UK which we have been in for a couple of years now.
Our footprint covers around 750,000 businesses and our primary
roll-out was based on a return for businesses, not for the consumer
market. Having said that, as a result of some of the things that
Ed Richards was saying earlier, the price drops have encouraged
us to move into another phase potentially for expanding our network
to include a more consumer orientated footprint and it depends
partially on the outcome of some of the reviews as to what we
do. We launched a wholesale product at the end of last year which
competes head-to-head with BT wholesale and we have had a very
good response from the industry in general. We are a little bit
worried about some of the deaveraging things that BT are doing
in terms of differential pricing, we believe they are trying to
hit us slightly competitively, but, notwithstanding that, we have
been very encouraged with the local loop infrastructure so far.
Mr Caio: My name is Francesco
Caio, Chief Executive of Cable & Wireless. We have a large
business in this country, about £1.6 billion in revenues
and we have recently launched under the Bulldog brand a Local
Loop Unbundling service to both consumers and small businesses.
We are now rolling out the network account and the first phase
will be to unbundle 400 exchanges by the end of this year that
will cover something like 30% of the population and about 35%
of the businesses. As David was saying, we have been observing
the evolution of Local Loop Unbundling processes and prices very
closely and we have concerns about some of the geographic deaveraging
of BT. We have recently submitted a complaint to the adjudicator
after having worked very effectively with both Ofcom and the adjudicator.
We are committed to innovating in this space, we are committed
to taking full advantage of infrastructure-based competition and
we are committed to both capital and managed bandwidths to make
sure that we offer to consumers and businesses a quality alternative
in the area of broadband.
Q39 Chairman: Thank you. One of the reasons
we are holding this inquiry at the moment is to try and get a
feel as to how the review has gone and I think really what we
would want to start off with this morning is your impressions
of the review. How satisfied are you? Do you think they have maybe
taken the wrong approach, been too kind to BT or too rough with
them? What is your general view? Have they been asking the right
questions as far as you are concerned?
Mr El-Mokadem: I think broadly
the answer is that we are very happy with the way the review has
been conducted thus far. Generally all of our members would say
that a review of this market was long overdue and I think the
years that came before Ofcom's establishment were typified by
regulatory uncertainty, and almost a paralysis in some cases in
terms of getting decisions made, and I think a strategic review
of this market was long overdue. We believe that Ofcom's approach
has been highly consultative and pitched at the right level, starting
to look at the strategic issues in Phase I and then drilling down
into a very good framework in Phase II. All of our members are
signed up to the principle of equivalence as being a good basis
for a regulatory settlement in this space. So far we are very
pleased with the progress that the review has made. I guess at
the end though we have been at this for a year and a bit and we
now need to very quickly see some results on the ground. Whilst
we do not mind the review going on for another few weeks if it
gets to a decent, robust structural answer, at the end of the
day it is the results on the ground that now matter and that is
where we want to see Ofcom turning very quickly.
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