Supplementary memorandum by Reuters Ltd
Summary of Telecoms Issues
The UK government has the ambition of creating
the world's best environment for e-commerce by 2002. The UK must
therefore have globally competitive telecommunications pricing
long before 2002.
For Reuters, data communications costs are a
key issue because—given our strategic objective of making
financial markets really work on the Internet—we have an
interest in delivering our services over high quality, high speed
networks that are competitively priced. Local loop unbundling
is key to our aim of offering services to the retail investor
as it will enable the delivery of high speed services over existing
phone lines at competitive prices. The fact that 85 per cent of
local lines are owned by BT 16 years after deregulation indicates
that competition has had little impact for many SMEs, especially
outside London.
The development of the UK's e-commerce competitiveness
is threatened because data communications costs here are globally
uncompetitive and the rollout of highspeed broadband services
is slower than in most of the EU. The evidence is . . .
— For three key means of accessing
the Internet (dial up over normal phone line, ISDN and local leased
line) the UK's European competitive position is now amongst the
worst in Europe, whereas eight years ago it was amongst the best.
— For national 2Mbit/s leased lines—a
key input cost for e-commerce—UK is worse than the European
average.[4]
— It is expected that all major EU
Member States will comply with the recent Commission recommendation
to implement Local Loop Unbundling by end-2000 except the UK.
This will further harm the rollout of high speed Internet services
in the UK.
— Oftel's consultation timetable is
unacceptably protracted—eg the national leased lines price
review was, after a year of consultation, put back for another
year to October 2000.
— Complaint resolution takes too long
and is rarely resolved satisfactorily—eg the review of unfair
cross subsidy in mobile service provision has been running for
14 months and three case officers, only for Oftel to now call
for further data.
How should this be remedied?
(1) Oftel should be under a statutory duty
to promote the UK's international competitiveness and innovation.[5]
(2) Additionally Oftel should be mandated
to:
— use international benchmarking not
cost in assessing reasonableness of UK tariffing;
— continue to encourage better pricing
transparency;
— target BT's unacceptably high leased
line and ISDN tariffs;
— promote clear pricing methodology
for local loop access;
— recognise that LLU must be faster—the
current target date of July 2001 is too late;[6]
and
— establish a cross-industry steering
group to guide policy on e-commerce relevant issues.
(3) We also suggest that:
— Oftel's resources need to be adequate
for the task and appropriately focussed. Staff turnover is very
high which leads to poor continuity and low levels of expertise
in what is a highly complex area.
17 May 2000
4 Source: Tarifica's benchmarking spring 2000. Back
5
We note that the FSA will now be obliged to promote the international
competitiveness of and innovation in the UK financial services
sector. Oftel has an even more pivotal role in the UK's international
e-commerce competitiveness and we feel its objectives as currently
expressed in the 1984 Telecommunications Act should be modernised
in a similar way. Back
6
Additionally, we note that the Analysys ADSL Benchmark report
for Oftel, reports that the UK is behind France, Germany and the
US in terms of broadband rollout. Back
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