Ofcom has loosened its grip on BT, lifting regulations yesterday that previously stopped the carrier from subsidizing fixed-line services in order to offer triple-play packages.
BT has been lobbying the regulator for a relaxation of the rules complaining that it was competing with “one hand tied behind its back” against rivals BSkyB and Virgin Media.
BT welcomed the move and warned the market that an autumn price war would ensue with new packages soon to be unveiled to undercut its competitors. “This will allow BT to offer more targeted discounts on products and services and more attractive bundles at better prices, something we have been unable to offer widely to date," said BT Retail chief executive Gavin Patterson.
The regulator said that BT no longer held “significant market power” in the fixed-line voice market, with over 12 million consumers using an alternative to BT, justifying the lessening of control.
“We have now completed our review. Our conclusions are that most of the UK retail markets, with the exception of Hull, are now effectively competitive and, specifically, BT no longer has significant market power... in the provision of retail fixed narrowband analogue access and retail calls markets in either the residential or business sectors,” Ofcom said in a statement.
Ofcom CEO Ed Richards added, “this is an important step in deregulating telecoms where competition can be relied upon to serve the consumer interest.”
New competition in the wireline market has resulted in a fall in the average monthly cost of home landline calls from £25.04 in 2002 to £21.57 in 2008.