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Ofcom Cracking Down on Broadband Providers

7 · JAN ·2015

We are only in the first full week of 2015 however there are already a number of reports concerning the telecommunications regulator Ofcom. During 2014 Fluidata published a number of articles discussing Ofcom’s investigations, particularly those into the controversial broadband supplier British Telecoms (BT). However, it seems as though the regulatory body is planning on becoming even stricter this year, meaning that telecommunications companies may soon face harsher regulations. Here at Fluidata we are not altogether surprised that Ofcom is launching further investigations into some of the largest ISPs in the UK. With access to high-speed Internet technology becoming increasingly important for both individuals and companies, it’s important that the ‘tier 1’ ISPs are not simply delivering services to increase their market share or revenue profits. Deploying the right products in the right areas, providing consumer’s choice of ISP, preventing overbuilding and safeguarding against monopoly will all be subjects high on regulators agendas. It seems as though BT in particular will continue to be heavily watched by the regulator as recent reports have suggested that Ofcom are not happy with their bid to purchase the mobile operator. When BT first announced that they were planning on moving back into the mobile operator market a number of industry experts were concerned that they were spreading themselves too thinly. Ofcom announced that their initial investigation into the two companies’ merger is to determine whether it would cause a “margin squeeze” in the market, leading to companies that rely on the BT infrastructure such as TalkTalk losing out. Discussing the investigation, James Barford, a telecoms specialist at Enders Analysis, said: "I would expect BT to pass the margin squeeze test after their retail price rise earlier this month, as Ofcom previously said it was on the edge. The acquisition of EE could actually make it much easier for them to pass the test because as it is currently formulated they could spread the cost of BT Sport across millions more customers.” However, it’s not just Ofcom that are planning on investigating BT, as the Competition and Markets Authority is also seeking to determine whether the acquisition of EE would lead to other ISPs complaining that they are gaining all 80,000 of EE’s previous broadband customers. So far, neither Ofcom, the Competition and Markets Authority nor BT have commented on these initial investigations, however there are rumours that BT will launch a court challenge if their bid to purchase EE is blocked by either regulator. Even though BT seems as though it will be Ofcom’s main target throughout 2015, other ISPs will also have to be on their toes over the next few months. This is due to the fact that the government’s intelligence agency GCHQ has called upon the regulator to put new regulations in place in order to prevent broadband signals interfering with radio signals. They claim that the increase in “power line” networking equipment – equipment that allows individuals to use the mains wiring in their properties to transmit data – is interfering with international military radio signals. An Ofcom spokesperson said: “Ofcom’s proposals are designed to update existing regulations to take account of developments in technology. They are not in response to requests from any organisation. Communications networks form an important part of the UK’s national infrastructure, both directly and as an input to other services including safety and security services, utilities and industry (e.g. banking). “Communications networks are a key aspect on which these services depend for their organisation and operation, and therefore it is important to protect their correct function from undue interference.” If Ofcom’s investigation supports GCHQ’s concerns then in the future they may be given the power to issue offenders enforcement notices or face prosecution. As technology develops not only do industry regulators have to deal with the physical difficulties that they inadvertently create but also the ethical ones such as market monopolisation. Throughout 2015 it is likely that Ofcom will continue to investigate a number of leading telecommunications providers, which means that the landscape of the industry is likely to shift on a regular basis.

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Posted by Sanita Karra