UK Example Shows the Potential of Structural Reform for Australia

Huge price drops and explosive growth in broadband availability in the UK demonstrated how quickly pro-competition reform could transform the communications market, the CCC said today.

The UK regulator, Ofcom, this week released a report* on the changes in the UK broadband market since BT was forced to separate its retail business from its monopoly network business to allow competitors fair access to customers.

“Ofcom directly credits greater competition resulting from these reforms for the dramatic improvements in broadband price and availability,” CCC executive director David Forman said.

“The UK has gone from a laggard to a leader in five years thanks to the separation of BT’s retail and network business, and consumers have been the big winners,” he said.

Over 65 percent of households and small businesses now have broadband, up from 37 percent in 2005 when the reforms were introduced.

But more dramatically, prices for broadband services had fallen by a dramatic 40 percent, from ₤23.30 a month to ₤13.61 for the same service.

This has occurred because the number of individual lines that are now delivering competitive services has grown from 123,000 to more than 6 million as competitors took advantage of the leveling of the playing field.

The number of competitors delivering their services via direct access to the lines to people’s homes has grown to 30 now that they can access these lines on the same basis as BT, according to BT.

“Telstra has repeatedly said that the UK was a basket case thanks to these competition reforms, but the truth is quite the opposite,” Mr Forman said.

“The Government’s decision to ensure that the National Broadband Network will be structurally separated from the outset is the right one, but it must now act to make sure that consumers don’t have to wait until NBN is fully operational in eight years to see the market here transformed.

“Its response to its review of regulation must be built on the foundation of separating Telstra’s retail and wholesale businesses so that we, too, can enjoy the benefits of a fully competitive market and catch up with the leading broadband nations,” Mr Forman said.

*http://www.ofcom.org.uk/media/features/llulandmark

Contact

David Forman
Executive Director
CCC Inc
0438121114