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Posted by Mike Cansfield on February 12, 2010
The deregulation of the UK communications market began in 1984 and heralded the start of the competitive era. This week the UK regulator Ofcom removed one of the last vestiges of the monopoly era by requiring BT to open it's ducts to allow wholesale rivals to lay fiber cables in them if they wished to do so. This change was supported by the incumbent BT, which just goes to show how far the industry has changed since the dawn of deregulation!
The wholesale market in the UK is very competitive. BT Wholesale in the leading supplier, but faces tough competition from Cable&Wireless (which in past few years has absorbed Energis and Thus who both offered wholesale services), Virgin Media (which encompasses the UKs cable tv operator ntl), Carphone Warehouse (who acquired the wholesaler Opal as the basis for their retail broadband play), Global Crossing (which acquired the wholesaler Fibernet), and Gamma Telecom to name a few. It is the vibrant wholesale sector that provides the base for a competitive retail sector that ensure customers have a choice of communications supplier.
The opening up of ducts may seem relatively insignificant, but this is an important step towards the future evolution of the wholesale sector. The opening up of BT ducts means other wholesalers don't need to dig trenches and lay their own to house their fiber, thereby potentially speeding-up the deployment of fiber across the UK by making it quicker and cheaper to use existing infrastructure. This is good for consumers and the wider UK economy. It will be interesting to see if the regulatory bodies in other countries replicate the Ofcom determination on ducts as often seems to happen.
Fiber is, of course, an access technology, but there is much more to communications today than just connectivity. What a customer can do with connectivity today is just as important as the line itself. Next month Ofcom is due to publish its findings on how the satellite broadcaster BSkyB will be required to make available its premium content (mainly soccer) on a wholesale basis. The significance of this is that it will herald the start of a new era where wholesale communications truly embraces both connectivity and content.
The changing nature of wholesale is an area we are tracking - see the Forrester reports http://www.forrester.com/rb/Research/changing_face_of_telecom_wholesale/q/id/48365/t/2 and http://www.forrester.com/rb/Research/tech_trends_wholesale_communications_market_comes_of/q/id/46733/t/2. But what do you think? - as ever, we'd be happy to discuss.