Copenhagen Economics has conducted a study on the wholesale market for fixed call origination for British Telecom. This work is in response to the UK regulator Ofcom’s consultation proposals issued in the February 2013 Narrowband market review.
Ofcom’s consultation consider that BT continues to hold Significant Market Power (SMP) in the wholesale market for fixed call origination. This is one of the seven markets listed by the European Commission as susceptible to ex-ante regulation (cf. EC 2007 Recommendation on relevant product and service markets).
The study reappraises the impact of competitive constraints in this market. It finds that the availability of alternative network infrastructure and the consumer demand for bundles of voice and broadband reduce significantly competitive concerns. Thus, it concludes that there is only limited scope for regulation of this market in the UK.
The study recommends that call origination regulation is rolled back in all but the rural parts of the UK, since in 78% of the UK cable and local loop unbundling operators hold inputs that they can use to self-supply call origination. It argues that only basic remedies remain appropriate as a safeguard, while other, more intrusive remedies can be removed without market failure risk.
The full report can be downloaded from Ofcom’s website here
For further information please contact Partner Henrik B. Okholm