A REVIEW of price controls in the telecoms market is a ‘golden opportunity’ to promote investment and innovation, Cable & Wireless claimed today. The Office of Utility Regulation has announced a price control review as part of a proposed relaxation of regulation in the market.
C&W chief executive Geoff Houston said changes would benefit customers, with better services and more value for money.
The telco can see itself following companies such as Sky, Virgin Media and BT in offering mobile, broadband, home telephone and digital television all in one inclusive package, but it cannot currently do so under OUR rules.
‘The trend is toward delivering greater value by providing customers with a broader range of services. That is where we want our business to be heading,’ said Mr Houston.
‘That is how the market elsewhere is developing, but we are unable to offer this type of bundling of services until we have greater flexibility in terms of wholesale and retail pricing.’
He agreed that the approach of the OUR - which has had a sometimes uneasy relationship with the company - needed refreshing.
‘You could argue the current method was appropriate in 2002, but our industry has moved on enormously since then and so has the market. The key now has to be a lighter-touch approach and I hope the OUR does not waste this golden opportunity to deliver that,’ he said.
‘We have reached the stage now where over-regulation is threatening to stifle innovation and investment. The approach needs to be more flexible to allow the market greater freedom to facilitate and encourage competition and support the development of new services.
‘That is what will ultimately deliver better products and greater value for money to consumers.’
Mr Houston said the review would also influence the company’s investment plans. It is committed to putting £40m. into the Channel Islands and Isle of Man and wants certainty that it can use its investment and have certainty about expected returns.
The current price control splits services into four product ‘baskets’ and applies different price caps to each.
Mr Houston said there were a number of problems with this approach, particularly as services become more converged.
The model was no longer appropriate in the face of competition from outside the island.
‘We are having to compete with new and emerging technologies all the time and we need flexibility to be able to respond to these,’ he said.
‘You cannot look at competition purely in terms of like-for-like services, as the current system does, because technology is changing the whole face of our industry all the time.
‘It is almost impossible to say where our real competition is and who it will be a year from now.’
Article posted on 23rd May, 2007 - 12.00am
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