Ofcom’s Strategic Telecoms Review provides a great opportuntity to deliver on the UK’s telecoms potential. But it might be worth the regulator keeping a few things in mind…

1. Regulatory certainty through defined, measurable goals

The telecommunications industry needs a goal if it is to hit its target. Ofcom must not fail to set targets now it has the opportunity. Ofcom�s Strategic Review is a new opportunity to establish defined, measurable regulatory goals for the industry. The regulator has an opportunity to create a genuinely competitive market by ensuring no one player has more than (lets say) 40% of the fixed line market by 2015. This new regulatory certainty will deliver investment, innovation and efficiency to the UK�s telecommunications markets.

2. Genuine competition rather than mimicking competition

In the telecommunications market, regulators have previously mimicked competition rather than achieving genuine competition. Regulatory initiatives such as Wholesale Line Rental (WLR) and Carrier-Pre Select (CPS) have created artificial markets based on regulatory protection rather than genuine competition, with alternate providers to BT dependent on one company for facilities and innovation. All the choice provides no real choice at all. This situation has been detrimental to the development of a strong and innovative UK telecommunication industry, since there is little incentive for BT to innovate.

3. Facilities not service based competition

Strong industries must be able to stand on their own two feet. Unfortunately a very large number of telecommunications products stem from a regulatory approach that looks to mimic competition in the absence of the real thing. The aim is to provide an umbrella for �competitors� to enter the market without incurring the costs of market entry associated with building out a network. In time it was hoped that these firms would invest returns in developing their own networks � but this hasn�t happened. Ofcom now has an opportunity to place the emphasis back on facilities not services, the real driver of strong and competitive markets.

4. Swift and severe punishment for market abuse

BT has had it easy as the dominant player in the telecommunications market. Significant number of customers who wanted to go elsewhere have until relatively recently had nowhere else to go. As a monopolist there is little incentive to cater or respond to the market since the one company is the market. Regulation aims to address this problem by using various economic mechanisms to assess whether BT is abusing its market position, before implementing the necessary remedies. Often the process is highly legalistic and long-winded, putting competitors out of business before any penalty is incurred. Once Ofcom sets its goals, it must protect them by implementing swift and severe punishment for cases of market abuse.

5. Regulatory withdrawal

If you have a monopoly it will need regulating. Without setting a defined goal for regulating the market Ofcom will have to continue to regulate the market rather than withdraw from it as was the rationale under the Communication Act 2003. This is an outcome that would contradict the will of Parliament as dictated by the Communications Act, 2003.