Ofcom�s Strategic Review of Telecommunications (SRT) Phase 2 report is available here.

Luke has already supplied the main news: BT must ensure �equivalence�, which basically means that rival operators must be given �real� equality of access to BT�s network (similar to what BT�s wholesale arm gives BT�s retail arm). It can be thought of as the �Three P�s�: equivalence in (i) products, (ii) prices and (iii) processes. See section 1.36. If BT cannot deliver on the Three P�s, Ofcom will get tougher.

Here�s my take on some of the major themes of the SRT:

* �You�re gonna change�. Ofcom say its been a bad 20-year marriage between BT and those providers that rely on access to its network. Reminds me of the old Hank Williams song:

You’re gonna change your way of livin’
Change the things you do
Stop doin’ all the things that you oughten too
Your daddy’s mad; He’s done got pee-eeved
You’re gonna change or I’m a-gonna leave.

* Regulatory reasonableness. The first thing that stands out in this document is that, from a 30,000 ft perspective, Ofcom makes itself looks very good in this document, mostly because it employs the triangulation theory developed by Bill Clinton�s strategist, Dick Morris. In this case, Ofcom basically says it can: (i) not regulate at all; (ii) take down the national telecoms champion in a brutal fight; or (iii) do something in-between. That �in-between� choice will always seem reasonable, right?

* Avoiding �regulatory determinism�. Compare this document and the public service broadcasting (PSB) Phase 2 report and note the difference in tone. After reviewing the PSB report, I criticised Ofcom for its overconfidence and seeming inability to appreciate that it might not possess enough information to decide that a certain type of �300 million public service publisher (PSP) is needed. Ofcom gets it right in the SRT, candidly acknowledging: �Regulators cannot create investment, nor are they well placed to determine when and how much.� Ofcom explores this theme even further in its section on de-regulation, where it states: �There is a danger that the law of unintended consequences can apply to well-meaning regulatory initiatives.� Ofcom should apply this thinking to its PSB review.

* Regulatory withdrawal. Ofcom�s intention seems to be that, as soon as conditions permit, it will deregulate certain areas and rely on non-sector specific competition laws and market forces to police the market. Enlightened thinking.

* Ofcom�s consultation process. It�s still not ideal (no reply comments), but the regulator is moving in the right direction. See section 2.13. One issue of particular relevance here: Where the regulator is considering actions that have a particular applicability to one entity (in this case, BT), Ofcom should state that, during the consultation period, any meetings with BT will be publicised, on-the-record, etc. Why not?

* Empowering consumers. See section 9.14. Is it just me, or do other people also doubt the efficacy of these regulatory techniques to increase consumers� awareness of the conditions under which they can get a better deal in the marketplace? Is the Ofcom PASS really used at all? And a thought experiment: As a consumer, I really don�t know the exact difference in prices between Marks & Spencer and Tesco before I go out to the shop. I do know there is real competition, and I suppose I indirectly rely on that to keep prices in-line. Why should the telecommunications market be any different? In other words, if Ofcom can create real competition, who cares whether consumers are informed about pricing? The patient has a fever and the NHS care whether the patient knows how to use a thermometer properly. The patient�s knowledge is important, I suppose, but the priority should be curing the fever!

* Annex E � �Broadband� = 128 kb/s. New Labour: Super-sized casinos and super-slow broadband?

Stay tuned to OfcomWatch folks�