Select Committee on European Union Minutes of Evidence


Supplementary memorandum by Reuters Ltd

Summary of Telecoms Issues

  The UK government has the ambition of creating the world's best environment for e-commerce by 2002. The UK must therefore have globally competitive telecommunications pricing long before 2002.

  For Reuters, data communications costs are a key issue because—given our strategic objective of making financial markets really work on the Internet—we have an interest in delivering our services over high quality, high speed networks that are competitively priced. Local loop unbundling is key to our aim of offering services to the retail investor as it will enable the delivery of high speed services over existing phone lines at competitive prices. The fact that 85 per cent of local lines are owned by BT 16 years after deregulation indicates that competition has had little impact for many SMEs, especially outside London.

The development of the UK's e-commerce competitiveness is threatened because data communications costs here are globally uncompetitive and the rollout of highspeed broadband services is slower than in most of the EU. The evidence is . . .

    —  For three key means of accessing the Internet (dial up over normal phone line, ISDN and local leased line) the UK's European competitive position is now amongst the worst in Europe, whereas eight years ago it was amongst the best.

    —  For national 2Mbit/s leased lines—a key input cost for e-commerce—UK is worse than the European average.[4]

    —  It is expected that all major EU Member States will comply with the recent Commission recommendation to implement Local Loop Unbundling by end-2000 except the UK. This will further harm the rollout of high speed Internet services in the UK.

    —  Oftel's consultation timetable is unacceptably protracted—eg the national leased lines price review was, after a year of consultation, put back for another year to October 2000.

    —  Complaint resolution takes too long and is rarely resolved satisfactorily—eg the review of unfair cross subsidy in mobile service provision has been running for 14 months and three case officers, only for Oftel to now call for further data.

How should this be remedied?

  (1)  Oftel should be under a statutory duty to promote the UK's international competitiveness and innovation.[5]

  (2)  Additionally Oftel should be mandated to:

    —  use international benchmarking not cost in assessing reasonableness of UK tariffing;

    —  continue to encourage better pricing transparency;

    —  target BT's unacceptably high leased line and ISDN tariffs;

    —  promote clear pricing methodology for local loop access;

    —  recognise that LLU must be faster—the current target date of July 2001 is too late;[6] and

    —  establish a cross-industry steering group to guide policy on e-commerce relevant issues.

  (3)  We also suggest that:

    —  Oftel's resources need to be adequate for the task and appropriately focussed. Staff turnover is very high which leads to poor continuity and low levels of expertise in what is a highly complex area.

17 May 2000


4   Source: Tarifica's benchmarking spring 2000. Back

5   We note that the FSA will now be obliged to promote the international competitiveness of and innovation in the UK financial services sector. Oftel has an even more pivotal role in the UK's international e-commerce competitiveness and we feel its objectives as currently expressed in the 1984 Telecommunications Act should be modernised in a similar way. Back

6   Additionally, we note that the Analysys ADSL Benchmark report for Oftel, reports that the UK is behind France, Germany and the US in terms of broadband rollout. Back


 
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