OFCOM recently announced a fast-track consultation as regards K-C, the incumbent telecoms operator in Hull and parts of East Yorkshire, being able to bundle together lines, call and fixed access broadband.

If other interested parties wish to make their views know, please be aware the consultation closes this Sunday 5th September 2010.

There follows the NextGenUs response.

“NextGenUs UK CIC would genuinely welcome the introduction of bunding of retail telecommunications services in the Hull SMP area as soon as there is equivalence of wholesale access and pricing as available from BT Openreach in the rest of the UK.

If K-C wishes to offer better value to its customer immediately then it is entirely at liberty to reduce the costs of the individual calls, lines and fixed broadband components, without seeking to limit competition by tieing customers into long term bundled contracts.

NextGenUs would like to engage in a dialogue with the appropriate staff at OFCOM to expand upon this initial objection to the proposed Retail bundling in Hull and this online submission is put forward in a briefing format in view of the very limited time available until the consultation closes on September 5th.

OFCOM have recently relaxed the reigns on BT Retail in the rest of the UK in permitting BT to offer more aggressively priced service through bundling lines, calls and broadband services to residential customers. The customer has the freedom to select a bundled option (the more you buy the less you pay) and is not “forced bundling” (tying) that forces KC customers to pay for local calls from KC at an additional £3.50 per line per month whether they make a call or not and removing all competition in market for local calls.

If OFCOM were to allow KC to offer similar “bundled” packages, whilst initially being good for the consumer, would have a considerable long term negative effect on consumer choice since by reducing charges without the presence of any existing competition in an existing Monopoly where Significant Market Power (SMP) already exists would further minimise any possibility of any other Commuications Provider seeking to enter the Hull market in direct competition to KC and harm whatever limited competition already exists.

If OFCOM are considering permitting KC to bundle services,Ofcom MUST conduct a new investigation into the individual markets for telephone calls, lines and broadband markets in the Hull area. If KC still are still considered to have SMP (Significant Market Power) in any of these markets bundling cannot be permitted.

NextGenUs wishes to make its position abundantly clear that the removal on the existing conditions on KC will be fully objected to and vehemently opposed on the grounds that KC continue to possess SMP in all 3 markets and Communication Providers (CP’s) do not have access to the KC telephone line at the wholesale level.

NextGenUs would only ever agree to the removal of the existing conditions placed on KC unless the equivalent of Openreach’s WLR3 services were made available from KC in the Hull area whereby CP’s were able to compete directly with KC for the provision of fixed telephony service having obtained “Equivalence” with all providers that wish to compete in the Hull market.

If OFCOM were to orchestrate this would fully benefit consumers in terms of not just providing consumers with competitively priced services but would also provide consumers with a number of alternative choice’s with a selection of providers whereby endusers can choose their supplier based on price and service.

OFCOM should write to all CP’s to solicit their views about the Hull Market.”

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What is perfectly clear from the waste described in the above blog post is that not a penny of public subsidy must be allowed to go to BT unless and until there is transparency that best value for Taxpayers Money is being achieved.

No more repetitions of Iwade in other words!

The UK’s copper wire network grew in what is euphemistically referred to as an “organic” fashion without sufficient attention paid to least cost operations/maintenance.

This was largely a legacy of the Nationalised GPO years and seems to have persisted since Privatisation some quarter a century ago.

The fundamental problem with either state-monopoly or commercial monopoly is the same.

It is a problem of lack of incentive.

In other words, why care about constant gradual improvement in productivity when the costs of inefficiency can be passed onto the customer?

There is a better way to be found and that is the Community Interest monopoly.

Gordon Cook’s December Report captures the issue stateside exceptionally well, here is an extract that goes to the heart of why the community interest needs safeguarding to ensure the value proposition of NGA is future-proofed.

Go Gordon!

“Until you find a way to stop the network owner from extracting monopoly rent from its wires, you will never cross the transition chasm into the widespread productive use that Carlotta Perez speaks of as the final deployment phase of the ICT revolution.  Until these technologies go into widespread use, you don’t get all their economic benefits. Under wireline owner-extortion you can kiss device innovation good bye.

The wire owner is a predator.  Now why would you put a private entity in control of building, constructing, and operating the wires?  Your first answer is going to be its ok to do because they are regulated.

But regulators are ordinary people who are subject to the economic lobbying pressure of the wire owners.”