Is it the end of the line for Oftel?

UK telecoms watchdog Oftel and its director general David Edmonds have come out fighting against allegations of soft treatment towards BT, after coming under sustained attack from users, the European Commission, BT's rivals and the media.

Oftel has protested strongly against the most serious accusation levelled against it - that it allowed BT to slip the leash and gain a head start in providing local loop broadband services. It insists that BT is keeping to schedules and pre-empting deadlines, and there is some truth to this. But the feeling in the industry is that the regulator has put its foot down too late.

As a result, claims that Oftel is to be disbanded and replaced by an all-embracing communications and media regulator have popped up on news websites and in the mainstream press over the last few weeks. This, of itself, is nothing new, however.

The UK government has been looking into such a possibility since 1998, when the Department of Culture, Media and Sport (DCMS) launched a review of how to regulate the media. And a team of joint staff from the DCMS and Department of Trade and Industry (DTI) is now looking into exactly what kind of regulations will be necessary as communications technologies continue to develop over the next 10 years.

The idea of an all-encompassing regulatory body first surfaced in 1998 to try and ensure that issues raised by new technologies such as the internet, were not ignored. For example, under the existing 1984 Telecommunications Act, it is not clear which regulator would be responsible for content transmitted over IP networks. But a new body, the select committee suggested, could be known as Ofcom and could deal with this.

While such suggestions are not set in stone, the one thing that is certain is that change is coming. The discordant voices of the telecoms industry seem to have agreed on one point at least: Oftel isn't working.

A watchdog with teeth
Louise Lancaster, director of European regulatory affairs at telco Viatel, says the structure of any new regulator is not important, and that telcos, particularly those in competition with BT, will judge any new watchdog by its bite rather than its bark.

"We are less concerned about what type of organisation we have than by what action it takes. We would like the regulator to be more proactive and assertive than the current director general has tended to be," she said.

"We are a long way from being able to pull back completely from regulation and rely only on competition law, particularly with respect to access and interconnect. We would also be concerned that the independence of the regulator from the government was maintained in any new organisation and that its decision-making processes remained transparent," Lancaster continued.

Any review of Oftel's structure should also bear in mind proposed European Commission legislation, which would require the body to be reorganised, she added.

Oftel defends its corner
Edmonds had originally welcomed the DCMS select committee's report in May 1998. "There is a clear view that there should be no have-nots in the Information Age. I believe this should be at the heart of the sectoral regulator's role," he said.

But it is those very have-nots, those who could be left without access to broadband services, that are the cause of Oftel's problems.

The rush by telcos to operate services from exchanges serving urban areas, which are likely to generate the most revenues, means that businesses and consumers in more remote areas will not have the same level of choice as those in metropolitan regions. Providing broadband fixed wireless services in rural areas has been suggested as one solution to this problem, but these do not come under Oftel's remit.

And this presents a problem for the government. New technologies are emerging all the time and access providers will inevitably seek out the most lucrative markets, but Downing Street's policy demands that its watchdog safeguard the right of businesses and consumers to equal access and that it ensures fair competition. The case for Ofcom grows in strength.

Robin Duke-Woolley, senior analyst at Schema, said: "The time is right to create a new regulatory framework. The internet has blurred many historical boundaries, and the industry needs a framework that recognises the emerging economic structure of the communications industry. The Ofcom concept moves in that direction, but it now needs pushing on."

On the back foot
Tony Lavender, principal consultant at analyst Ovum, said that Oftel's increasingly strained relationship with its charges is making it feel cornered - a situation that is aggravated by companies wanting to access local loops that use the media to snipe. "Oftel must be feeling the strain. It's gone into panic mode - it is in a highly defensive mode," he claimed.

This was highlighted in a recent Oftel statement on behalf of Edmonds, which said: "If there is any dispute between an operator and BT, it will be resolved by Oftel. If necessary, I shall not hesitate to make determinations requiring BT to comply. The guidelines are tough. BT will have to provide and make ready for use collocation space in a maximum of four months."

"For standard facilities such as unbundled loops, I will determine the prices. The charges for other items such as collocation should be commercially negotiated. In case of dispute, I will determine a reasonable price to be paid," it added.

But such tough talk rings hollow, following Edmonds's admission that he wished Oftel had acted sooner and with a firmer hand.

Despite arguments from telcos other than BT that they only want a level playing field, the underlying theme is one of change: change in technology, change in services, change that benefits companies large and small.

It appears, in future, that content will be king, but the company with no access to it will have no throne to sit on. And with a government that is widely held to value style over substance, the telecoms watchdog may soon find itself losing its crown.