OFTEL took a further step towards fully open competition in the residential telecom market this week by introducting new elements to the regulatory regime for BT. The main effect of the change is to allow customers to receive a service direct from BT's competitors. At the moment customers receive a separate charge for line rental from BT even if they choose a different provider for call charges.
The implication of this is that non-price as well as price competition will emerge for consumers, providing an incentive for BT's competitors to provide either additional services or packages such as free line rental in order to attract customers. As has happened in other regulated sectors, an incentive has been offered for compliance with this to BT, namely gradual removal of price controls depending on how competitive the market becomes.
The consumer interest element of this is possibly more certain than for the gas supply industry. For gas this type of deregulation has resulted in some unfair elements of non-price competition, with confusing price structures and underhand sales tactics requiring regulatory action which has still to be solved. With telecoms the potential benefits for additional services, particularly with internet-based services should outweigh any confusion the consumer may experience as a result of the amount of choice that will become available to them. BT has already shown itself to be fairly innovative in the products it offers consumers . This change is likely to result in fairer competition rather than just more competition as other companies are given the chance to provide the same type of services that currently only BT can.