In the UK, customers get broadband services from ISPs who are either dependant upon wholesale broadband services or their own LLU (local loop unbundling) lines. UK broadband suppliers offer a wide range of packages and bundles with different specifications, prices and service quality to meet the requirements of different customers in UK. These broadband indicators often change as the ISPs need to survive in the fierce competitive UK broadband market. In this regard, Ofcom, the telecom regulator in the UK has a view that promoting competition between ISPs who provide broadband services via their LLU networks is more beneficial to the UK broadband market as well as to the customers.

However, local loop bundling still requires large investment thus there are a few areas in the UK, where ISPs still have to access wholesale services to deliver their services. In these areas where competition is too insufficient to make ISPs to offer various options to broadband customers thus these areas are badly in need of regulatory measures.

Last November, Ofcom issued a consultation (also known as Review of the wholesale broadband access markets 2006/07) regarding its views over broadband services (for both home users and businesses), the classification of broadband markets based on geographic areas and the recognition of SMP (significant market power) in markets and the regulatory measures it will take if needed.

According to Ofcom, there are four markets in UK based on competitive conditions:

• The geographic areas which are covered by exchanges where KCOM is the only operator (“the Hull area”)
• The geographic areas which are covered by exchanges where BT is the only operator(“Market 1”)
• The geographic areas which are covered by exchanges where there are 2 or 3 Principal Operators AND exchanges where there are 4 or more Principal Operators but where the exchange serves less than 10,000 premises (“Market 2”)
• The geographic areas which are covered by exchanges where there are 4 or more Principal Operators and where the exchange serves 10,000 or more premises (“Market 3”)

In case of SMP, KCOM and BT had SMP in the Hull area in Market 1 respectively. However, the competitive conditions are constantly changing and as Ofcom was having plans to issue a second consultation, Ofcom did not feel the necessity to recognize the existence of SMP in Market 3 as the issue was still open for discussion.  
After its assessment of SMP in Hull area, Market 1 and Market 2, Ofcom has decided to implement many regulatory measures. Accordingly, the providers are required

• to provide Network Access on reasonable request
• not to discriminate unduly
• to publish a reference offer
• to notify terms and conditions
• to publish technical information
• to have accounting separation

Finally, Ofcom has asked the public to provide comments on its views with regard to the products and geographic market definitions, its assessment of SMP, and the regulatory measures it has planned to implement. Until now, there were 30 comments out of which 7 were confidential. Some respondents felt that symmetric services must be included in the product market definition and that home and business broadband customers could be considered in separate markets. There was a consensus among many respondents that BT was still a SMP in all market levels – 1, 2 and 3 while most respondents had different views over the competitive conditions in Market 3.

The consultation document also reveals BT’s commitments to provide future broadband pricing and reduce the price of its wholesale products every year until 2010. In the two letters that BT sent to Ofcom, the largest broadband provider also assured that it would offer its wholesale broadband services in all parts of UK without discriminating any geographical area.