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Summary

On March 22, 2016 the UK telecoms regulator, Ofcom, published a draft statement on its periodic Business Connectivity Market Review. The statement focuses on reducing the prices for wholesale high-speed business broadband, but also covers improved service provisioning and support. Most business broadband lines are owned and maintained on behalf of competing providers by BT, so the new rules will have a particularly significant impact on the UK incumbent.

A focus on service experience and not just cost

BT’s competitors in the enterprise sector have long called for Ofcom to address the UK business market, missing few opportunities to draw the regulator’s attention to the issue. In particular they have focused on the impact more effective regulation of BT could have on SMEs. Competing service providers such as Virgin Media Business and TalkTalk Business have pointed out what they consider to be structural market barriers to SME uptake of high-speed connectivity services. Such barriers, they contend, inhibit the realization of a fully “Digital Britain” in which highly connected SMEs help drive economic growth.

One of Ofcom’s goals is to ensure fair prices and, crucially, it has included in its remit not just “traditional” business broadband and leased point-to-point network services, but also Ethernet, which is no longer confined to large enterprises, but is increasingly used by SMEs. Ofcom is introducing refreshed charge controls for both of these types of high-speed network services; this will see wholesale prices decline significantly over the coming years.

Ofcom has taken a broader approach to regulating this market, focusing not just on prices, but also on the business customer experience. The regulator notes that since 2011 the average time between a customer’s order and the line being ready has increased from 40 to 48 working days. In its draft it is proposing that BT reduce this to 46 working days by the end of March 2017 and return it to 40 working days the following year. It is also proposing that by the end of March 2017 Openreach must complete 80% of leased line orders by the date it promises customers, rising to 90% from April 2018.

Ofcom’s focus on customer experience will be welcomed by many. Ovum’s global research on B2B satisfaction levels with telecoms service providers indicates that many fail to live up to expectations. As the report Enterprise Insights: Evaluating Suppliers in Global Managed Services outlines, areas of disappointment include customer support, delivery to agreed SLAs, provisioning times, problem resolution, and fault management. In a world of on-demand enterprise ICT services, it is in service providers’ own interest to be more responsive when it comes to the delivery of high-speed network services that support ICT.

Regulators elsewhere have also been reviewing the regulatory arrangements for business services. Large enterprises often have ICT budgets of more than $1m and, in general, “money talks.” However, SMEs often do not have such leverage with national or local service providers. In such cases, support from regulators could be appropriate. Governments around the world are focusing on the importance of the SME market for economic growth, so Ofcom is unlikely to be the last national regulator to focus on B2B.

Appendix

Further reading

Enterprise Insights: Evaluating Suppliers in Global Managed Services, TE0005-000695 (April 2015)

Author

Evan Kirchheimer, Research Director, Enterprise Services

evan.kirchheimer@ovum.com

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