Comment

Is public involvement in the telecoms market a good or a bad thing?

Analysis: It depends of course where you're coming from, but it must be plain to the most dyed-in-the-wool free-marketeer that some level of regulation of telecoms is needed.

And that of course is because the ability to communicate is seen as one of the most fundamental of rights -- if I can put it that way -- in the modern world. Like electricity, gas -- and of course, water -- one of the modern state's roles is to ensure that you can access communications.

The important word there is access, since it implies the ability of the consumer to pay for the service. But there's no earthly reason, as one story this week pointed out, why the state should pay for the service too. In that story, the head of Ofcom, Ed Richards, has come down on the side of state regulation not state subsidy -- as well he might, if he knows which side his bread is buttered.

A full transcript of this interview is available here

As Richards points out, well over 95 per cent of UK homes now have broadband access with zero state subsidy involved. The market has worked in this case.

And one reason why regulation has worked in the UK's telecoms industry is because it forced BT to open up its network to third parties. We're still undergoing that process of course and, as a result, we have yet to reap the full benefits of the local loop unbundling programme. But the ability to rent a BT line and sell broadband access over it has generated a tidy profit for many companies. Even though they deny it...

Now, with BT's 21st century network (21CN), things are changing again. As the story this week points out, we're in danger of seeing BT monopolising once more. It was then mooted that maybe a state-funded alternative ought to be built, to keep BT on its toes.

With the broadband market as a model, it seems clear that the best route is regulation: fair prices for all along with a healthy competitive market.

Seems to have worked so far.

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