Yesterday Ofcom announced that it had released BT from it’s shackles preventing it from selling discounted fixed line, broadband and TV – effectively letting the other providers such as Virgin Media, Talk Talk and BSkyB out compete.
BT has 14 million installed lines into UK homes versus 12 million for the others combined. In my view that would still remain a significant amount of the market share, especially given that BT Openreach’s services including local loop unbundling at the exchange is utilised by all the 400 service providers who do not have their own network.
I would now expect a price war – which is great for consumers, assuming all other factors, such as quality, customer service and fault resolution remain the same. My fear would be that in order to turn a profit with lower tarifs being offered those very services will suffer. We will see a balancing of the networks where they attempt to balance the service against the cost to optimise consumer take up.
BT’s share price rose nearly 5% yesterday on the announcement and nearly 2% today.