2. 1 The Implications of the Access Guidelines for the Television Markets David Levy Controller of Public Policy BBC Presentation to OFTEL PFG 8 th July 2002

3. 2 The key access obligations  The access guidelines set out key obligations to ensure fair and effective competition: –non-discrimination –Unbundling of services –Transparency – to NRA and to competitors –Cost-based pricing –Reasonableness on both sides  Any reduction or evasion of key obligations as a result of concerns over: –The initial investment by the SMP operator; or –The maintenance of network integrity/security Must be thoroughly investigated, justified to competitors and subject to frequent review.

4. 3 Making non-discrimination obligations work  Effective Chinese walls are vital  Otherwise vertically-integrated firms can seek unfair advantage: –Self provision of technology in advance of its release to competitors; –Access to competitors’ confidential information, acquired when negotiating access –Abusing testing/network integrity requirements to delay the launch of competitors’ services.  Solutions –Genuine separation between company branches –Published accounts for each –Dedicated & separate staff –Controls on information sharing

5. 4 Unbundling  Proportionate unbundling has served independent service providers and BT’s customers well for many years.  To date, in TV markets, unbundling by SMP operators has been limited.  This has inhibited competition and inflated costs, eg: –Regionality –Transaction based versus FTA Interactivity  The burden of proof needs to be reversed - SMP players must be required to justify why unbundling could not be achieved.

6. 5 The need for cost-based pricing with transparency  Reference offers are welcome – must include those for unbundled services  Tariffs that are simply “a basis for negotiation” don’t aid transparency  Joint & Common costs must genuinely be so –Clarity is needed over costs of self provision  Transparency needs to be to the NRA and to those seeking access.

7. 6 Reasonableness on both sides  Guidelines focus on what might be a reasonable request for access.  But what would be unreasonable terms for an SMP player to impose?  Eg an SMP player should not abuse a gatekeeper position to impose visual layout constraints on competitors’ services - –not for the benefit of consumers –but to enforce the SMP players’ platform-wide “look and feel”.

8. 7 Minimising the number of “Get out of jail free” cards  Initial investment by the SMP operator - –Risk must be rewarded through price –Not through denying third party access  The maintenance of network integrity/security – –Oftel must test all claims by SMP operators that access would undermine network integrity/security –It needs the resources and the commitment to do this –Otherwise risk of legitimate requests for access being blocked.