U.K. Report on Yell Rate Cap Out Tomorrow

We understand that tomorrow morning the U.K. competition commission will release its final report on classified directories in the U.K. The report is expected to reaffirm the commission’s earlier recommendations that the longstanding rate cap on Yell be essentially rolled back beginning in 2008. Here is our last post on the issue. We also covered this in Local Media Journal.

The full report will be available on the commission’s Web site, www.competition-commission.org.uk.

UPDATE 12/21/06: Here is a quick rundown on what the final report contains, much of which has been reported previously.

Beginning in March 2008, Yell can begin raising rates, at a pace no greater than the rate of inflation. While this is still rate regulation, it is a far more lenient regime than the current rate cap of the inflation rate minus 6 percent. Yell has operated under some form of rate cap since 1996.

The commission has finally acknowledged the presence of viable directory competition in the U.K. It also concedes that the Internet will emerge as a major competitive force, if it hasn’t already.

The commission also lifted the restriction that has prevented Yell from publishing local directories. This particular finding is not being well received by Yell’s competitors, although they have supported moving away from the rate cap.

The commission also gives Yell some leeway on launching vertical products, or “themed guides,” provided the number of classifications they include is limited.

The commission plans to review this whole thing again in three years.

While Yell still has to deal with regulators, it will be operating much more freely starting in 2008. In recent quarters, Yell has reported negative growth in print directories in the U.K., a sign that its ability to grow its way through the rate cap has run its course. If not for the strong performance of Yell.com, Yell might have gone into the red. So this ruling comes in the nick of time for Yell.