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Court Rejects BT Appeal over Ofcoms UK Network Access Costs Ruling

Wednesday, August 1st, 2012 (2:55 pm) - Score 785
bt street cabinet fttc deployment

The Court of Appeal has largely rejected BT’s latest attempt to appeal two judgments of the Competition Appeal Tribunal (CAT) from June 2010 and March 2011, which challenged an Ofcom ruling that found the operator had charged rival ISPs too much for access to its network (i.e. Partial Private Circuits – trunk segments market).

A Partial Private Circuit (PPC) is a set of “network components that [an ISP] is able to buy from BT in order to provide a private circuit to a third party” (e.g. you the customer) and thus extend its network. Providers typically purchase PPCs to provide connectivity between their existing core network and their “end-user customers in locations where they have no direct access network“.

Ofcom originally (2008) ruled in favour of BT’s rivals – Cable & Wireless UK, Virgin Media, Global Crossing, Verizon UK and COLT – by finding that BT’s related prices were “significantly above the competitive level” and thus “there was a risk that BT might fix and maintain some or all of its prices at an excessively high level, or impose a price squeeze, with adverse consequences for end-users“. It also moved to correct the operator’s charges.

Naturally BT stood to lose money and took the matter to a Competition Appeal Tribunal, which ultimately dismissed their argument that Ofcom did not have legal power to deal with “historic disputes” (this was found to be not “seriously arguable“) and its appeal against Ofcom’s original determination. The CAT said that BT had failed to “demonstrate to Ofcom the required cost orientation” and that left Ofcom’s alternative model as “the only satisfactory available course“.

Court of Appeal Statement

In any event, in the light of the arguments raised on behalf of BT on this appeal which I have rejected, and on the facts as found by the Tribunal, I can see no proper basis for reaching a different conclusion from both Ofcom and the Tribunal on the remedy they considered appropriate.”

So after a long running battle the Court of Appeal today ruled that it “would refuse permission to appeal“. Credits to OUT-LAW for spotting this development.

Court of Appeal Ruling (CASE:C3/2011/1683)

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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8 Responses
  1. Avatar DTMark

    Two questions:

    .. finding that BT’s related prices were “significantly above the competitive level”

    1. By comparison with/versus cometition with whom?

    2. As a private company, why can’t it charge whatever it likes?

    In the same manner, what is the maximum amount Tesco should be allowed to charge for, say, an orange, if there is no Sainsburys within five miles?

    What a tangled web we weave when we sell state assets thus creating a privatised monopoly.

    • Avatar telecom engineer

      Indeed DTMark. In my personal opinion its about time the Government decided what it wants BT to be. If it wants a private company get out of the way and let it Operate. If it wants to dictate terms and conditions then renationalise the UK Telecom arm (retail, wholesale and OR) and put in the investment required for the future and reap the rewards for the taxpayer.

    • Avatar zemadeiran

      When you have an incumbent with a pre existing monopoly you need to regulate said incumbent so it does not stifle and crush new entrants which results in lack of competition and little or no choice for the consumer.

      1. By comparison with/versus competition with whom?
      With other network operators in the UK such as Colt, C&W, Fujitsu etc

      2. As a private company, why can’t it charge whatever it likes?
      Companies that are not in a monopolistic position are not regulated by a specific body because they are naturally regulated by other companies in their market which in turn creates the market price.

      Keep calm and carry on…

    • Avatar zemadeiran

      The ultimate answer?


    • Avatar DTMark

      @telecom engineer – indeed. Either companies are private, or they are not. A hybrid is a paradox.

      As I have always argued, the infrastructure – as in, the the ducting (*not* the fibre) – should be public. Actually, it has to be, if we’re ever to get anywhere near the original BDUK objectives which now appear to have been completely abandoned.

      You can’t, on the one hand, have the government makiing noises about “the best broadband network in Europe” and then taxing those [fibre taxes, digging/road closure charges] who actually step forward to build said network while presiding over a situation which actually holds the entire project back for the same reasons it has always held it back.

      That is why the BDUK approach was and remains so deeply flawed.

      Regulation doesn’t work. All it does is force a position whereby BT will, quite correctly, hang on to its monopoly position and milk it for all its worth. That is the *correct* mode of operation for a private company whose legal primary duty is to shareholders, not customers. Why on earth should one private company be expected to act as some sort of charity with altruistic values for the good of others?

      There are only two reasons why FTTC is being rolled out at all. One is the rollout of 4G/LTE which will render ADSL and landline circuits completely redundant in many instances, and the other is the chance of a bite at the begging bowl that BDUK presents.

      That is why broadband has been and remains so utterly woeful and why, unless the so-called “superfast broadband” project changes direction, it will barely rise above mediocre.

      Competition raises standards.

  2. Avatar Deduction02

    Landmark decision which could in theory now lead to significant lower pricing.

    1. I imagine that was the whole point due to price there was a lack of competition
    2. Because although it is private it is a regulated industry, much like most utilities are such as Gas, Water etc.

    Im not entirely sure how you Tesco thing works but its basically. The maximum price a retailer can charge for a product must not exceed what the manufacturer set it at. Thats why supermarket prices vary by a few pence in most cases. Manufacturers likewise can be looked into for things such as price fixing, a few years ago im pretty sure (I MAY BE WRONG) there was a big investigation into coca-cola over something like that.

    • Avatar Somerset

      Lower pricing for what products?

      Where do you find that manufacturers can set prices? Who makes an orange? Are you thinking of Resale Price Maintenance which was abolished a while ago.

  3. Avatar Deduction02

    I said in theory for pricing. Theory and reality are 2 different things.

    And price fixing does still happen, read up about milk.

    PS complaining continually when you dont like the answer to your questions just shows further ignorance. Dont question me further if you dont like the answers.

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