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EU Clears Ofcom Plan for BT Dark Fibre, Lower Prices and Faster Installs

Thursday, April 28th, 2016 (8:32 am) - Score 2,161

As expected the European Commission has approved Ofcom’s Business Connectivity Market Review 2016 (BCMR) proposals, which among other things pledged to open up access to BT’s national Dark Fibre network, cut leased line (Ethernet) prices and deliver quicker installations. But the regulator did reject two of the EC’s proposed tweaks.

Broadly speaking there appear to have been no significant changes from what the United Kingdom’s national telecoms regulator outlined on 22nd March 2016 (full summary), although the EC did make two non-binding comments on what Ofcom had proposed.

The EC’s Proposed BCMR 2016 Tweaks

1) The EC considered that the implementation risks associated with imposing a duct access remedy could be mitigated by use of a “uniform costing methodology” in line with the approach we had adopted for pricing dark fibre. It asked us to consider imposing Duct and Pole Access in non-competitive areas.

2) The EC noted and welcomed our detailed analysis of network reach and welcomed our intention to deregulate or impose lighter remedies in areas with infrastructure based competition. It considered that it may be possible to have a more granular geographic differentiation of remedies with specific criteria for imposing lighter touch remedies, including taking account of the possible availability of access to BT’s ducts.

In particular, it asked Ofcom to consider the imposition of a lighter set of remedies in other areas (as well as the [London Periphery]), including the five Central Business Districts, based on a clear set of criteria.

However Ofcom rejected both comments and noted in its response to the first point that it would be “impractical” to “set a duct access price on an active-minus basis and in line with our approach to pricing dark fibre. This is because, unlike dark fibre there is not a one-to-one relationship between the potential duct access product and an active leased line product (or indeed the dark fibre product and a potential duct access product).”

In its reply to the second point Ofcom concluded that the factors they have taken into account in their assessment “do reflect all relevant parameters of the state of infrastructure-based competition and furthermore that a consideration of these factors leads us to conclude it is not appropriate to apply lighter touch remedies in any areas other than the [London Periphery].”

A more detailed explanation can be found in the regulators final statement. Otherwise the main proposals appear to be broadly the same as they were last month, which Ofcom again summarised as follows.

Faster installations and ‘dark fibre’ access

Since 2011, the average time between a customer’s order and the line being ready has increased from 40 to 48 working days. BT is now required to reduce this to 46 working days by the end of March 2017, and return it to 40 working days the following year.

Openreach must also complete 80% of leased line orders by the date it promises customers by the end of March 2017, rising to 90% from April 2018.

Today’s statement also confirms that BT will have to provide access to its optical fibre network for providers of high-speed leased lines for businesses, using a process known as ‘dark fibre’.

Lower wholesale charges for leased lines

Ofcom has confirmed reductions in the wholesale prices BT charges for leased line services, expected to result in lower prices for businesses.

The main ‘charge controls’ relate to two groups of services provided by BT. These are: newer lines based on the ‘Ethernet’ standards for sending data at very high speeds over networks; and older leased lines using ‘traditional interface’ technology.

* For BT’s Ethernet services with bandwidths up to and including 1Gbit/s, Ofcom has concluded an initial reduction in prices of 12%, with a subsequent overall cap of CPI -13.5% for each year of the charge control.

* For BT’s traditional interface services with bandwidths up to and including 8Mbit/s, Ofcom has concluded an initial reduction in prices of 7.5%, with a subsequent overall cap of CPI -3.5% for each year of the charge control.

BT aren’t likely to have too much of a problem, beyond a few of the usual grumbles, with most of what Ofcom has recommended. But there may yet be plenty of disagreements over how the Dark Fibre Access (DFA) solution is offered, administered and priced.

A BT Spokesperson told ISPreview.co.uk:

Dark fibre is a flawed piece of regulation that introduces an unnecessary layer of complexity and will deter others from building their own fibre networks. It is at odds with Ofcom’s recent statements about increasing competition at the infrastructure level. It is a cherry pickers’ charter benefiting those who don’t invest in networks at the expense of those who do including BT, Virgin Media, Cityfibre and Zayo.”

Ofcom has said that they want to have a final DFA solution ready by the end of 2016, which would mean that it could be officially launched to industry by 1st October 2017. In the meantime Openreach (BT) have been told to publish a draft Dark Fibre “reference offer” by 1st September 2016, which will probably show an initial outcome that favours BT’s position; subject to more negotiation.

Openreach recently (21st April) held its inaugural DFA Reference Offer workshop, which attracted so much interest from ISPs that they even had to change the venue to the Baynard House Events Centre (London) in order to create more space.

Ofcom will no doubt be hoping that an agreement can be reached without them having to impose their own forced remedy, but BT will be understandably resistant and so we wouldn’t yet be willing to bet against an Ofcom intervention.

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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.
Leave a Comment
8 Responses
  1. Chris P says:

    DFA is indeed flawed, who would want to bother investing in their own cables when BT are forced to let others use theirs at reduced costs?

    The more BT charges, the more incentive their is for others to enter the market, undercut BT and earn a decent return on their investment.

    Would be good for VM to have to open their network to others too. I’m sure there are many that would like a Cable internet service from anyone other than VM. Then VM would receive pressure from the ISP’s to expand into non serviced areas and drive competition with openreach. VM’s share holders wouldn’t like the lost opportunity of greater revenue but i’m sure they would earn more due to increased take up.

    1. Ignition says:

      VM don’t have any direct shareholders. They’re a subsidiary of Liberty Global.

      If VM were obliged to open their network up the expansion programme would stop. ‘Pressure’ from other ISPs would be quite irrelevant when it’s VM paying £700 per premises passed to build new areas.

      VM pay for the build, then have to wholesale to Sky who’ll gleefully pump OTT TV down the DOCSIS broadband network forcing VM to upgrade capacity, at their own expense of course, and simultaneously lose out on TV revenue of their own.

      The VM network can’t be unbundled cleanly. To deliver a single customer unbundled on a node means taking bandwidth away from that node for your own services.

      The price VM would have to charge and the structure under which they price would have to be pretty onerous to offset this.

      Really best left alone.

    2. Chris P says:

      If it’s really £700 per property passed, surely they want a greater opportunity to earn from those properties currently passed but who’s owners choose a different ISP. If they got wholesale prices for each property passed but not paying for VM instead of £0 like they currently get, I’m fairly sure that equates to increased revenue and profit.

    3. Ignition says:

      They’d lose retail revenue which is a pretty big deal. Given options they wouldn’t have 40% of passed areas buying from VM with another however many percent buying from someone else on the network, they would lose their own vertically integrated customers in return for a fraction of the income wholesale.

      If it were more lucrative for VM or any other cable company to wholesale they’d already be doing it. The only instances I’m aware of where cable companies wholesale is where regulation requires it.

  2. Chris C says:

    They either needed to split openreach, or stop all this LLU type nonsense, ofcom claimed to have realised they messed up yet are trying to setup a LLU style up on fibre.

    Lost for words.

    Meanwhile they still havent realised that things like runaway line rental needs sorting out on the retail side, whilst they obsessed with making things cheap for talktalk and sky.

    1. GNewton says:

      The wholesale line rental hasn’t increased, has it? Nobody forces you to use a BT Retail service.

  3. FibreFred says:

    Dark fibre isn’t llu

  4. Pierre says:

    If operators want Dark Fibre then they can get it from the likes of Zayo, or in some instances Virgin Media and other providers – but they should pay the going rate for it. Not get it on the cheap. That is anti-competitive. Dark Fibre provision is Zayo’s main business in the UK.

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