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Cityfibre Taking Ofcom UK to Court Over Protection of BT’s Dark Fibre

Wednesday, July 6th, 2016 (8:48 am) - Score 1,521

The outcome of Ofcom’s recent Business Connectivity Review (here and here), which gave Openreach’s (BT) competitors “physical access” to its fibre optic cables (i.e. allowing them to “take direct control of the connection“), clearly hasn’t gone down well at urban fibre optic broadband builder Cityfibre.

The solution itself is often referred to as Dark Fibre, although the fibre optic cables would not be “lit” using BT’s electronic equipment. Instead, they would be “lit” by a competitor installing their own equipment at either end of the optical fibre. Ofcom believes that this solution could deliver more market competition and help to speed-up the roll-out of new broadband services.

However the regulator was worried that BT would “charge excessive prices for dark fibre“, which they said might limit take-up and “lead to distortion in downstream competition“, and so they proposed that the dark fibre remedy should be subject to a charge control (i.e. keep its price low). But by offering Dark Fibre on the cheap the regulator could risk harming BT’s rivals in the same market.

Ofcom’s decision certainly came as a surprise to most of the major fibre optic infrastructure builders, not least since a similar review that was conducted by the regulator 2-3 years earlier had described the same Passive Remedy as carrying “significant risks of worse outcomes, both for consumers and for effective competition, including adding costs and encouraging inefficient entry.” BT agrees with that and they’re not alone.

A BT Spokesperson told ISPreview.co.uk in April 2016:

“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.”

Cityfibre are currently working to expand their own high-capacity fibre optic / FTTP broadband network to around 50 cities across the United Kingdom by 2020, which is predominantly used to serve businesses and the public sector. The operator has also shown that its network, with enough support from major ISPs, can even be extended to deliver 1Gbps Fibre-to-the-Home (FTTH) solutions (e.g. York and Bournemouth).

However Cityfibre doesn’t welcome the opportunity to gain access to BT’s Dark Fibre network through Ofcom’s regulated price approach. Cityfibre’s fear is essentially that the approach will threaten their own Dark Fibre market and they already have the support of other infrastructure developers (here).

Now Cityfibre has moved to challenge Ofcom’s Dark Fibre solution via the High Court’s Competition Appeals Tribunal, with the operator warning that the policy was “ridiculous” and would cement BT’s position in the broadband market as a “single, unassailable wholesale infrastructure provider.” A little ironic, since BT doesn’t want Ofcom’s remedy either.

Mark Collins, CityFibre’s Director of Strategy, said:

“As a major investor in the UK telecom infrastructure market, working to transform digital connectivity across the country, we need to ensure that CityFibre and other fibre optic infrastructure builders can invest against the background of a fair and balanced regulatory regime.

We believe Ofcom is implementing poor and inconsistent regulation, and we have a duty to robustly contest their decisions and policies in the normal course of business – especially where they conflict with stimulating long-term investment in the critical digital infrastructure which the UK so badly needs.”

At this point we should say that it’s important not to confuse the business orientated Dark Fibre fix with Ofcom’s other wholesale Duct and Pole Access (DPA) solution, which will give rivals access to use BT’s (Openreach) underground cable ducts and telegraph poles. Both solutions are essentially two different sides of the same coin and Cityfibre have already been trying, albeit with some difficulty, to make use of DPA for their own advantage (here).

Ofcom has of course pledged to “defend our decisions” and the Government’s Digital Economy Bill may help by increasing the threshold for such appeals, which would make it harder for operators to stall new regulation, but this won’t come in time to stop Cityfibre’s appeal. The need for this change arose after the earlier auctions of 4G spectrum in the 2.6GHz and 800MHz bands, which were delayed for years by legal threats from mobile operators.

Meanwhile Three UK has announced today that mobile Internet use on its network in Hull (East Yorkshire) has increased by 380% since January 2015, which of course follows the completion of CityFibre’s “dark fibre backhaul” network in the area (here). The timing of this PR is surely no coincidence and comes from Cityfibre’s PR firm.

Mobile operators EE and Three UK both invested to help build the new network, which placed the old legacy copper-based infrastructure. The project has enabled the networks to reduce bottlenecks in capacity that had previously affected mobile network speeds in Hull and expand 4G coverage throughout the city.

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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
10 Responses
  1. chris conder says:

    Open access is a farce. Nobody can afford the hidden costs. Better to build your own. But when infrastructure is publicly funded then anyone should have access to use it, especially dark fibre. This would mean altnets could go the extra mile where BT can’t go. BT won’t want this to happen but ofcom should enforce the open access rules. Currently all they mean is that you can choose a provider as long as the provider buys from BT wholesale who buy from openreach. Superfarce.

    1. Ignition says:

      Suspect TalkTalk, Sky, and others would be interested to know that they buy from BT Wholesale.

    2. TheFacts says:

      @Chris – yet again you show your complete lack of knowledge of the UK comms industry.

      Openreach:

      Our customers are the 537 communications providers who rely on us to deliver the telephone, internet, data and TV services that households and businesses buy from them.

  2. FibreFred says:

    Seems like an un winable situation here. Rivals moan they want access to BT’s fibre, Ofcom say let’s do it.

    Other rivals say no… that will spoil my own venture (which I completely understand)

    1. NGA for all says:

      Why do they not suggest to increase the geographic areas where dark fibre is not required? ie areas where there is functioning market for wholesale point to point circuits.

    2. FibreFred says:

      Ok but what about areas where the market isn’t functioning that Cityfibre want to move into using their own cabling?

    3. NGA for all says:

      @Fibre Fred there is no perfect answer. As soon as someone invests in a point to point fixed wireless connection on a route on the assumption he can (or must) charge above nominal national rates for peak bandwidth costs the dilemma starts.
      The quest for a uniformly low unit average bandwidth cost on a universal basis is one of the hidden attractions of GEA.

      I guess the opportunistic nature of City Fibre model to focus on slicing private circuit costs in the public sector should not impact on a broader plan to encourage investment in a fibre transition plan.

      CF could meet all their commercial objectives by declaring their willingness to support a DF product and prices in their target cities without the need for Ofcom’s intervention. They could probably produce a 2-3 year build plan. That should be enough to support an exit plan for their stakeholders.

  3. fastman says:

    some people just never happy !!!!

  4. nobobo says:

    Cityfibre is dumb

    “we making your city a (fibre city)”

    £700 a month for service

    what was the point? most small bussiness are happy on fttc or even adsl2+

    1. Mark Jackson says:

      Many small businesses can’t get FTTC and “happy” may be the wrong word to use for ADSL2+, but experiences do vary.

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