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UPD BT Stall Ofcom Dark Fibre and 2016 Business Connectivity Review Changes

Wednesday, July 26th, 2017 (2:39 pm) - Score 2,784

Ofcom’s Business Connectivity Market Review (here), which last year pledged to open up access to Openreach’s (BT) national Dark Fibre network, cut leased line (Ethernet) prices and deliver quicker installs, has been sent back to the drawing board by the Competition Appeals Tribunal (CAT).

A key part of the regulator’s review of the £2bn leased line market was its proposal for BT to make Dark Fibre available in all parts of the UK except central London (including the City of London and Docklands) – where Ofcom deemed that there is sufficient competition in the market – and Hull, where most leased lines are provided by KCOM (KC) rather than BT.

The Dark Fibre requirements would also only apply to a particular type of leased line(s) known as Contemporary Interface Symmetric Broadband Origination (CISBO), which use newer Ethernet and WDM technologies.

Ofcom’s Market Definitions (BCMR 2016)

4.1 Introduction

This section sets out our market definition and SMP assessment for the wholesale 4.1leased line services provided using newer technologies i.e. Ethernet and WDM. These are referred to as Contemporary Interface Symmetric Broadband Origination (CISBO) services.

In this section, we first present our market definition analysis. We define:

• A single product market for CISBO services: This includes Ethernet and WDM services at all bandwidths (including EFM services) and;

• Three distinct geographic markets: These are Central London Area (CLA), London Periphery (LP) and Rest of UK (RoUK) excluding the Hull area.

The new Dark Fibre service is based off Openreach’s 1Gbps capable Ethernet Access Direct product (details) and gives rival ISPs “physical access” to the national operator’s existing fibre optic cables (i.e. allows them to “take direct control of the connection“), which means that they can then install their own equipment at either end of the optical fibre within the cable ducts.

At the time Ofcom claimed that DFA could foster more competition and speed-up the roll-out of faster broadband services around the UK (e.g. backhaul capacity for new networks), although big infrastructure builders like BT, Virgin Media, Cityfibre and Zayo all feared that it could discourage similar operators from investing to build their own fibre optic networks. Nevertheless a number of ISPs, such as TalkTalk and SSE Telecoms, have shown interest in the product.

However Ofcom’s review and its measures may now have to be revisited after the Competition Appeals Tribunal (CAT) ruled that the regulator’s market definitions for many of the proposed changes were incorrect.

CAT Ruling

5. The Tribunal is in the process of preparing its judgement on the market definition issues, but it is aware that the parties would soon have to start expending substantial resources preparing for the remedies hearing. The Tribunal is concerned to assist the parties and to avoid unnecessary costs from being incurred, and has therefore determined to give its decision on the market definition issues now with its reasons for that decision to follow in writing later.

6. The Tribunal finds unanimously that:

—–(1) Ofcom erred in concluding that it was appropriate to define a single product market for CISBO services of all bandwidths;
—–(2) Ofcom erred in concluding that the RoUK comprises a single geographic market; and
—–(3) Ofcom erred in its determination of the boundary between the competitive core segments and the terminating segments of BT’s network.

7. Ofcom’s decisions in respect of all three matters will therefore be quashed. However, as will be explained in the full reasons, the Tribunal is not in a position to substitute its own findings in relation to any of the above matters. The matters will therefore be remitted to Ofcom for reconsideration.

8. Pursuant to Rules 19(2) and 107(1) of the Competition Appeal Tribunal Rules 2015 (2016 S.I. 1648) the Tribunal extends time for the making of any request for permission to appeal until three weeks after the notification of the Tribunal’s written reasons.

The appeal was pushed forward by BT against Ofcom, although there were several intervening parties including Vodafone, TalkTalk, COLT, Virgin Media, Three UK and Gamma Telecom. A spokesperson for Openreach said, “We note today’s ruling by the Competition Appeals Tribunal which found that Ofcom’s market review definitions were inaccurate. The UK has a vibrant business connectivity market with a large, diverse and growing choice of providers – and this decision means that future regulation, where necessary, can be placed on a sound footing.

A Spokesperson for Ofcom said:

“We are disappointed with today’s judgement. Once we have the Tribunal’s reasoning, we will know how best to proceed in order to protect competition and consumers. We continue to believe that dark fibre can bring significant benefits for businesses and consumers.”

At the very least this could result in a longer delay before their proposed changes are introduced, although it’s currently unclear whether or not Ofcom will need to run the whole BCMR again from scratch or if they will appeal the decision. Meanwhile it looks as if Openreach won’t be forced to launch their Dark Fibre product in October 2017.

UPDATE 27th July 2017

Cityfibre has this morning given their reaction to yesterday’s ruling.

Mark Collins, CityFibre’s Director of Strategy and Public Affairs, said:

“We welcome the Tribunal’s decision, which is very positive outcome for all companies investing in full fibre infrastructure.

We have consistently argued that Ofcom’s regulatory framework must, at its core, support competitive investment across the UK’s digital infrastructure. Our decision to appeal the BCMR was based on our strong belief that Ofcom’s BCMR regulation did not support this objective.

We look forward to a productive dialogue with Ofcom going forward, shaping a regulatory environment that encourages investment, supports competition and delivers better outcomes for enterprises and businesses.”

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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
3 Responses
  1. grrrrr says:

    Thank you Cityfibre for screwing it up for everyone else in the rest of the country to protect your localised partial coverage which takes ages to get access to and misses large chunks

    1. 125uS says:

      I think the issue is that it could greatly harm any of the businesses that have installed their own fibre.

      If the cost of renting a dark fibre from Openreach is lower than installing your own on your own network (it almost always will be) then the companies that have built their own networks are at a great disadvantage compared to those that haven’t. That would tend to reduce, not increase, competition in the last mile.

      It seems like a measure that discourages investment in infrastructure is probably not the right one. I don’t think this affects broadband at all really, the dark fibres would still cost hundreds of pounds a month (Openreach’s website has proposed pricing of £2022 install and £1968 annual rental).

    2. FibreFred says:

      Cityfibre (and others) haven’t screwed it up, the change was obviously flawed which is why CAT rejected it.

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