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UPDATE Openreach Cancels UK Launch of their Dark Fibre Access Product

Tuesday, August 15th, 2017 (1:17 pm) - Score 6,635

The proposed Dark Fibre Access product from Openreach (BT), which would have allowed rival ISPs to gain “physical access” to the operator’s existing fibre optic cables (i.e. enabling them to install their own equipment at either end of the fibre within cable ducts), has today officially been cancelled.. for now.

The plan was first introduced as part of several measures under Ofcom’s 2016 Business Connectivity Market Review (here). The regulator viewed it as a change that could foster more competition and speed-up the roll-out of faster broadband services around the UK (e.g. backhaul capacity for new networks). A number of ISPs (e.g. TalkTalk, SSE Telecoms) had already made significant plans for the new service.

However several major infrastructure builders, such as Openreach, Virgin Media, Cityfibre and Zayo, all feared that DFA would discourage operators from investing to build their own fibre optic networks. In keeping with that BT launched a legal challenge of the measures via the Competition Appeal Tribunal (CAT), which last month dramatically ruled in their favour (here).

A key part of the regulator’s review of the £2bn leased line market was its proposal for BT to make DFA available in all parts of the UK (RoUK) 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.

On top of that Ofcom also defined DFA as applying to a particular type of leased line(s) known as Contemporary Interface Symmetric Broadband Origination (CISBO), which use newer Ethernet and WDM technologies. However the tribunal ruled that the regulator’s market definitions for DFA were incorrect and this “quashed” some of the key decisions from their 2016 review, which sent DFA back to the drawing board.

CAT’s Ruling

The Tribunal found 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.

Under the original plan Openreach was expected to launch their DFA product on 1st October 2017, but the ruling changed all that. In theory Openreach could have either chosen to proceed with DFA (i.e. under less favourable terms), cancel the launch or shelve it until such time as Ofcom can figure out whether DFA is still viable (i.e. the regulator could do that by re-running their review from scratch).

Today the Office of the Telecoms Adjudicator (OTA) held a crunch meeting and the immediate fate of DFA was decided. Industry sources have informed ISPreview.co.uk that the launch of DFA has now been cancelled, at least until such time as Ofcom can set out how they intend to proceed.

The outcome was perhaps the only one possible because Ofcom are still awaiting the tribunal’s full reasoning and until they have that then the regulator will not know how best to proceed, although they continue to believe that DFA can “bring significant benefits for businesses and consumers.” In the meantime DFA will not proceed.

Separately, ISPreview.co.uk understands that the same meeting also included discussion about a potentially significant change to the expensive FTTP on Demand (FTTPoD) product. FTTPoD is similar to Openreach’s native “full fibreFTTP deployments, except it can be rolled out into certain non-FTTP areas following a request, but the end-user needs to pay a significant installation cost to help cover the construction work.

However we understand that the proposed change would involve dropping the price of FTTPoD to match native FTTP, with “project builds” becoming an option for things like estates. The new FTTPoD solution might also adopt ECC charges rather than a distance band with mandatory survey. But take this with a pinch of salt because we don’t yet have the detail and it’s currently only being “considered“.

UPDATE 2:12pm

We now have some official comments coming in.

Openreach’s Official Statement

“Industry will be aware, in June 2016 BT appealed Ofcom’s findings in the 2016 Business Connectivity Market Review (BCMR) on the market definition and the imposition of the Dark Fibre Access (DFA) remedy.

The Competition Appeal Tribunal (CAT) issued a Ruling on 26 July 2017 that Ofcom had erred (a) defining a single product market for contemporary interface symmetric broadband origination (CISBO) services of all bandwidth, (b) concluding that the rest of the UK comprises a single geographic market and (c) its determination of the boundary between competitive core segments and the terminating segments of BT’s network

In light of the CAT ruling and following discussions between Ofcom and various parties involved in the CAT litigation, Openreach do not intend to launch DFA on 1 October 2017 or notify launch pricing at the end of August/early September 2017. We’ll issue formal communications to CPs over the coming days.

We are very keen to discuss with CPs what existing or future alternatives to dark fibre may meet their requirements.”

Mark Collins, Cityfibre’s Director of strategy and Public Affairs, added:

“After Ofcom’s flawed regulatory efforts in the BCMR were overturned by the CAT, there is no legal basis to mandate the introduction of a regulated dark fibre product. Therefore, Openreach’s decision not to proceed with a dark fibre offering is not a surprise.

As one of the UK’s largest suppliers of dark fibre infrastructure, CityFibre’s growth and proven ability to attract investment, demonstrates that the competitive market for business connectivity, including commercial supply of dark fibre, is alive and well and not in need of disproportionate and unnecessary regulatory interference.

Rather than continuing to drive increased dependency on Openreach, we suggest that Ofcom goes back to the drawing board to focus on delivering more appropriate and proportionate remedies that help meet its own strategic objectives to support increased competitive investment in full fibre for the UK.”

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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.
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29 Responses
  1. NGA for All says:

    If FTTP on demand is pursued in the context of B-USO modelling costs and the vast BDUK underspends, investment account balances, BT’s capital deferral, the FOD commitment in Wales, Scotland R100, Northern Ireland £150m (DUP -Cons), and BT’s new £600m offer is applied then there is no reason why FTTP on demand cannot become the basis of how the B-USO is implemented.
    It may take a little time to materialise but the opportunity is there to realise a near national demand led FTTP-GPON service, where the copper gain technology is found wanting.

    1. Steve Jones says:

      What has that got to do with this news item?

    2. baby_frogmella says:

      What’s this “FoD commitment in Wales” you speak of?

    3. GNewton says:

      @Steve Jones: Well, the article mentions Fibre-on-demand:

      “the same meeting also included discussion about a potentially significant change to the expensive FTTP on Demand (FTTPoD) product.”

      The current incarnation of the FTTP-on-demand is as good as dead, and this needs to re-addressed.

    4. baby_frogmella says:

      @GNewton/JNeuhoff/Carpet Burn
      FoD even though its expensive, is not dead. According to Fluidone, at present they’re getting ~ 10 orders each month, which wouldn’t be the case if it was of no interest to anybody. Compared to a leased line service, FoD can work out significantly cheaper over the longer term though obviously you don’t get the same SLA & speed guarantees that you do on a leased line fibre service. I agree though, the FoD pricing has to come down significantly in order the attract the residential punter.

    5. James says:

      FOD as it stands is dead. There are millions who would jump on it if was priced like native FTTP. Seeing that only a hundred odd people are taking it up every month should prove that it’s never ever going to go mainstream.

      If OR priced it like native FTTP, scrapped the connection charge that costs almost a grand on it’s own & lowered the installation charges from thousands to hundreds then it would take off.

    6. GNewton says:

      @James: As I said, it’s “as good as dead”, it’s a rare niche product, it has no market impact, and does not really serve the needs of a genuine FTTP-on-demand.

      @Baby_Frogmilla: I can’t find any post from Carpet Burn nor JNeuhoff on this forum thread? Who are you replying to?

    7. Gadget says:

      @James – FTTPoD is only available where FTTC has been installed, so already limits demand to those who really want the faster speeds and are prepared to pay the speed premium. native FTTP is installed instead of FTTC and so potentially serves the whole area rather than a single user – That’s one big reason why the charges are so different.

    8. bob says:

      @ James And I’m sure Aston Martin would sell more cars if they priced them at £100 each. I wonder why they haven’t thought of that already?

    9. Chris P says:

      If OR priced it like the fttc who would pay the difference in cost? The magic money tree?

      If OR are over charging how come no one else is swooning in and charging the same or less?
      Why are the banks not throwing cash at b4rn saying go that potential market, undercut OR and gain customers for life on their monopolistic installation and service?

      It costs that much because it costs that much. If it where cheaper they’d have done it by now as they’d be earning from it with all those ISP’s reselling services across it.

  2. Simon says:

    £1200 minimum for install and £60 a month for 36 months, the latest quote I had for 330/30

    1. Mike says:

      Which provider gave you that quote?

    2. James says:

      OR are charging isp’s an annual rental of £1188 (excluding vat) + a fixed connection charge of £750 (excluding vat) to provide them with 330/30 FOD. That’s not counting the installation charges. Isp’s then add their own costs on top before it hits the consumer.

      Unless said company is going to pay the vast excess out of their own pockets, £60 a month is sheer fantasy.

  3. Ultraspeedy says:

    Next move by Ofcom will now screw BT with their USO plans and wanting to increase prices to fund it.

  4. Apolloa says:

    Cough cough **rigged fixed monopoly market for one corporation only** cough cough…

    This country is doomed to never have a decent internet infrastructure, not with the government parties we have and the Offcom joke and Open Reach..

    1. TheFacts says:

      …and your plan is?

    2. Richard Oakes says:

      no vision in any of them all useless, everyone should have the ability to take gigabit if they want to thats my USO
      remote can be done over microwave and mesh systems,

    3. TheFacts says:

      Who funds it?

      And everyone should be within 5 miles of a Waitrose while we are sorting this out.

    4. GNewton says:

      @TheFacts: How about you tell us your plan instead of asking others all the time. In fact, do you have any proposals at all? Like for example a better alternative to dark fibre access?

    5. bob says:

      Problem is not many people want fast internet. Most people want basic connection if any internet at all. Even when FTTP is provided, lower speed packages are predominantly chosen. There’s no real popular use case for 100mbps, let alone 330 or 1gbps that doesn’t involve vast amounts of torrenting.

    6. dave says:

      People want to get the speed they sign up for and at a reasonable price. It’s a big problem that we still have services that are sold as 80Mbps yet average ~30-40Mbps. Most would be happier if they signed up for 30Mbps and actually got 30Mbps.

    7. AndyH says:

      @ Dave – Everyone signs up expecting 80Mbps? ISPs do not provide estimates about what speeds you will receive when you sign up?

    8. Chris P says:

      It’s sold as an UPTO service.

      It’s quite simple to understand that depending on the individual circumstances the actual rate varies.

      If I want a mortgage, the bank will lend me upto 90% loan to value, depending on my circumstances. If I’m buying a house for £300k and earn £200k per year I’ll pay a high interest rate but get that 90%, if I earn £30k I won’t get anywhere near that, likely only ~30%. Like any estimator it gives me an indication with the real value provided on application.

      It’s really not a hard concept to understand.

    9. Web Dude says:

      @bob – I have no wish to use my bandwidth for torrenting but security webcams, etc, family watching video streaming (esp once 4K becomes popular) and other things like backups to the cloud mean I want 20+ Mbps upstream. Here, with a fibre cab 20 metres from (back) of house but home supplied from a cab 700m away, and VM in next street but not this one, the estimates suggest I cannot get even 35 Mbps downstream, so may move (or buy a flat from which to live/work) and use Hyperoptic at 100 or 1000 Mbps (the latter speed, at under 70 quid/month, seems best value to me).

      In the short term I may choose an 80/20 service mainly for the upload side, though quite understand it may not be as fast as I’d like.

    10. Chris P says:

      Moving seems a bit extreme especially if you own your home it’s likely tens of thousands to move or a few thousand for install charges for a faster circuit.
      My cab is over 1 km away (~22mbs fttc) and the local cab my neighbors neighbor connects to is ~100m away and just being upgraded to fttc. I am currently on vm but would like faster uploads too for the same reasons as you Web, so could pay vm more, get fttod or hope OR can be persuaded to reterminate my line to the local cab so I could get fttc from there. I have considered fttod but may wait to see what shakes out.

    11. MikeW says:

      Moving is certainly a bad idea, especially when based on attempting to use the cloud in a poor, bandwidth-inefficient manner.

    12. Mike says:

      Generally if you want faster upload speeds you’re better off with LTE or LTE-A if available.

      @bob What’s wrong with torrenting?

    13. GNewton says:

      @MikeW: “Moving is certainly a bad idea, especially when based on attempting to use the cloud in a poor, bandwidth-inefficient manner.”

      I have to disagree. The way you use the cloud is different from that of many other users and developers. Your workaround strategy to low local upload speeds by keeping software and/or data on remote servers in data centres with sufficient available symmetric bandwidth doesn’t work for everyone.

      Moving premises to areas where genuine fibre broadband exists makes sense for quite a number of small businesses, e.g. for graphics designers, web designers, software developers, media companies etc. This country is subject to a broadband postcode lottery, but with a little bit of research you can find the right location.

    14. 125uS says:

      I think dark fibre as originally planned would tend to enforce monopoly rather than increase competition.

      Openreach would have a regulated, nationally available product that stomps right on the toes of the alternate network providers. It’s no coincidence that Virgin, Colt, Cityfibre and others are pleased that dark fibre isn’t going ahead. It reduces the value of their network investments and gives new entrants the chance to play using only Opex funded by customer orders, no need to find investors to fund the Capex for network build.

      What will be interesting to see now, given the alt-nets fear of dark fibre, is whether it emerges in some form anyway from Openreach as a product to compete with them.

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