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Competition Tribunal Upholds Dark Fibre and UK Market Definitions Ruling

Friday, November 10th, 2017 (3:41 pm) - Score 1,082
BT major fibre optic cable junction telephone exchange uk

The Competition Appeal Tribunal has today handed down judgement against the market definitions used in Ofcom’s Business Connectivity Review, which upholds the July 2017 ruling (here) and means that the plan to cut leased line charges or force Openreach (BT) to offer Dark Fibre is still stalled.

Openreach were originally due to launch an Ofcom proposed Dark Fibre Access (DFA) product this year, which would have enabled rival UK 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). But this plan was cancelled after BT won a legal challenge against Ofcom’s “incorrect” market definitions (here).

Infrastructure builders like Openreach, Virgin Media, Cityfibre and Zayo have long feared that DFA could discourage operators from investing to build their own fibre optic networks and will thus welcome today’s update.

Mark Collins, Cityfibre’s Director of Strategy & Policy, said:

“CityFibre welcomes today’s decision from the CAT, which upholds the market definition aspects of the appeal against Ofcom’s BCMR.

This decision means Ofcom will now need to reconsider and redefine its assessment of the market in a way that not only truly addresses the industry’s longstanding concerns regarding fairness and competition, but also fits the context of an accelerated full-fibre roll-out – as demanded by the Government.

Ofcom’s flawed approach was unduly fixated on a ‘make do and mend’ strategy of squeezing economic value out of BT’s existing legacy network, not recognizing and encouraging the expansion of new, fit-for-purpose fibre networks from the likes of CityFibre. It’s pessimism about the prospects for real, infrastructure-based competition would have perversely restricted alternative providers’ ability to compete. It’s fixation with forcing BT to offer dark fibre ignored the fact that CityFibre, amongst others are already providing wholesale dark fibre and plan to expand its footprint substantially.

This is now an opportunity for Ofcom to rethink its strategy. What it should have done, and now should take this opportunity to rectify, is to properly assess and understand the market to determine what competition concerns exist and then, and only then, introduce remedies which are fit for purpose and forward thinking, to deal with those concerns.

The judgement will give Ofcom the opportunity to revisit its blinkered approach to the introduction of dark fibre at all costs and press ahead with the introduction of market controls or remedies which are fit for purpose, such as unrestricted duct and pole access. The market needs remedies which will ultimately provide the competitive intensity the market needs in order to thrive in a way that is fair and delivers choice and value-for-money for customers.”

A Virgin Media Spokesperson said:

“We welcome today’s ruling which requires Ofcom to rethink how these markets will be regulated. It’s vital that Ofcom encourages and supports investment in the UK’s internet infrastructure at a time when companies like Virgin Media are laying the foundations for ultrafast broadband across the UK.”

So far Ofcom has not said how they intend to proceed, although it’s likely that they may need to re-run their 2016 Business Connectivity Market Review. In the meantime Openreach has proposed to launch a new OSA Filter Connect product, which is a kind of virtual (grey) dark fibre style solution (here).

UPDATE 6:46pm

Added a comment from Virgin Media above.

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Mark Jackson

By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.

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7 Responses
  1. Chris P

    Another bloody nose to OFCOM.

    How long can Shaz stay in the post for before her minister decides its time she moved on?

    I’d like to see her at OFGEN.

  2. MikeW

    I have no particular comment about the business angle of this decision.

    However, if you take the comments from CityFibre and VM at face value, they’re saying that Ofcom should not regulate in order to allow more fibre to be deployed. If you apply those arguments to the residential market, they’d be used as a basis for arguing that Ofcom should butt out of LLU regulation that keeps copper in place.

    • CarlT

      Given where the UK market is now I am utterly convinced that if Ofcom had kept out of LLU ultrafast networks would be more advanced.

    • Steve Jones

      In essence yes, and Ofcom ought to be putting on notice a schedule for withdrawing the MPF and WLR mandated products albeit only to be withdrawn where there are suitable GEA-based alternatives. As it is, current Ofcom regulations are a major barrier to the evolution of the OR network.

      There probably also ought to be some measures to change the current universal geographic pricing model so that wholesale prices bear at least some relevance to local costs. That would make a significant difference to commercial business cases albeit that it would be inevitably controversial and complex.

    • MikeW

      @CarlT
      Agree with that 100%

      LLU is a form of regulation predicated on the access network being already deployed, largely unchanging, with no value to be gained from being changed, and no penalty incurred for being kept in place. A commodity.

      @Steve
      I agree.

      With LLU being the form I describe, the one thing that Ofcom could do now to atone for its error is to allow the access network to be changed out without penalty.

      And something has to give on the issue of funding the worst-served portion of the country. I’m appalled particularly at the obstructionism that some firms are exhibiting.

    • NGA for all

      Is Market A not 90% BT for IPstream? Why not start there?

      Steve, Ofcom report a uniform cost for all bandwidth, UK not geographically large enough to create a need for a different price, The underlying cost is no more than £5 per Mbps, where the price is as previously discussed.

  3. lolfibre

    Yes stop DFA access as the industry will supply more say CityFibre who just let Vodafone (where fibre goes to die – they’ve bought loads of other networks and taken them off the market) take theirs off the market and VM who try their best to avoid selling fibre (try buying it). Neither of them are ever going to offer fibre in most of the country where access to BT fibre would be useful.

    OFCOM should regulate this monopolistic cabal

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