Competition Tribunal Upholds Dark Fibre and UK Market Definitions Ruling

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.