{"id":31698,"date":"2022-07-24T00:01:39","date_gmt":"2022-07-23T23:01:39","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=31698"},"modified":"2022-07-22T15:11:00","modified_gmt":"2022-07-22T14:11:00","slug":"cityfibre-find-positives-in-its-failed-fttp-prices-appeal-vs-ofcom","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2022\/07\/cityfibre-find-positives-in-its-failed-fttp-prices-appeal-vs-ofcom.html","title":{"rendered":"CityFibre Find Positives in its Failed FTTP Prices Appeal vs Ofcom"},"content":{"rendered":"

The Competition Appeal Tribunal<\/a>‘s (CAT) decision last week to reject CityFibre<\/a>’s appeal against Ofcom<\/a>’s approval process for Openreach<\/a>’s \u201cEquinox<\/em>\u201d price cut (here<\/a>), which slashed the cost of the incumbent’s wholesale FTTP<\/a> broadband products for UK ISPs, may not have been a total loss for the alternative network operator.<\/p>\n

Alternative network providers, like CityFibre<\/a>, are concerned about such discount schemes because they’re in the early stages of investment to deploy rival networks and thus carry a lot of risk, particularly when facing a dominant market player.<\/p>\n

The fear among some players is that Openreach<\/a>\u2019s discounts might eventually result in a reduction in competitive fibre infrastructure investment and deployment, which could reduce choice and innovation, and potentially even result in higher prices for consumers; though for now the extra competition is more likely to result in lower prices.<\/p>\n

On the flip side, AltNets have taken a big risk in assuming that Openreach<\/a>’s wholesale prices would always remain high (i.e. making altnet’s services appear more attractive for consumers and investors) and that they wouldn’t be allowed to adapt, particularly in aggressively competitive urban areas.<\/p>\n

We recommend reading the prior article(s) for the full context. But to cut a long story short, CityFibre<\/a>’s appeal focused more on how Ofcom<\/a> arrived at their decision to approve Openreach’s discounts, rather than the price reductions themselves. Nevertheless, the tribunal ended up “unanimously rejecting<\/em>” all of CityFibre’s grounds for appeal and “dismissed the appeal in its entirety<\/em>,” which sounds fairly definitive.<\/p>\n

Finding the Positives in Rejection<\/strong><\/span><\/h3>\n

However, it’s somewhat customary for the losing party to find any positives they can in such an outcome, and CityFibre are no exception. At the time, the operator noted that the tribunal had made some “significant criticisms of Ofcom<\/a><\/em>” as part of its ruling, although they didn’t initially go into a lot of detail.<\/p>\n

Put another way, the CAT did find flaws in Ofcom’s consultation process, but it ruled that they were “not so flawed as to be unlawful<\/span><\/em>“. After spending some time reading through the ruling, while also speaking to CityFibre and Ofcom, we now have a better idea of what the operator meant and have summarised the key points below.<\/p>\n

CityFibre’s Perspective on the Judgement<\/strong><\/span><\/p>\n

1.<\/strong> The CAT found it surprising that Ofcom did not understand the altnet business model:<\/p>\n

Tribunal Quote: “Given the apparent significance of the Overlap Conclusion, we find it surprising that Ofcom did not ask CityFibre if it had information about its short term network build plans and the anticipated overlap with Openreach. It seems obvious that CityFibre would, at least to some extent, have had such information available, if only because it was important information for the purposes of securing investment<\/em>.”<\/p>\n

2.<\/strong> Whilst the CAT acknowledge the high hurdle required for a successful judicial review, and that it was not for the CAT to substitute its views for those of an expert regulator, it considered that Ofcom could have asked further questions for the purposes of its assessment:<\/p>\n

Tribunal Quote: “CityFibre has not met the high hurdle required to establish that Ofcom has failed in its duty to make sufficient enquiry. We consider that there were further questions which Ofcom could have asked, and which it may indeed have been desirable to ask. However, it is not for this Tribunal to substitute our views on that subject for those of an expert regulator with deep knowledge of the subject<\/em>.”<\/p>\n

3.<\/strong> The CAT considered that regulators like Ofcom are afforded discretion to make expert judgments in the expectation that they will provide clear and consistent guidance to investors:<\/p>\n

Tribunal Quote: “very significant investment commitments and resource allocation decisions are made on the basis of [Ofcom\u2019s] policy statements. Put another way, a lack of clarity and consistency in implementation has significant consequences and is therefore to be avoided. Regulators like Ofcom are afforded the discretion to make expert judgments in the expectation that they will provide clear and consistent guidance to those that they are regulating<\/em>.”<\/p>\n

4.<\/strong> The CAT expects Ofcom to maintain careful scrutiny of the market at this important time to ensure its conclusions are validated by evidence of actual competitive conditions:<\/p>\n

Tribunal Quote: “Ofcom has reserved to itself the power to review its decision and to intervene if it considers that the Equinox offer is affecting competition in a way which Ofcom had not previously appreciated. We would encourage Ofcom to maintain careful scrutiny of the market at this important time, to ensure that the judgements it has made in the Statement continue to be validated by the emerging evidence of actual competitive conditions<\/em>.”<\/p><\/blockquote>\n

CityFibre hopes this means that Ofcom will now be more effective, and even proactive, in scrutinising any future Openreach offers for their FTTP<\/a> products at wholesale, to ensure that all operators are given a “fair bet<\/em>“. But it remains to be seen whether any of the above points, if properly reflected by the regulator, would fundamentally change the outcome of future reviews.<\/p>\n

Naturally, we raised these points with Ofcom, and a spokesperson told us this: “We carefully considered this offer and rivals\u2019 views, and concluded that it does not raise concerns requiring intervention. We\u2019re pleased that the Tribunal unanimously rejected CityFibre\u2019s appeal on all grounds, and we will consider the comments in the judgment carefully<\/em>.”<\/p>\n

As for CityFibre itself, they clearly haven’t given up the fight and may, should it be deemed necessary, be considering another bash at litigation – assuming Openreach introduce further discounts in the future (this is a distinct possibility). Time will tell, although it would currently still seem to be an uphill struggle.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Competition Appeal Tribunal‘s (CAT) decision last week to reject CityFibre’s appeal against Ofcom’s approval process for Openreach’s \u201cEquinox\u201d price cut (here), which slashed the cost of the incumbent’s wholesale FTTP broadband products for UK ISPs, may not have been a total loss for the alternative network operator.<\/p>\n","protected":false},"author":1,"featured_media":28366,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[474,418,56,86,36,69,38],"class_list":["post-31698","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-bt","tag-cityfibre","tag-fttp","tag-law","tag-ofcom-regulation","tag-bt-openreach","tag-politics"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nCityFibre Find Positives in its Failed FTTP Prices Appeal vs Ofcom - ISPreview UK<\/title>\n<meta name=\"description\" content=\"The Competition Appeal Tribunal's (CAT) decision last week to reject CityFibre's appeal against Ofcom's approval process for Openreach's \u201cEquinox\u201d price\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2022\/07\/cityfibre-find-positives-in-its-failed-fttp-prices-appeal-vs-ofcom.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CityFibre Find Positives in its Failed FTTP Prices Appeal vs Ofcom - 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