Dark Fibre and a better quality of serviceMatthew Evans
Ofcom today published their draft statement on the Business Connectivity Market Review (BCMR). Whilst Ofcom need to consult the European Commission before making their final conclusions it is unlikely that this will cause a significant delay, with the final statement expected next month.
Following hot on the heels of Ofcom’s Digital Connectivity Review, the BCMR examines the provision of Leased Lines to businesses in the UK. It has made a number of proposals, most notably requiring that BT open up its fibre network on a passive basis (ie ‘Dark Fibre). It has also altered the price controls which should result in cheaper leased line products and imposed new targets that it will require BT Openreach to achieve when delivering and repairing services.
Jonathan Oxley, Ofcom’s Competition Group Director, said: “All of us depend on high-speed, fibre optic lines. Businesses use them to communicate, and they also underpin the broadband and mobile services used by consumers at home and on the move.
BT is relied on by many companies to install these lines, and its performance has not been acceptable. These new rules will mean companies across the UK benefit from faster installation times, greater certainty about installation dates, and fast repairs if things go wrong.”
When Ofcom conducts these market reviews – which it has to do every 3 years under the EU’s Regulatory Framework for Telecoms – it first defines the market and then seeks to determine whether a communication provider (CP) has Significant Market Power (SMP). If it identifies an operator with SMP then it determines what remedies to impose. In Central London it has found that no operator has SMP and has therefore lifted regulation from BT.
However, in the rest of the UK (apart from Hull) it has found that BT has SMP. This is not a surprise, what is more interesting is the choice of remedy. Whilst the last market review ruled out passive remedies in favour of an active remedy, this review indicates that Ofcom will move towards former. This is in line with the overall sentiment of the DCR. Ofcom states that it does this for three reasons; it will stimulate competition, eliminate the need for duplication of some electronic equipment and will allow the roll back of regulatory obligations on BT for active services.
Unlike the DCR which opened up access to BT’s Ducts and Poles (DPA), this review finds that a dark fibre remedy is more appropriate. This would allow other CPs to access unlit strands of BT’s optical fibre and install its own electronic equipment. Much of the focus will be around the price of such dark fibre and its interaction with the DPA product announced in the DCR. There will inevitably be a period of negotiation around costs between Ofcom and industry with a target date of a dark fibre remedy coming into force from 1 October 2017.
Ofcom also found that BT’s quality of service in providing wholesale Ethernet services is not acceptable. They have therefore imposed two sets of minimum standards, one around the certainty of delivery – for instance 80% of orders will need to be completed before the contractual delivery date in 2016/17, rising to 90% in 2018/19 – and the other around a set of quality of service benchmarks;
There’s certainly a lot to go through in this BCMR (coming in at around 850 pages and multiple annexes) but it is interesting to see Ofcom’s new focus on deploying fibre start to permeate through to its decision making.
Let’s not forget too that Government is also conducting a review in Business Connectivity, so this may not be the last intervention into this market that we have seen this year…