Ofcom publishes the outcome of its Wholesale Fixed Telecoms Market Review

After launching its consultation in January 2020, Ofcom has published a statement ‘Promoting investment and competition in fibre networks – Wholesale Fixed Telecoms Market Review 2021-26‘ in which it identifies BT as having market power in the provision of physical telecoms infrastructure, and wholesale markets underpinning broadband and leased line services (except in Central London). New regulations apply to BT from April 2021 until March 2026. 

Key points:

• Openreach must allow network operators to lay their own fibre networks using Openreach’s infrastructure through its Physical Infrastructure Access (PIA) product.
• Ofcom will vary how it regulates Openreach’s broadband products, depending on the level of current or prospective competition in an area.
  • In competitive areas (Area 1) Ofcom will not regulate Openreach’s broadband products. Customers in these areas will benefit from the choice of multiple networks, so regulatory restrictions can be removed. No such areas have been identified yet.
  • In areas with the potential for material competition (Area 2) making up 70% of the UK, Openreach will be required to provide wholesale access to its network. A flat, inflation-adjusted, regulated price is being set for Openreach’s entry-level superfast broadband service only (40 Mbit/s).
  • In the remaining areas (Area 3) making up 30% of the UK where Openreach is the only operator providing a large-scale network, Ofcom is setting a cost-based charge control which allows Openreach to recover the costs of both its existing copper network and its investment in a new full-fibre network (BT has committed to deploying full fibre to 3.2 million premises by March 2026).
• Openreach will be able to charge more (£1.70 per month extra) for the 40 Mbit/s service if it is delivered over full fibre,
• Openreach will be prohibited from offering geographic discounts on its superfast broadband wholesale services, including full fibre, and must give at least 90 days’ notice of the introduction of certain commercial terms.
• Ofcom does not expect to introduce cost-based price controls until at least 2031. Beyond that date, Ofcom will continue to regulate in a way that supports competition and investment.
• Leased lines will be regulated in a similar way to residential broadband, by varying its approach geographically to reflect the level of current or prospective competition. In Area 3 Openreach will be required to provide dark fibre links at cost to support mobile and other network growth.
• To ensure that Openreach provides the quality of service customers need, Ofcom has maintained the existing rules for how quickly it must carry out repairs and installations. In light of the impact of Covid-19, Ofcom has set the requirements in the first year (FY 2021/22) at slightly lower levels (2019/20 levels for broadband services) than the rest of the review period.

Ofcom is also consulting on Openreach’s three live pricing offers.