These various requirements include, but are not limited to, providing a reference offer, enabling network access upon reasonable request, and not discriminating unduly. The remedies also include charge controls.
The UK operators are staking their claim to be trailblazers in 5G (see separate item), but access to high quality, affordable fiber will be as essential to the new networks as advanced radio expertise. The state of the dark fiber market will help decide the 5G winners and losers – plentiful, modern and cost-effective fiber is one factor that puts Japanese operators ahead of the world so can UK regulator level the playing field for UK MNOs?
Currently, the mobile operators complain that BT’s wholesale arm, Openreach, restricts affordable access to its fiber network. They are seeking to partner with, or buy, their own fixed line assets to support increased levels of high speed backhaul, Cloud-RAN fronthaul, and future converged fixed/mobile access networks. Vodafone’s recent deal with CityFibre is an example, while the main cableco, Liberty Global’s Virgin Media, should be able to leverage its own fiber assets more effectively in future, to enhance its value in a much-expected merger or joint venture with Vodafone, or to expand its own wholesale and neutral host business.
But Openreach is so dominant in terms of fixed line footprint that the MNOs remain wrong-footed – as well as constantly fearful that, however arm’s length Openreach is from BT, there may be favorable terms for BT’s own mobile subsidiary, EE, the cellular market leader.
So Ofcom has launched its latest consultations about the position of Openreach, which may result in it taking a harder line than it did after the previous one last year. That did enforce more separation between the two BT businesses, but not as rigidly as many critics wanted – these had called for a complete break-up of the incumbent telco.
The new process comes in the wake of a Competition Appeal Tribunal (CAT) decision in July which decided that Ofcom’s 2016 Business Connectivity Market Review (BCMR) included inaccurate market definitions. That verdict led BT to scrap a plan to introduce dark fiber access (DFA), which had been mandated by Ofcom as part of the BCMR.
The regulator is making another attempt to make DFA a major part of the UK telecoms landscape. As part of its new consultation, it is revoking the measures initiated by the BCMR, and imposing a set of temporary measures until the results of the current consultation, while BT rivals can hope again for a real dark fiber market in the UK.
“We consider in this consultation whether to add a requirement on BT to provide dark fiber in addition to the other remedies,” said the regulator in a statement. “As part of this dark fiber consultation, we are also consulting on the market definition and SMP [significant market power] assessment set out in the BCMR Temporary Conditions Statement.”
As part of its interim measures, Ofcom has divided wholesale services between lines with speeds up to 1Gbps, and those above, in rules governing what it calls contemporary interface symmetric broadband origination (CISBO). This is in response to a ruling by the CAT that the regulator was wrong to define a single product market for all CISBO offerings (which include wholesale leased line services using modern interfaces, including Ethernet and WDM).
Ofcom was also judged to have been wrong in defining the rest of the UK (excluding Central London and Hull) as a single geographic area, and so was wrong to conclude that BT held significant market power (SMP) in that diverse region. It has now adjusted its definition of the ‘rest of the UK’ (RoUK) also to exclude the central business districts of Birmingham, Glasgow and Leeds, plus the Central London Area.
It concludes that BT still enjoys significant market power in the RoUK region for the slower CISBO services, hence the temporary remedies, which will be in place until a new BCMR is agreed. The new requirements include that BT must provide a reference offer, enable network access upon reasonable request, and not “discriminate unduly”, and there are various charge controls.
BT has been making changes itself designed to fend off tighter regulation by proving it is open to providing well-priced, fair access to its rivals and other customers. For instance, it has introduced a new Optical Spectrum Access (OSA) Filter Connect, which gives telcos access to fiber via an Openreach managed service, potentially reducing their overheads and providing more dynamic capabilities. However, Ofcom prefers the full dark fiber access approach.
“We continue to believe that introducing dark fibre would promote efficiency and better sustain effective competition than would be possible with active remedies alone,” Ofcom said. “We therefore propose that BT should be required to launch the dark fibre product, including the publication of the RO (reference offer), within one month of the publication of our final statement.”
Interested parties have until 29 December to submit their responses. Ofcom expects to issue a statement in early 2018.
“We’re very surprised by Ofcom’s decision and disappointed given the clarity of the CAT judgement and Openreach’s commitment to developing new, alternative products which can meet the demand for dark fibre,” said an Openreach spokesperson.