Ofcom opens up PIA and dark fibre, but altnets unhappy

Earlier in the summer 2019, Ofcom issued its final determinations based on the latest Physical Infrastructure Market Review (PIMR) and Business Connectivity Market Review (BCMR). The decisions are expected to enable altnets to gain deeper access to Openreach assets, but the Ofcom approach has drawn criticism, including an appeal to the Competition Appeal Tribunal from BT competitors Vodafone and TalkTalk.

With the BCMR, the regulator decided to introduce a requirement for BT to provide access to dark fibre, on reasonable request, for inter-exchange circuits from certain BT-only exchanges. “We have decided to restrict the scope of dark fibre from our consultation position, so that it is only available from BT-only exchanges with no rival networks close by [within 100 metres of the exchange]”, Ofcom said.

Openreach has now soft-launched a Dark Fibre X (DFX) product that will be available from BT-only dark fibre exchanges to any other exchange. The service is available initially in the east region of the UK, with additional regions being added until the full launch by 1 January 2020.

CAT to consider Ofcom’s determination on market power

Vodafone UK held a press and analyst event to reveal its decision to appeal the BCMR to the Competition Appeal Tribunal (CAT).

TalkTalk has also reportedly filed its objections to the BCMR with CAT.

Operators are questioning whether the regulator took an evidence-based approach to its decision-making process, and argue that the final ruling is inconsistent with its stated goals.

Vodafone identified three areas where it considers Ofcom has acted inappropriately:

1. It is objecting to the decision that Openreach does not have significant market power in the central London area. The regulator’s ruling was based on the substantial number of alternative infrastructure available to most businesses in the area (four, on average). However, Vodafone considers that the costs of switching providers remain prohibitive, and that BT’s market share, which is said to exceed 60%, demonstrates that the central London market remains uncompetitive.
2. Vodafone is protesting the decision to replace cost-based charge controls with flat price caps in the BCMR.
3. It is objecting to Ofcom lifting the price cap for leased lines in urban areas where it anticipates stronger infrastructure competition to develop.

As noted above, the period covered by the BCMR has already been truncated from its usual three years, and the CAT appeal process is expected to take until at least summer 2020, and the challenging operators may be hoping to influence Ofcom’s approach to subsequent regulatory decisions as much as amending the current regime.