Ofcom launches consultation on wholesale broadband charge controls

28 Jan 2014

UK telecoms regulator Ofcom has launched a public consultation relating to proposed charge controls for IPStream Connect Max and Max Premium in those areas of the country where there are two or less principle broadband operators. This follow an earlier consultation, published in July last year, which among other things outlined suggested changes to market definitions, with the number of defined markets falling from four to three: Market A (only one or two broadband providers present – 9.6% of premises in the UK, predominantly rural areas); Market B (three or more ISPs present – 89.7% of premises); and the Hull area (KCOM is the sole provider – 0.7% of UK premises). Ofcom says the whole of Market B would be unregulated as there is already effective competition which ensures that prices for end users are determined by market forces.

With the charge controls in the latest consultation relating to Market A, where Ofcom has also proposed that incumbent BT be labelled as having significant market power (SMP), the watchdog said the purpose of the latest call for feedback is to ‘seek stakeholders’ views on revised and new proposals on the charge control, which have come about following the publication of BT’s latest Regulatory Financial Statements (2013 RFS) and have resulted in a significant change to the range of X that we consulted upon in our 2013 WBA Consultation’.

Among the notable proposals put forward by Ofcom are: the use of 2012/13 as the base year for cost modelling purposes; the updating of its market size adjustment; and the expanding of proposed zero cease charges to all services in Market A. The regulator also noted that the consultation explains why it does not consider it appropriate to change our proposals in the 2013 WBA Consultation in relation to market definition, SMP or remedies following the receipt of new information on fibre roll out and take-up. However, it has confirmed that it will continue to monitor the roll out of fibre-based broadband services by BT, and the take-up of such services by communications providers and end-users, ‘with a view to reconsidering our approach if necessary before the end of the market review period’.

Interested parties have until 10 March 2014 to make submissions to the consultation, with Ofcom saying it expects to subsequently publish a statement on the matter in spring 2014.

United Kingdom, BT Group (incl. Openreach), Ofcom