Ofcom sets out proposals designed to improve business broadband

22 Mar 2016

UK telecoms regulator Ofcom has unveiled proposals for ‘strict new rules’ which are designed to ‘improve BT’s performance in installing high-speed business lines and significantly reduce the wholesale prices BT charges for these lines’. With such plans forming part of the watchdog’s Business Connectivity Market Review, published today, it said it aims to finalise the new rules at the end of April 2016, subject to consideration by the European Commission (EC).

Having previously set out plans in its Strategic Review of Digital Communications to reduce reliance on BT’s infrastructure unit Openreach by further opening up the fixed line incumbent’s network, Ofcom has now confirmed plans to require BT to provide access to its optical fibre network for providers of high-speed leased lines for businesses. As such, the telco will have to offer competitors physical access to its fibre-optic cables, allowing them to take direct control of the connection. BT is already required to offer wholesale leased line products, which bundle the optical fibre and BT’s own network equipment, at regulated prices to competitors, but Ofcom claims that opening up the incumbent’s ‘dark fibre’ network ‘should increase the opportunity for competitors to develop new high-capacity services for their customers’.

Alongside this, Ofcom has also detailed requirements for faster leased line installations for businesses, with the proposals calling for BT to reduce the average time between a customer’s order and the line being ready to 46 working days by end-March 2017, before reducing it to 40 days a year later; according to the regulator, the current average time has risen from 40 working days in 2011 to the current average of 48 working days. Meanwhile, Ofcom has also found that Openreach is currently failing to complete one in four leased line installations on the initial date it promised to its customer. To remedy this, Ofcom is proposing that by the end of March 2017 Openreach must complete 80% of leased line orders by the date it promises customers, rising to 90% from April 2018. Ofcom has also said that Openreach must fix at least 94% of faults on its leased line network within five hours.

Finally, Ofcom has confirmed plans to reduce the wholesale prices BT charges for leased lines services. For BT’s Ethernet services with bandwidths up to and including 1Gbps, the regulator has suggested an initial reduction in prices of 12%, with an overall cap of CPI -13.25%, for each year of the charge control. Meanwhile, for BT’s traditional interface services with bandwidths up to and including 8Mbps the proposals are for an initial reduction in prices of 9%, with an overall cap of CPI -3.5%, for each year of the charge control. Ofcom aims to bring prices down over a three-year period from 1 May 2016.

With Ofcom confirming it has now notified the EC of its proposals, subject to the Commission’s consideration it has said it intends to publish a final statement next month. As part of the dark fibre proposals, the regulator has noted that BT would be required to publish a draft ‘reference offer’ for industry, containing wholesale pricing and terms for access, by 1 September 2016. This would then be subject to negotiation between BT and other providers, with a view to BT publishing a final reference offer by 1 December 2016, ahead of dark fibre access becoming available to telecoms providers from 1 October 2017.

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