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[Bowdon]

https://www.ispreview.co.uk/index.php/2018/12/ofcom-move-to-redefine-uk-geographic-fibre-markets-from-2021.html

Over the next few years the UK will witness a surge in alternative fibre optic (FTTP) broadband ISP networks, which means that investment and competition will vary a lot by geography. In response Ofcom has today begun consulting upon a new approach to how they set regulation and define such markets from 2021.

The importance of such definitions is not to be underestimated, as shown by its impact upon the regulator’s previous 2016 Business Connectivity Market Review. Ofcom’s original review proposed that Openreach (BT) should offer a regulated Dark Fibre Access (DFA) product (i.e. allowing rival ISPs to gain “physical access” to existing fibre optic cables in order for them to install their own equipment at either end of the fibre).

Under this proposal the DFA solution would have been made available in all parts of the UK (RoUK) except central London (including the City of London and Docklands) – where Ofcom deemed that there is sufficient competition in the market – and Hull, where most leased lines are provided by KCOM.

Ofcom also defined DFA as applying to a particular type of leased line known as Contemporary Interface Symmetric Broadband Origination (CISBO), which use newer Ethernet and WDM technologies. But rivals like Cityfibre, Zayo and Virgin Media were unhappy, not least because DFA could have undermined their own fibre investments.

BT also challenged all this via the Competition Appeal Tribunal (CAT) and won, not least because the aforementioned market definitions were found to be incorrect.

    CAT’s 2017 Ruling

    The Tribunal found unanimously that:

    (1) Ofcom erred in concluding that it was appropriate to define a single product market for CISBO services of all bandwidths;

    (2) Ofcom erred in concluding that the RoUK comprises a single geographic market; and

    (3) Ofcom erred in its determination of the boundary between the competitive core segments and the terminating segments of BT’s network.

    Ofcom Statement

    By spring 2021, we plan to have regulation in place that varies by geographic area. To promote greater certainty for investors, this new regulation will be in place for at least five years. It will replace Ofcom’s Business Connectivity Market Review and our Wholesale Local Access Review.

    In the coming years, we expect to see significant investment in new, competing fibre networks. But investment and competition will vary by geography. So we intend to take a flexible approach to regulation, reflecting how many different competing fibre companies are present in a particular geographic area.

    Our initial thinking on how our competition assessments and regulation may vary by geography from 2021 are as follows:

    • Category 1 (Competitive areas) In areas where at least two existing networks are present in addition to BT, supplying ultrafast broadband and leased lines services, we would carry out further analysis, for example by looking at market share data, to determine whether these alternative networks provide sufficient competition to ensure that Openreach does not have Significant Market Power (SMP). Where this is the case, no regulation of Openreach would be imposed.

    • Category 2 (Potentially competitive areas) includes areas:
    – with one or more existing alternative ultrafast networks already present that are not included in Category 1;
    – where one or more operator has plans to deploy; and
    – where we consider future rollout could be economic.

    Our focus will be on promoting investment and competitive entry.

    • Category 3 (Non-competitive areas) includes areas with no existing alternative ultrafast networks, no operator plans and where we do not consider build is likely to be economic … our objectives are to encourage investment by Openreach while protecting consumers from high prices.