Ofcom’s proposed regulations, designed to increase investment in full-fibre networks, has come to a grinding halt, as a judge-led panel rules against the regulator.
The plans outline new terms under which BT would have to slash the price its competitors would have to pay in order to deliver standard network speeds over its network and providing access to its dark fibre.
In doing so Ofcom has said that they hope to stimulate competition, investment and improved broadband coverage for consumers. Access to dark fibre would allow operators such as Vodafone, Three and others, to install their own equipment, rather than paying to use Openreach kit.
The Competition Appeals Tribunal said that Ofcom made an error in it definitions of the UK business market and Ofcom will have to launch a re-assessment of the business market in order to implement its proposals.
It also said, that interim pricing would have to be agreed with BT, for its wholesale business products, while the new market review takes place. Last month, Openreach cut prices to wholesale customers to 1.1% in advance of the Ofcom review.
Openreach has come under criticism in the past from competitors who have complained that BT has charged high prices for surveys to check whether there is capacity on poles or ducts – as well as the access charges themselves.
Telecoms companies Virgin Media and CityFibre argue that cutting the price of standard broadband will damage the investment case for full-fibre networks, saying: “The reduction in wholesale prices does more than constrain prices for higher speeds: it means that they will fall . . . It is this collateral effect that has the potential to damage investment in fibre.”
With Greg Mesch, chief executive of CityFibre, echoing the same sentiment in a quote to the Financial Times, adding: “If you take the price to zero, we all die. They are going too low, too fast."
Both CityFibre and Virgin Media offer alternatives to Openreach in many areas of the country and would face pressure should Ofcom’s proposal go ahead. However companies like Sky and Talk Talk, who use Openreach’s network, praised the planned regulations.
Ofcom have said that it is “disappointed” with the court’s decision and that “once we have the Tribunal’s reasoning, we will know how best to proceed in order to protect competition and consumers. We continue to believe that dark fibre can bring significant benefits for businesses and consumers".
An Openreach spokesman said: “We note today’s ruling by the Competition Appeals Tribunal which found that Ofcom’s market review definitions were inaccurate. The UK has a vibrant business connectivity market with a large, diverse and growing choice of providers – and this decision means that future regulation, where necessary, can be placed on a sound footing.”