Ofcom has proposed to shake up the £2bn leased line services market by making BT open up its dark fibre networks to communications service providers (CSPs) wishing to provide high-speed telecommunications lines to business customers.
BT already offers wholesale leased line products, bundling fibre-optic cable and its own network equipment at regulated prices, and this would continue under the new regime. However, Ofcom’s latest idea would let CSPs use BT’s fibre with their own equipment.
Ofcom believes this will let CSPs deploy tailored, high-capacity data links at more cost-effective prices for their customers.
The regulator said leased line take-up was increasing as CSPs responded to more demand for data from consumers and businesses.
Jonathan Oxley, Ofcom competition group director, said: “High-speed, fibre-optic leased lines are invisible to most people. But they form a critical building block in the UK’s infrastructure that underpins people’s personal and working lives.
“Today’s proposals should help businesses across the UK that rely on high-speed data lines. We want to see more innovation, faster installations and more competition, by providing operators with the opportunity to deploy the technologies of their choice.”
Openreach rapped over leased line installation
Ofcom is also proposing to place minimum quality of service performance requirements on Openreach, saying it is concerned that Openreach often takes too long to deploy leased lines.
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According to Ofcom’s statistics, the average time between a customer’s order and the leased line being ready has increased from 40 to 46 days in the past four years. It would like Openreach to reduce this back to 40 by 2017.
The regulator said although leased line services often require complex and bespoke work, it was also concerned that in 2014 Openreach only completed half of its leased line installations on the original promised date.
In response to this, Ofcom will also require Openreach to meet the delivery dates it promises customers to 80% of cases by next year, and 90% by 2018.
Deregulation a boon to BT
In a small fillip to BT, Ofcom went on to propose the deregulation of the leased line market in some areas, lifting supply and pricing requirements in central London and Hull, where it believes competition from other fibre providers, such as Colt, is healthy enough that regulation is no longer needed. This would apply to a type of leased line called contemporary interface symmetric broadband origination (CISBO).
It would also remove regulatory requirements applying to low-bandwidth leased lines, which are often analogue and incapable of delivering speeds much higher than 2Mbps. Such lines are still used by a few organisations, but they are mostly now defunct, and BT is currently migrating them to newer services.
In a statement sent to Computer Weekly, BT set out a number of objections to the proposals, saying that it believed Openreach’s current offer already created a level playing field and a “vibrant, competitive market” with many competing CSPs.
The BT spokesperson said: “Mandating dark fibre risks favouring a few companies that have the greatest capacity to deploy it, to the disadvantage of all other firms.
“It will undermine investment – as a number of service providers have warned – and it would increase costs, divert resources and add more complexity just when we’re beginning to make progress on improving service.”
However, other CSPs welcomed the proposals. Barney Lane, Colt head of regulation, hit back at BT’s suggestion that it would undermine the work that has gone on to date .
“Opening up access to infrastructure in areas without sufficient competition has proved successful in boosting investment in superfast broadband in the rest of Europe, including southern Europe, where local small to medium-sized enterprises (SMEs) have far better connectivity options available to them than those in the UK,” he said.
“Ofcom's ruling is an important step in the right direction. It will help spur innovation and incentivise connectivity providers like Colt to roll out new services. This will ensure that the UK will be able to grab its share of the estimated $1.36tn digital economy of the future,” he added.
CityFibre’s Greg Mesch said dark fibre was already validated worldwide as “the only infrastructure platform” capable of delivering effective and future-proof connectivity.
“Ofcom has made clear the need to balance investment, innovation and competition in the UK telecoms infrastructure and services space,” said Mesch.
“While CityFibre welcomes Ofcom’s decision as a clear validation of our business model, we urge it in the strongest possible terms to ensure that any future approach to pricing in no way distorts the market or discourages investment by independent infrastructure builders.
“The task of redressing the legacy of decades of underinvestment in the UK for fibre infrastructure is too large and important to be left to one monopoly provider, and the role of smaller, entrepreneurial players must not be underestimated or undervalued,” he said.
Service launch set for 2017
A public consultation on the proposals will run until the end of July 2015, with a final decision expected in early 2016 and taking effect in April 2016.
It would also require BT to publish a draft "reference offer" for the industry, containing wholesale pricing and terms for access, ahead of negotiations before a final agreement at the end of the year.
Ofcom hopes dark fibre access will become available to CSPs in April 2017.