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Tribunal strikes down Ofcom rulings on business broadband

The telecoms regulator will have to go back to the drawing board as it seeks to establish regulation for the business broadband market, following a successful appeal by Openreach

Telecoms regulator Ofcom will have to begin a new consultation addressing the business broadband market after the Competition Appeals Tribunal (CAT) struck down rules introduced in 2016 to improve availability of fit-for-purpose broadband services to businesses and create a more competitive market.

In its Business Connectivity Market Review, Ofcom forced Openreach to cut wholesale prices on leased line services for enterprises, improve its performance in installing them, and give other leased line service providers access to its dark fibre infrastructure.

However, in doing so the regulator defined a single product market and three geographic markets for contemporary interface symmetric broadband origination (Cisbo) services.

In its appeal, Openreach argued that Ofcom should have defined separate markets for services delivering under and above 1Gbps, and that the regulator erred in its application of a boundary test as a necessary condition for a finding of effective competition in the three geographic segments – central London, peripheral London and the rest of the UK (excluding Hull).

Following its deliberation, the CAT found in Openreach’s favour, and agreed it was inappropriate to define a single product market for Cisbo services of all bandwidths; that it was inappropriate to define the rest of the UK as one market; and that Ofcom had incorrectly determined the boundary between the competitive core segments and the terminating segments of the Openreach network.

“Ofcom’s decision in respect of all three matters will therefore be quashed,” said the CAT in its judgment.

However, it added, the CAT was not in a position to substitute its own findings in relation to those matters, and therefore these will have to be referred back to Ofcom.

The CAT’s full judgment has not yet been published and is unlikely to be much before the autumn, therefore a full re-consultation on Ofcom’s part will not take place for some time. This means that existing controls on leased lines will remain in place.

“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,” said an Openreach spokesperson.

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In a brief statement, an Ofcom spokesperson added: “We are disappointed with today’s judgment. Once we have the tribunal’s reasoning, we will know how best to proceed to protect competition and consumers. We continue to believe that dark fibre can bring significant benefits for businesses and consumers.”

The judgement also means that, for the time being, Openreach will not have to launch a dark fibre access product on 1 October 2017, as previously stipulated.

Openreach had previously described the dark fibre regulation as flawed and said it was a “cherry picker’s charter” that would not only deter others from investing in fibre, but penalise those, such as CityFibre and Zayo, that already had.

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