Ofcom puts forward "strict new rules" for BT's Openreach division, including cutting charges and boosting installation times

 
Catherine Neilan
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BT will have to meet these demands if it wants to keep Openreach (Source: Getty)

Ofcom has put forward "strict new rules" that BT must adhere to if it wants to avoid having to carve off its Openreach business.

The regulator told BT it must improve its high speed business lines performance and "significantly" cut its wholesale charges for these lines, as part of its review of the market, published today. The new rules will be finalised at the end of April, after approval by the European Commission.

The review found that Openreach was "taking too long to install leased lines" and was "not providing adequate certainty that the services will be provided by the date first given to the customer".

In fact, since 2011, the average time between an order being taken and the line being ready has increased from 40 to 48 working days. Ofcom has said BT must reduce this to 46 days by the end of March 2017 and to 40 by the following year.

The watchdog also found that Openreach was failing to complete one in four leased line installations on the initial date it promised to its customer. By March 2017, BT must complete 80 per cent of leased line orders by the date it promised, rising to 90 per cent by the following April.

Ofcom has also said that Openreach must fix at least 94 per cent of faults on its leased line network within five hours.

Jonathan Oxley, Ofcom competition group director, said: “All of us depend on high-speed, fibre optic lines. Businesses use them to communicate, and they also underpin the broadband and mobile services used by consumers at home and on the move.

“BT is relied on by many companies to install these lines, and its performance has not been acceptable. These new rules will mean companies across the UK benefit from faster installation times, greater certainty about installation dates, and fast repairs if things go wrong.”

On top of this, Ofcom wants to further up BT's network, and will require it to provide access to its optical fibre network for providers of high-speed leased lines for businesses.

This means BT would have to give competitors physical access to its fibre-optic cables, allowing them to take direct control of the connection - otherwise known as "dark fibre".

This should increase the opportunity for competitors to develop new high-capacity services for BT's customers, Ofcom said.

Oxley added: “We have outlined plans to reduce the country’s reliance on BT’s Openreach division. Our proposals on ‘dark fibre’ do just that, letting BT’s competitors better serve their customers by getting direct access to BT’s optical fibre cables.”

And wholesale prices must be dropped: for BT's ethernet services with bandwidths up to and including 1Gbit/s, Ofcom has concluded an initial reduction in prices of 12 per cent, with an overall cap of CPI -13.25 per cent, for each year of the charge control.

BT's traditional interface services with bandwidths up to and including 8Mbit/s must be reduced by nine per cent with an overall cap of CPI -3.5 per cent, for each year of the charge control.

BT must now publish a draft ‘reference offer’ for industry, containing wholesale pricing and terms for access, to be published by 1 September.

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.

Dark fibre access would then be available to telecoms providers from 1 October 2017.

A BT spokesperson said: “Today’s statement from Ofcom is very much in line with what they proposed last year so there are no surprises here.

“Competition and choice have been growing in the business connectivity market and we believe there is a strong case for less, not more, regulation.

“We accept there is more to do on service and are committed to doing better and meeting our business customers’ rising expectations. Ethernet provision can be complex and the need for street works and wayleaves mean delays are often beyond our control. We are doing all we can to overcome such challenges. The required Ethernet price cuts and the introduction of dark fibre will not help to underpin service improvement.

“Dark fibre is a flawed piece of regulation that introduces an unnecessary layer of complexity and will deter others from building their own fibre networks. It is at odds with Ofcom’s recent statements about increasing competition at the infrastructure level. It is a cherry pickers’ charter benefiting those who don’t invest in networks at the expense of those who do including BT, Virgin Media, City Fibre and Zayo.”

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