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Summary

1.1 Opal Telecom Ltd (“Opal”, a wholly-owned subsidiary of the Carphone Warehouse Group plc (“CPW”)) referred a dispute to Ofcom for resolution on 13 January 2006 in relation to the price charged by BT (through its business division Openreach[^(-1-)]) for metallic path facility (“MPF”) bulk migrations. Opal believed that a £20 special offer made by BT in May 2005 (for the period from 1 July 2005 to 30 June 2006) for Shared Metallic Path Facility (“SMPF”) bulk migrations should also be available for MPF bulk migrations.

1.2 Openreach confirmed that the special offer was available only for SMPF migrations and it sought to commence commercial negotiations to arrive at an appropriate charge for what it claimed was a ‘new product’. When such commercial negotiations did not result in a price being offered to Opal for MPF bulk migrations which was acceptable to Opal, Opal referred the dispute to Ofcom.

1.3 In the absence of a new price for MPF bulk migrations, Openreach believed that the appropriate price was the charge ceiling of £34.86 set in the Review of the Wholesale Local Access Market (“RWLAM”) in December 2004.

1.4 Ofcom decided that it was appropriate for it to handle the dispute and opened a formal investigation on 3 February 2006. Following submissions from both parties, the scope of the dispute was revised as follows:

“Following further discussion with the parties, Ofcom has revised its understanding of the scope of this dispute. Ofcom now proposes to determine the appropriate charge to be paid by Opal to Openreach for bulk migrations to full MPF, taking into account:
a. Openreach’s obligation to offer a cost-oriented charge based on long-run incremental costs, as set out by SMP Condition FA 3.1; and
b. Openreach’s obligation not to unduly discriminate against communications providers, as set out by SMP Condition FA 2.1, given the current limited period special offer price of £20 for shared bulk migration offered by Openreach.”

1.5 Ofcom requested information regarding costs from Openreach to inform Ofcom’s view as to the appropriate charge for MPF bulk migrations. Ofcom used the principles set out in the RWLAM in December 2004 to determine which costs should be included in the relevant charge.

1.6 In arriving at its determination, Ofcom has had regard to Openreach’s obligation to offer a cost-oriented charge based on long-run incremental costs under SMP Condition FA 3.1 and its obligation not to unduly discriminate against communications providers under SMP Condition FA 2.1. Ofcom has noted that the requirement to provide LLU services reflects Ofcom’s finding of BT’s SMP in local access, and enables competition in the absence of the ability of competitors to replicate BT’s access network, including in the provision of broadband services.

1.7 One of Ofcom’s regulatory principles in respect of broadband is to promote competition at the deepest levels of infrastructure where it will be effective and sustainable, which in areas of higher customer densities will mean competition based on LLU.

1.8 On 28 April 2006, Ofcom issued a draft Determination to the parties proposing to resolve the dispute by setting a maximum charge of £29.06 for Opal for bulk MPF migrations. Ofcom has considered the responses from the parties to this draft determination, as well as representations from third parties with an interest in the outcome of the dispute. These responses have led Ofcom to amend its conclusions in a number of aspects as set out in the detail of this document, with the result of a further reduction in the maximum level of the charge for bulk MPF migrations.

1.9 Having considered the responses to the draft Determination, costing information provided by Openreach and the obligations imposed by SMP Conditions FA 3.1 and FA 2.1, Ofcom proposes to set a maximum charge of £27.54 for Opal for bulk MPF migrations.

1.10 “Bulk migrations” are all orders meeting the criteria for bulk, as determined by Openreach, Opal and other members of the relevant OTA (Office of the Telecoms Adjudicator) Forums. In short, where there are more than 100 end-users who are customers of a specific service provider connected to an exchange (100 end-users per exchange allows Openreach to project manage the migrations such that a single engineer can be allocated at least 10 same service provider migrations in a day) , a bulk migration of the customers of that service provider may be considered. In the specific case of Opal, where more than 100 of its subscribers are supplied using WLR either with or without broadband at a particular exchange, then Openreach must offer Opal the capability to perform bulk migrations (providing, in the case that the customer takes broadband from another provider, Opal has obtained permission from these subscribers to switch their broadband service as per agreed LLU industry procedures).

Footnotes:

1.-References to Openreach throughout this Determination are references to the division of BT responsible for provision of LLU services to third party service providers such as Opal.

The full document is available below

• Determination to resolve a dispute between Opal Telecom and British Telecommunications PLC (Openreach) about LLU bulk migration charges [pdf]
  Full Print Version

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