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Summary

1.1 On 22 September 2005 BT Group plc (“BT”) offered, and Ofcom accepted, a set of undertakings (“the Undertakings”) pursuant to section 154 of the Enterprise Act 2002 in lieu of a reference of certain markets to the Competition Commission. At the time the Undertakings were formulated it was realised that in the interest of reaching a conclusion in a timely manner, to ensure that the benefits could be felt by consumers as quickly as possible, it would be inappropriate to consider all BT’s products in the context of to which products Equivalence of Inputs (EOI) should apply. Therefore, a process was included into the Undertakings to allow Ofcom and BT to consider the EOI requirement for certain products at a later stage. In addition, the Undertakings provide that under certain circumstances BT may apply for exemptions from certain provisions.

1.2 In January 2006, BT provided Ofcom with a proposed list of products (which had not been specifically identified in the original Undertakings) to which EOI should apply and a number of requests for exemptions and requests for agreement from Ofcom. BT needs to seek such agreement since, for instance, Openreach pursuant to the Undertakings cannot supply products on a non-EOI basis unless it has the agreement of Ofcom.

1.3 Since receiving the requests from BT, Ofcom and BT have been discussing the substance of the requests and BT has modified the requests in line with those discussions. Ofcom has taken the view that it would only consult with other stakeholders, either formally or informally, once it was satisfied that the substance of the requests is something to which Ofcom would be minded to agree.

1.4 Ofcom published a statement on 15 June 2006 in respect of the first batch of exemptions Requests from BT for specified exemptions and agreements to its Undertakings under the Enterprise Act 2002 – Part 1 (“Exemptions Part 1”) and included in this a list of 15 outstanding requests^(-1-). Ofcom is aware that the issue of exemptions leads to some uncertainty within the industry and therefore believes that requests should be dealt with as expeditiously as possible. Thus this first statement covered the less complex requests, the form of which Ofcom and BT were able to quickly agree upon. In recognition of the complex issues surrounding the remaining requests, and the view that receiving comments on them from the wider industry would help inform Ofcom’s decision making process, on 18 October 2006 Ofcom published a consultation Requests from BT for specified exemptions and agreements to its Undertakings under the Enterprise Act 2002 – Part 2 in respect of 13 of these outstanding requests.

1.5 Following this consultation, Ofcom published a statement in December 2006 agreeing to 9 of the 13 requests^(-2-). At that time, Ofcom decided more time was needed to resolve the issues related to the four other requests for fibre-based products (i.e. Redcare CCTV, Media & Broadcast services, managed radio communications services and Wavestream). Each of these products relies on direct access to fibre and so, in their current form, cannot consume the EOI products included in Openreach’s product portfolio. Ofcom was concerned that making access to dark fibre available on an EOI basis to provide the input for these products had the possibility of undermining investment in infrastructure and so, instead, sought to agree with BT intermediate EOI products that could support these services without reducing the functionality available to the end user. Ofcom was also keen to take into account Openreach’s Ethernet portfolio review^(-3-), which was being carried out at the time of the statement. In order to allow for this, the existing temporary exemption in respect of these requests was extended up to 31 March 2007^(-4-). This was further extended to 31 December 2007^(-5-) to allow a conclusion to be reached on these requests.

1.6 This statement includes a decision by Ofcom to agree to three of these four requests. This came into effect on 17 July 2007 when the agreement attached in Annex 2 of this document was signed by both parties.

1.7 With regard to the request for an exemption for Wavestream, Ofcom has decided that further consultation is required. This consultation will be carried out separately to this statement. As such, this statement does not include a decision on the Wavestream exemption requested by BT.

1.8 Two of the requests identified in Exemptions Part 1 as outstanding (i.e. initial wideband planning and inter-exchange capacity planning) are not covered by this statement and remain under discussion between Ofcom and BT.

Footnotes:

1.- http://www.ofcom.org.uk/telecoms/btundertakings/exemptionsandvariations/requests/

2.- http://www.ofcom.org.uk/consult/condocs/btrequests/statement/

3.- http://www.openreach.co.uk/orpg/news/productbriefings/wes/downloads/Briefing_WESBES014.pdf

4.- http://www.ofcom.org.uk/telecoms/btundertakings/exemptionsandvariations/variation6.pdf

5.- http://www.ofcom.org.uk/telecoms/btundertakings/exemptionsandvariations/variation8.pdf

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• Requests from BT for specified exemptions and agreements to its Undertakings under the Enterprise Act 2002 [pdf]
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