This consultative document examines BT's current policy on duct and pole sharing and its implications for the telecommunications market. Its main objective is to help Oftel determine whether duct and pole sharing would enhance competition. The document reaches a number of provisional conclusions on different aspects of sharing - the broad thrust being that there are some circumstances, notably where there is limited access to customer sites, where there could be economic benefits in shared access. These need to be explored further in trials which BT has expressed itself ready to conduct. Views on these and other possible sharing routes are invited from public telecommunications operators (PTOs), site-owners and customers.
DON CRUICKSHANK
Oftel invites comments on the proposals set out in this Consultative Document.
Representations should be sent to:
Mohinder Mahi
Oftel
50 Ludgate Hill
London EC4M 7JJ
All representations will be publicly available in Oftel's library. Those responding are requested to separate out any confidential material into a confidential annex which is clearly marked as such. Representations are to be received by 15 May 1996.
After this a second stage 'period for review' will take place. This period is intended to allow parties to make comments on the first stage representations. Any second stage representations are to be received (at the same address) by 29 May 1996.
Oftel intends to set up a link between this Consultative Document on Oftel's pages and comments placed on respondent's own Internet pages. Please contact Catherine Guiver at Oftel on 0171 634 8756 to organise this .
Any confidential material should be sent to Oftel by ordinary mail, not via Internet.
This consultative document flows from Oftel's commitment, in its Statement of July 1995 Effective Competition: Framework for Action, to consult on policy towards the sharing of ducts and poles. It takes into account the responses to an Oftel review conducted last year of BT's policy for duct and pole sharing and its implications for the telecommunications market. It reaches provisional conclusions on some of the issues and invites views from PTOs, site-owners and customer on whether duct and pole sharing would benefit competition.
The document looks, in particular, at:
Oftel's views on duct and pole sharing are set out in paras 36 to 39. Briefly, these are:
Oftel invites comments on the issues discussed in this document and in particular on the questions posed in para 40.
1 Ducts and poles comprise a substantial part of the basic infrastructure which carries the telecommunications networks required to provide services to the public. The construction of new competing networks involves significant cost to PTOs. Therefore, infrastructure sharing should, in principle, reduce unnecessary duplication of investment, assist in more rapid construction of competitive networks and enhance competition generally. Mercury was licensed in 1984 to compete with BT and has since invested heavily in its own network without seeking to share ducts or poles with BT. During the life of that duopoly the question of sharing was not a major issue.
2 In 1990 the Green Paper Competition and Choice: Telecommunications Policy for the 1990s foreshadowed the end of the duopoly and a move to a multi-operator environment based substantially on network competition. The Government wished, wherever possible, full use to be made of existing facilities and wayleaves and for PTOs to share ducts and other infrastructure as far as possible. This would help competitors to become established more quickly and would reduce the cost of additional competition because the new operators would be able to share in the economy of scale of making greater use of existing ducts and wayleaves. This paper also stated that a proliferation of trunk network operators with Telecommunications Code powers ('Code powers'-see Annex) might have a detrimental effect on the environment.
3 The Government recognised, however, that practical difficulties might limit the scope for such sharing. In the subsequent 1991 White Paper Competition and Choice: Telecommunications Policy for the 1990s the Government and the Director General welcomed BT's willingness to share its infrastructure. The Director General indicated that he 'intends to monitor developments to see to what extent sharing takes place in future'.
4 In practice the new holders of PTO licences have not pressed Oftel to intervene to achieve greater access to BT's ducts and poles. However, Oftel has received a small number of complaints from customers mainly relating to sharing of ducts leading from a PTO's network onto a customer site (lead-in ducts), sharing of PTO ducts on a customer site (on-site ducts), and ownership issues. Oftel accordingly initiated a review last year of the scope for duct and pole sharing, and BT's policy in respect of duct and pole sharing, by writing to PTOs.
5 This document takes account of the responses received, reaches provisional conclusions on some of the issues raised and invites further views from PTOs, site owners and customers on whether duct and pole sharing would benefit competition. The issues raised are examined under the following three broad headings:
The Annex provides definitions of the terms used in this paper.
6 Prior to 1984, in the great majority of cases, only British Telecommunications (or in the past the Post Office, which had "exclusive privilege" over telegraphs) needed to install telecommunications ducts and poles. Therefore BT considers that almost all pre-1984 telecommunication ducts and poles in the UK, both on and off customers' sites, belong exclusively to it. There are, of course, certain exceptions to this such as Kingston Communications (Hull) plc and British Rail.
7 In response to the 1990 Green Paper, BT made it clear that, in principle, it was keen to use its assets in the full, but, in practice, did not see scope for sharing ducts and poles with other operators. This consultative document looks at the current policies adopted by BT, in order to determine:
If a case for sharing were felt to exist, there would be a need to consider whether only BT should be required to share or whether such a requirement should be extended to other PTOs and in what circumstances. For the reasons given in paragraphs 9 to 14 below, any liberalisation would require primary legislation and is a matter for government as a whole not solely Oftel.
8 BT's views and current policy are summarised below:
9 An operator's statutory rights to execute works in the street and on others' property are set out in Schedule 2 to the Act (the Code). When an operator wants to install lines or other telecommunications apparatus, or maintain or inspect it, and needs to have access to privately-owned land, it must (subject to certain provisions in default) obtain the agreement in writing of the occupier of that land.
10 However, the right conferred by the occupier of private land (like the right to execute works in the street) is expressed as being "for the statutory purposes", a term which is defined in the Code as meaning 'for the purposes of establishing and running the operator's system'.
11 There is no compulsion under statute or by virtue of any telecommunications licence for any operator to share its ducts/poles with another operator. The provisions of the Code have been interpreted to mean that sharing between operators of telecommunication apparatus installed under these powers, including ducts and poles, is not authorized under the Code.
12 Whilst the position has not been tested in law, it appears that the provisions of the Code do not permit one operator who has statutory rights to execute, keep installed and inspect telecommunications apparatus on public or private land to allow another operator to carry out the same tasks on the area of land in question. Whilst the occupier or landowner may be able to confer similar rights on another operator with respect to the same land, there may well be private law, policy or other reasons which would prevent such rights being conferred.
13 Where two operators who each provide or convey cable programmes are able to reach an agreement about sharing ducts, the Broadcasting Act 1990 permits sharing under such an agreement, notwithstanding any provisions in the Code which could have precluded such an agreement.
14 Against this background it appears to Oftel that it is not possible to achieve significant additional access even on a voluntary basis. Such access could not be achieved by licence amendment and primary legislation would be required to enable BT, Mercury, Hull etc to share their ducts and poles with other operators who do not provide cable programmes. Legislation would also be necessary to require an operator to share ducts or poles with another operator (whether or not providing cable programmes) or at the least to give the Director powers to require an operator to share in certain circumstances.
15 So far as utilities other than telecommunications are concerned, provision is made in section 98 of the Act for electricity and water authorities to accommodate telecommunications apparatus in their ducts or mains. The Secretary of State is given powers to make orders to ensure that such accommodation can be made, although land-owners' rights take precedence.
16 The Secretary of State may modify schedule 4 conditions in licences granted under section 7 of the Act to Cable PTOs to allow them to use the high-voltage electricity infrastructure to fly lines to assist with trunk links, particularly in rural areas. However, in effect, this freedom, which is confined to the trunk network rather than the local loop, is of little benefit to the majority of cable PTOs.
17 The Canadian Radio-Television and Telecommunications Commission (CRTC) sets rules for rates charged by federally regulated telephone companies to cable companies for shared use of telephone poles and structures. Sharing has taken place for a number of years and the CRTC's objectives are to minimise the amount of subjective judgement required to set rates and to ensure fairness for both telephone and cable subscribers. Rating procedures are intended to achieve an equitable arrangement for both the cable and telephone companies. The CRTC is not aware of any significant technical or security problems arising out of the sharing arrangements.
18 The FCC is authorised to regulate the terms and conditions for attachments to poles and ducts, including poles owned by electricity companies. However, Oftel's understanding is that the regulation is in practice done by the State Utilities Commissions and that duct and pole sharing takes place on a regular basis with the owners of the ducts/poles being obliged to provide room for new entrants. Duct sharing, in particular, guarantees the incumbent certain rights and protection. We have been told by one operator with experience in the USA that sharing gives rise to very few problems.
19 This consultative exercise has to be set against the current developments in EU legislation, in particular the Interconnection Directive and the Commission's Article 90 Directive on Full Competition in Telecommunications Markets.
20 The draft Interconnection Directive, currently under negotiation, would require Member State authorities to encourage the sharing of facilities, eg ducts and trenches, between public telecommunications operators where one operator has special powers in respect of rights of way etc. Whilst national regulatory authorities may intervene to resolve disputes, the Directive accepts that agreements between operators as to facilities sharing are essentially a matter for the operators concerned. Member States wishing to impose sharing arrangements (including the apportionment of costs) may do so, but only after a period of public consultation.
21 The draft Article 90 Directive on full Competition in Telecommunications Markets is likely to be adopted during the first half of this year and provides that:
"Member States shall ensure that there is no discrimination between providers of public telecommunications networks with regard to the granting of public rights of way for the provision of such networks.
Where the granting of additional rights of way to undertakings wishing to provide public telecommunications networks is not possible due to applicable essential requirements, Member States should ensure access to existing facilities established under rights of way and which may not be duplicated, at reasonable terms."
With regard to the first part of this new draft article, the UK grants Code Powers to appropriate PTOs on a non- discriminatory basis today. The essential requirements applicable to sharing referred to in the second part of the draft article would most likely be "the protection of the environment and town and country planning objectives". Where, for these reasons, Code Powers are not granted arrangements would be required to enable sharing of facilities. The grant of Code Powers to prospective licensees is a matter for the Secretary of State.
22 The case for requiring BT to share its ducts and poles, is that it could remove a potential barrier to the entry of new players in the market and help to decrease BT's competitive advantage as a monopoly provider of services. Current BT policy forces new market entrants to construct separate infrastructure and this could cause delays and additional cost. Further, the digging of additional trenches to lay new ducts causes disturbance to home owners and road users. The need to site additional poles is also a cause for concern and is a topic regularly raised by Local Authority representatives on Telecommunications Advisory Committees. Infrastructure sharing should in principle therefore have the benefits of:
23 Some respondents to the earlier consultative exercise also raised the question whether pole sharing would assist the development of cable networks from urban to rural areas by providing a sensible means by which to extend coverage in low density areas.
24 On the other hand, sharing of ducts and poles can give rise to significant problems in the following areas:
(a) Security and integrity
Access to ducts or poles by parties other than the owner increases the risk of criminal or accidental damage to the network, which would have to be detected, diagnosed and repaired. Further, damage in a shared duct might dilute the security customers have from a diversity of suppliers, ie a customer who took both BT and another operator for security purposes might find himself with no service if damage occurred in a shared duct.
(b) Liability
Satisfactory arrangements would have to be devised for apportioning liability for injury to people and damage to property arising from the actions of other parties in a duct or pole network. Account would also have to be taken of the hazardous environment in which work would be carried out(eg gas in ducts and falls from poles).
(c) Practicality
Spare space could be limited by the more intensive use of duct capacity following the recent legislation on roads and street works and the need to set space aside to accommodate planned network developments.
To the extent that there are difficulties, these are likely to be compounded in a situation of multi-sharing rather than simply two or three sharing or wishing to share.
25 As pointed out in paragraph 14, primary legislation would be required to enable non-cable operators to share their ducts or poles. It is therefore important to show that there are strong grounds for arguing that duct and pole sharing is desirable for the development of healthy competition in the provision of telecommunication services in the UK. Also, there is a need to consider the costs likely to be potentially incurred and saved as a result of duct and pole sharing to set against the benefits in coming to a view on its desirability. Unfortunately, BT and other respondents to Oftel's earlier review have not been able to provide any meaningful estimates of these costs and potential savings.
26 The results of the informal consultation undertaken by Oftel have been somewhat inconclusive. Ten of the 21 respondents favoured duct and pole sharing in principle, while three were opposed to sharing and eight showed little interest in sharing mainly for legal, safety or technical reasons. Those in favour of sharing felt that BT's current policy acted as a barrier to entry and that sharing would encourage the pace and development of competition. Two of those opposed to sharing generally were in favour of sharing where access was limited and two who were opposed to duct sharing saw merit in pole sharing in order to extend coverage in low density areas. The purpose of this further consultation exercise is to seek views from a wider base of interested parties, including PTOs, site owners and customers of telecommunication services.
27 The problems referred to in paragraph 24 are real, but as recorded in paragraphs 17 and 18, duct and pole sharing in Canada and the USA is common and does not appear to have given rise to serious difficulties. It is not clear why, with the appropriate commitment from interested parties, the problems of security, integrity, liability and practicality should not be resolved in the UK as it has been abroad, if sharing holds genuine benefits.
28 A commitment to sharing would also be in accordance with the 1991 White Paper and the generally perceived view that technological advances in telecommunications including the information superhighway can best be achieved via co-operation among operators.
29 In coming to a conclusion on duct and pole sharing, account has also to be taken of the fact that, following its review of on-site sharing carried out in 1994/5, BT has agreed to liberalise its policy in respect of sharing on-site, and in respect of sharing where access is limited. It has accepted that there are cases where there might be difficulties in gaining access to particular sites, and in such cases BT has said that it is willing to adopt a more flexible approach to sharing ducts and poles with OLOs. However, BT has said that account will have to be taken of what duct and pole capacity is spare. Further, BT considers that any duct capacity made available to other operators will have to be in separate bores. Subject to these caveats, BT proposes to:
Oftel understands, subject to the necessary site surveys etc, that BT is now in a position to trial the sharing of its on-site or lead-in duct/poles with other PTOs. It proposes to publish firm criteria after it has had the opportunity to test the criteria in the field. Obviously, it needs practical cases to trial with, and it would seem that no customers are currently pursuing this form of duct/pole sharing requirement.
30 There is one area where the absence of off-site sharing could be particularly damaging to competition and that is where there is only limited access across some natural or structural obstacle such as a river or a bridge. This matter was raised by some operators during the earlier consultation exercise.
Oftel would like to know whether this issue has caused serious problems for operators, and if so what the problems have been and how they have been addressed.
31 During the informal consultation exercise the general view of those respondents who commented on the question of payments for sharing was that in respect of existing ducts and poles, BT should be allowed to raise a reasonable charge. However, the point was made that because of the advantages which currently accrued to BT for its monopoly ownership of infrastructure, other operators might have fees waived (except in respect of maintenance charges) until effective competition was achieved in the UK market.
32 For new ducts and poles it was felt that PTOs could pay a pro-rata share of the capital cost of construction plus maintenance or a rental charge. The view was expressed, however, that there should be only one "owner" of a duct/pole. No respondent suggested that BT should divest itself of its ownership of its existing ducts/poles.
33 It was considered that the actual methodology for deriving appropriate duct sharing charges needed careful examination and some further study. Thought also needed to be given to whether Oftel should have the power to determine the methodology and level of charges to be introduced.
34 Trench digging is one of the major costs in laying down infrastructure. It also causes disruption and inconvenience to the public. The sharing of new trenches would therefore
seem highly desirable. Responses to the earlier informal consultative exercise indicated that trench sharing with other PTOs and utilities is already a fairly common activity which is encouraged by the New Roads and Street Works Act and is already routinely undertaken by PTOs where it is sensible to do so.
Oftel would be grateful for an indication of any problems that have arisen in this area.
35 Ownership of ducts and poles on private land remains a contentious issue, with BT claiming to own nearly all pre-1984 ducts and poles and all the newer ones which it has laid, even where a customer has contributed to the cost. However, this is a property rights issue and Oftel would be reluctant to become involved in disputes over ownership. One of the main concerns expressed by customers about ownership arose from BT's refusal to share on-site ducts with other operators. If BT were prepared to take a more liberal view of on-site sharing on reasonable terms, this issue may become less significant.
36 At this time Oftel has an open mind as to whether duct and pole sharing on the highway and other public land should become compulsory, and if so whether only BT should be required to share or whether other operators should be prepared in certain circumstances to share their ducts and poles, where there is adequate spare capacity. Since duct and pole sharing was considered in connection with the 1991 White Paper there has been a considerable increase in competition and the laying of new infrastructure. Mercury has continued to extend its network and cable companies and others have made, and are continuing to make, significant investments in duct systems. The responses to the informal consultative exercise were evenly divided between those in favour of sharing and those who were opposed. This does raise questions about whether sharing is an issue of high priority to operators. However, as this paper suggests there are economic and competition arguments for sharing, and while a number of technical and operational problems would arise from such sharing, experience abroad suggests that these are not insurmountable.
Views are therefore invited on this issue below, and Oftel will reach a conclusion in the light of the representations received as to whether to recommend changes to the legislation as and when an opportunity arises.
37 Trench sharing is economically desirable. It does not give rise to the problems that might be experienced in duct or pole sharing and clearly needs to be encouraged. Oftel would wish to pursue the matter further if there was evidence that PTOs did not co-operate in trench sharing wherever possible.
38 If BT puts into practice within a reasonable timescale a new policy in respect of duct and pole sharing on-site and customer access sharing (see paragraph 29) on satisfactory terms, then Oftel is minded not to pursue these two issues further at this time, having regard to other priorities.
39 For the reasons set out in paragraph 35 Oftel's provisional view is that it would not be appropriate to pursue this particular issue further if BT agrees satisfactory terms for its on-site sharing policy referred to in paragraph 29.
40 To help Oftel reach firm conclusions on these issues in order to decide whether to advise on a change in the law, comments would be welcomed on the matters discussed above and in particular on:
(i) Whether off-site duct and pole sharing would help to encourage competition?
(ii) Whether the benefits to competition and the cost savings which could result from sharing would outweigh any extra costs incurred, including the potential risks to the network?
(iii) If off-site sharing was felt to be appropriate, should only BT be required to share or should such an obligation be placed on all PTOs?
(iv) Whether operators should pay for sharing and if so how should payment be made in respect of:
(v) Whether limited access across natural or structural obstacles (see paragraph 30) causes serious problems, irrespective of whether sharing is felt to be appropriate more generally?
(vi) If BT agreed to put into practice a new policy in respect of duct and pole sharing on-site and customer access sharing along the lines set out in paragraph 29, would this meet the concerns raised in respect of these two issues?
(vii) Does ownership (mainly by BT) of ducts and poles on private land continue to raise issues of concern (see paragraph 35)
(viii) Do other PTOs perceive likely benefits from BT's more flexible approach to on-site sharing?
(ix) Is trench sharing with other PTOs and utilities sufficiently established that it does not require further consideration by Oftel (see paragraph 34)?
Code powers
Under the Telecommunications Code, operators may be conferred certain rights by the occupiers of land (subject to certain provisions in default) or, in the case of street works, by virtue of certain statutory provisions. These rights enable operators to install and maintain their telecommunications apparatus, such as cables and switches, in or under land, `for the statutory purposes', which are defined in paragraph 1(1) of the Code as 'the purposes of establishing and running the operator's system'.
Lead-in duct
Is defined as the primary route or routes leading from BT's off-site network onto the site.
Off-site
Is defined as public land eg roads and pavements.
On-site
Is defined as a site or set of premises owned by an individual or company.
Sites in multiple occupation
Are defined as sites where BT has contractual commitments for network services to more than one customer.
Sites in single occupation
Are defined as sites in single occupancy where BT has only one set of contracts with one customer for network services to that customer on that site.