Local Loop Unbundling: The Terms of the Access Network Facilities Agreement
Statement and Determination

Published on 21 February 2001

Chapter one Background to the request

Chapter two The principles the Director General has applied

Chapter three Co-location space

Chapter four Contractual obligations

Chapter five Restrictions in the agreement

Chapter six Withholding of information about resources

Chapter seven Transfer of co-location space

Chapter eight Dispute resolution

Chapter nine Conclusion

Attachment Minor comments

Appendix 1 - The Determination

This Statement and Determination concerns the terms and conditions upon which BT makes available unbundled local loops. The Director General was asked to make a determination by a group of operators concerning some of the terms offered by BT for local loop unbundling (in its offer dated 4 September 2000), which they believe were unreasonable. The main heads of dispute referred to in the other licensed operators’ (OLOs) request are set out in the following pages. The areas of dispute did not cover all of the terms of the offer made by BT or required under Condition 83 of BT’s licence. This Determination does not, therefore, deal with:

• the prices to be charged by BT for local loop facilities: some of these will be determined by the Director General. In particular, the prices for the use of the local copper loop itself, were determined on 29 December 2000;
• the method for allocating space for local loop unbundling at BT exchanges (this was the subject of a separate determination made on 27 November 2000);
• all of the terms of the offer. Oftel does not believe it is necessary to reach a view on the reasonableness, or otherwise, of all of the terms of the offer many of which are not currently in dispute. The Director General may, of course, intervene again to make a further determination if necessary.

Condition 83 of BT’s Licence obliges BT to enable other licensed operators (OLOs) to use BT’s local loop and to provide exchange space and other associated facilities to OLOs. These services are together known as "Access Network Facilities" and the process is commonly referred to as local loop unbundling.

Regulation (EC) 2887/2000 on unbundled access to the local loop came into force on 2 January 2001. This requires notified operators (including BT) to provide unbundled access to the local loop under a reference offer to be published from 31 December 2000. Under both the Regulation and Condition 83, the Director General has the power to require changes to that reference offer where justified to ensure that its terms are reasonable. This Determination is therefore made under the Director General’s powers under both the Regulation and the Condition.

In the summer of 2000 BT entered into negotiations with the OLOs to produce a standard form agreement for the provision of Access Network Facilities. On 4 September 2000, BT published a version of the agreement which took into account some (but not all) of the OLO’s concerns. Accordingly on 27 September a group of OLOs made a request to the Director General, which, amongst other things, asked the Director General to determine the terms of the ANF Agreement In the light of the OLO’s complaint, Oftel published a consultation document and draft determination in November 2000 to settle those terms of the ANF Agreement on which BT and the OLOs were not able to agree.

BT, the OLO group and other interested parties responded to the consultation with comments on the draft determination in mid-December 2000. In the light of the comments received, Oftel invited both BT and the OLO group to meetings to discuss the outstanding issues.

The Director General has considered the representations made to him both in writing and in person. As will be seen from this Statement and the Determination, the Director General has taken account of many of them and made appropriate changes from the draft he originally proposed in November 2000.

The version of the ANF Agreement which most OLOs participating in local loop unbundling signed was that published by BT on 4 September 2000. Consequently, references in this Statement and in the Determination are to that version of the agreement. The OLOs complaint was based on the terms of an earlier offer (August 2000) and some of the areas of dispute had been resolved in the September offer.

BT published a further offer on 29 December 2000 in the light of the consultation and the finalisation of the EC Regulation. This offer took up some, but not all of the changes proposed by Oftel in the draft Determination put out to consultation and, where appropriate, comment is made on it in this Statement. However the Determination nevertheless provides that amendments shall be made to the 4 September ANF Agreement to ensure that amendments to comply with the Determination are made to all agreements for ANF services signed by OLOs and not just to those few (if any) ANF Agreements which may have been concluded on the 29 December 2000 terms.

The purpose of the EC legislation requiring BT to provide unbundled access to its local loop is set out in Article 1 of Regulation EC 2887/2000:

Condition 83 of BT’s licence similarly provides that its purpose is to promote competition and a wider choice for users, in particular for broadband telecommunications services and high-speed Internet services. In ensuring that BT’s offer in the ANF Agreement fulfils this purpose, Oftel has considered the issues raised by the OLOs (and also certain other issues) under the following broad headings:

• reasonableness, having regard to the interests of all relevant parties and the relevant provisions in BT’s licence;
• EU law. The Director General has had particular regard to the provisions of the Regulation on unbundling the local loop (2887/2000) and has also considered the Commission Recommendation on this subject (26 May 2000);
• competition in the use of the local loop and in the provision of services over it - with particular reference to the principles applied under EC competition law and the Competition Act 1998.

Oftel has also published guidelines on local loop unbundling under Condition 83, to which reference is also made.

Taking these heads in turn:

Reasonableness of terms offered

The Director General was asked to determine that certain terms in the ANF Agreement are unreasonable and to settle the basis for terms which are reasonable. Oftel takes that to mean terms which are fair between the parties, sensible and practical, yet also take into account the objectives set out above.

In striking this balance, Oftel acknowledges that BT has the right to be properly paid for the services which it makes available and to be subject only to obligations which are practicable. As against this, the Director General must also have regard to the concerns expressed by the OLOs that BT, which is being obliged to do something that it would not otherwise have a commercial incentive to do, would not necessarily provide ANF and MPF (local loop) services and connections to the standards required by the OLOs voluntarily.

EU legislation and practice

The European Parliament and Council adopted the Regulation on unbundled access to the local loop on 18 December 2000. This provides that BT, as a "notified operator", shall, from 31 December 2000, meet reasonable requests for unbundled access to local loops from OLOs. Oftel does not believe that there are significant areas of incompatibility between the provisions of Condition 83 and those of the Regulation. Accordingly, Oftel takes the view that this Determination is compatible with the provisions of the Regulation.

The Director General is under a duty to ensure compliance with directly applicable EC law such as the Regulation and accordingly, he has made his Determination under the powers given to him in Article 4(2) of the Regulation, as well as his powers under Condition 83 to determine the dispute between the OLO group and BT.

The OLO group making the determination request has also requested the Director General to make a finding that, in offering terms which are unreasonable, BT is abusing a position of market dominance, contrary to Chapter II of the Competition Act 1998. By Section 60 of that Act, Oftel must have regard to relevant legislation and jurisprudence of the EC institutions.

Oftel has not taken a final view on this competition aspect of the complaint. In exercising his powers under Article 4(2) of the Regulation and paragraphs 19 and 20 of Condition 83, the Director General is ensuring that the terms and conditions, in relation to which the OLO group has made the request, will be reasonable.

Article 3 of the Regulation and the Commission’s Recommendation of 26 May 2000 on unbundled access to the local loop, give some guidance to the Director General as to what is "reasonable" in this context;

1. BT must offer LLU on terms that are no less favourable than those which it provides equivalent services to its own operations ie BT must offer services to at least the same quality and the same time scales as it does to itself;
2. a notified operator such as BT should offer terms which would have been agreed between willing parties in an equal bargaining position;
3. the incumbent operator (in this case BT) should be able to recover its reasonable costs;
4. services offered must be sufficiently unbundled, so that a beneficiary operator only pays for what it needs;
5. co-location must be on terms which are "transparent" (open for all to see), "non-discriminatory" (the same for all in the same position) and "fair" (which the Director General takes to mean reasonable).

Ensuring a competitive market

Both the Regulation and Condition 83 contain provisions requiring BT not to discriminate in the provision of unbundled access to the local loop. This rule (also found elsewhere in BT’s licence) is designed primarily to stop BT misusing its market power, especially where it would cause an adverse effect on competition. In particular it means that BT must not:

1. discriminate against its competitors;
2. discriminate between the parties with which it trades; or
3. discriminate against its competitors in a downstream market and thus prefer its own downstream business.

General competition law (both under Articles 81 and 82 of the EC Treaty and the Competition Act 1998) imposes similar obligations on BT not to discriminate, without objective justification, in markets where it is in a dominant position.

Both sets of rules regulate BT’s behaviour towards companies with which it competes, and to whom it also supplies inputs required for them to supply services to their customers. This means that BT must, in the provision of ANF services, provide these on at least the same terms that it provides such services to the downstream part of its own business. BT would not be offering reasonable terms if its service did not at least meet this basic standard.

Further, the obligation not to unduly discriminate or prefer means that BT must be under the same economic incentive to provide ANF services to third parties with whom it competes as it does to provide those services for the benefit of the downstream part of its own business. It is the need for such an incentive which is a fundamental reason behind the Director General’s Determination.

Finally, although complaints of discrimination by BT will often be dealt with by the Director General pursuant to regulatory powers, nevertheless, he believes that it is appropriate that the terms offered by BT under Condition 83 should ensure that no discrimination, contrary to BT’s licence obligations or to competition rules, ought to occur in the future and that OLOs have a remedy for breach of contract (in addition to any regulatory remedy) if it does.

The OLOs raised five points which are dealt with in turn:

1.    There should be a fair, transparent and non-discriminatory procedure for the allocation of co-location space both individually and between competing operators.

In November 2000 the Director General made a Determination on the "Bow-wave" process, which sets out the mechanism for allocating space between OLOs. Discussion between BT and the OLOs and the Director General as to the future of the Bow-wave process (which forms part of the ANF Agreement) are ongoing, and therefore the Director General takes the view that it would not at present be appropriate to include in this Determination any direction to BT to amend it.

In the consultation document on the ANF Agreement (November 2000) Oftel suggested that the Bow-wave process might be used to allocate space which becomes available in BT exchanges in the future, where such space is in short supply, but in circumstances where BT has formally withdrawn the bow-wave process for that area.

In the light of representations made in the consultation process, the Director General now believes it would be premature to make such a Determination at present, although again, he would of course do so if appropriate in the future.

This Determination therefore does not contain any direction as to the future method of allocating space where it is in short supply.

2.    The criteria for the availability of space should be set out in the contract. There is no effective mechanism for verifying BT’s decisions on availability. Furthermore, BT refuses to carry out detailed surveys of all its MDF sites or to permit operators to survey them.

Oftel has some sympathy with the view that there should be an effective verification mechanism. One way would be to take these matters completely out of BT’s hands and put them in the hands of a third party. The Director General has decided against this. BT owns the sites and runs a sophisticated national network and system. BT must retain ultimate control over them, but subject to the need to comply with its legal obligations to provide unbundled local loops promptly and in a non-discriminatory way.

Oftel therefore proposes that, if an OLO believes that BT is unreasonably stating that insufficient space is available in an MDF site to meet demand for Co-location, the OLO should be able to invoke the dispute resolution procedure contained in Clause 20 of the Main Body of the ANF Agreement. This would enable the OLO to request an independent expert to verify the space available to the relevant MDF site.

The Director General notes that, in its latest revision to the offer for the ANF Agreement (published on 29 December 2000), BT has amended Clause 20 (by the insertion of a new sub-clause 20.7) to permit an OLO to do this. Accordingly, and provided that the other revisions to Clause 20 directed under this Determination are made, the Director General takes the view that the OLOs concerns should be met by the drafting proposed by BT on 29 December.

Under the ANF Agreement it is BT which is responsible for carrying out the works. Since the OLO will pay for the costs of these it is reasonable that the OLO should have some control over them, while allowing BT to supervise how the work is done so that it does not damage BT’s own system or buildings. Provisions should therefore be placed in Part II of the Agreement to allow operators to have the costs or specification of works verified by an independent expert, in the same way that they can ask an expert to verify whether space is available. Express reference should be made to Clause 20 of the Main Body of the agreement.

On 17 January 2001 Oftel launched an investigation into the costs which BT is proposing to charge for the construction of co-location space. This investigation is ongoing, but any conclusions reached will inform both OLOs and any expert(s) appointed to resolve a dispute as to the reasonableness or otherwise of BT’s offers.

The complainants suggest structural separation between BT’s wholesale network business and BT’s retail business so as to protect their commercially confidential information which BT (wholesale) has in its possession.

The Director General is of the view that forced separation of parts of BT’s business is not proportionate to the aim of protecting confidences. In the consultation and draft determination, Oftel made detailed proposals to try and protect the confidentiality of OLOs business information, specifying in particular as to precisely how to ensure that BT did not pass this information around the BT organisation, except to the minimum extent necessary. BT made a number of submissions, the thrust of which was that BT already had detailed internal compliance systems in place designed to protect the confidentiality of third parties business secrets, specially in the context of interconnect with BT’s telecommunication system.

Oftel has seen the relevant parts of BT’s compliance manual on this issue. The Director General understands BT’s view that it would be administratively difficult to put in place separate procedures to deal with the protection of confidential information provided by an operator in the context of local loop unbundling, which differed from the internal procedures covering in general the handling of information received from another operator interconnecting with BT. He also believes that such procedures would be unnecessary, since he is satisfied that Clause 15 of the Main Body of the ANF Agreement, when read in conjunction with BT’s compliance procedures, are sufficient to protect OLO’s legitimate interests.

However the Determination requires a specific provision to be inserted in the confidentiality clause of the Main Body of the ANF Agreement (Clause 15) obliging BT to procure that none of the Confidential Information obtained under the ANF Agreement is used to give commercial advantage to BT’s retail DSL business. The provision should mirror a similar provision in BT’s Standard Interconnect Agreement.

Oftel also understands the OLOs argument that BT, as the owner of the exchanges, will have valuable information as to the aggregate level of demand for co-location space and utilisation of it in individual exchanges, to which other operators will not have access. This information may not be "Confidential Information" which would be protected by Clause 15 but, in aggregate, might permit BT to gain some degree of competitive advantage. Oftel suggested to OLOs that a solution to this issue might be for some or all of such aggregated sensitive (but not confidential) information to be put in the public domain, so that BT would have no greater competitive advantage than any other operator. Some operators suggested that this might be an appropriate solution, subject to certain safeguards.

However, several OLOs have objected to the publication of such information on a number of grounds. Oftel is still examining their arguments and the Director General will reach a view in due course. Consequently, this Determination makes no direction in respect of the disclosure of sensitive information (whether aggregated or not) which is not "Confidential Information" as defined in the ANF Agreement.

Oftel does not believe that physical separation of all of an OLO’s equipment from that of BT is always likely to be necessary - although in most cases, from Oftel’s experience of site visits to date, it is nevertheless likely to be possible for a separate "hostel" to be constructed.

Where space does not permit the use of physical partitioning, Oftel expects BT to be in a position to offer alternative "bespoke" options to OLOs. It should be noted that Article 3.2 of the EC Regulation only allows notified operators (such as BT) to refuse to meet reasonable requests for co-location where the refusal can be justified on technical grounds or due to the need to maintain network integrity.

In the event of dispute between BT and an OLO as to whether physical separation of equipment is necessary, the dispute resolution procedure in Clause 20 of the Main Body to the ANF Agreement should be applicable in the same way as it would in relation to other disputes of an essentially technical nature. Further comment on Dispute Resolution is given in Chapter Eight. Oftel expects to publish guidelines dealing (amongst other things) with these issues in the near future.

1.    Need for specific service level obligations and obligations to use reasonable endeavours

The Director General is of the view that BT should be contractually bound to meet specific time scales and commitments for:-

1. making available sites, including construction of works;
2. repair and maintenance of Metallic Path Facilities;
3. quality of service.

The consultation sought to specify some benchmarks for these three heads.

In relation to (i), the Bow-wave Process and Parts I and II of the Agreement already provide significant detail on the time scales for provision of co-location facilities. To the extent that further service level provisions may be required, they should be negotiated between BT and the OLOs, at least for an initial period.

In relation to (ii) and (iii), the Director General is of the view that BT should be required to provide service of a reasonable quality immediately and the Determination makes this direction.

In the medium to longer term, a key element of BT’s offering must be a requirement that BT should meet specific targets and service levels, covering timeliness, reliability and quality.

Oftel believes that, in the first instance, commercial negotiation is the preferred method for deciding what service levels should be provided and what compensation should be paid for failure to meet them. On the issue of compensation, Oftel believes that it is reasonable for a two stage approach to be adopted;

1. BT pays standard compensation for failure to deliver to the agreed service levels in any event; then
2. an OLO may, if it believes it has suffered recoverable losses beyond this amount, sue for that actual loss.

In its latest ANF Agreement offer, BT has included some provisions for standard compensation (liquidated damages), for example for late delivery of co-location space (see Part II, paragraph 3.10 of the 29 December 2000 offer) following the suggestion made in the Oftel’s November 2000 consultation document. Oftel also understands that BT has in principle accepted this structure for compensation for failure to meet service level commitments. Nevertheless, the Director General is still of the view that it is appropriate to require BT to provide more detailed service level commitments in this Determination. The Director General also notes that BT is required to specify service levels in its reference offer pursuant to Regulation 2887/2000.

BT argued that detailed service levels can only be agreed once services have started over unbundled local loops and operators are providing service. The Director General does not accept this argument. Some of the services being offered are not totally new and the aspects which are novel have been subject to trials which begun in the Spring of 2000. The OLOs and BT are, therefore, able to agree specific targets and levels in a service level agreement both as respects any outstanding issues regarding installation and as respects the provision of service on an ongoing basis. If those service level agreements (eg for MPF’s themselves) later need "fine-tuning" as a result of experience, that can be done by further agreement. BT and the OLOs therefore have until the 30 April 2001 to agree detailed service levels failing which the Director General may intervene to determine them.

The Director General also proposes to insert a general requirement that BT must at least meet the same conditions and time scales as it sets itself when providing equivalent services. This is also now required under Article 3 of Regulation 2887/2000. This requirement will not replace the obligation on BT to provide services of a reasonable quality, or to a specific level as agreed with the OLOs in a service level agreement, but to provide a ‘backstop’ in the event that service levels cannot be agreed.

The Director General notes that in some other European countries, where the terms of the equivalent to an ANF Agreement have been published, the incumbent operator is contractually committed in the context of local loop unbundling to meeting the same time frames those which as apply when it supplies its own downstream operations. Similarly, in the United States, an incumbent local exchange carrier is contractually committed to provide service within the same time scales and of the same quality to the services it supplies to its own downstream operation.

The issue of whether BT has discriminated against competitors in any case when it has allegedly been slow in delivering services to them or they have fallen below the reasonable standard will depend on the circumstances of each case. However, if BT does not provide unbundled access services on time scales or to a quality which is essentially the same as that on which it provides services to itself, it will, under this Determination, be in breach of contract. This would be in addition to any liability BT may have for damages on non-contractual grounds for breach of Article 3 of Regulation 2887/2000.

BT raised the issue of the appropriate comparator for the purposes of assessing whether discrimination has taken place. It argued that neither the level of service it offers its retail customers, nor the level of service it is required to offer under the Regulation and Condition 83 of its licence is appropriate. Rather, BT argued the service it is offering under the Agreement is a series of inputs to enable others to provide a competing wholesale service.

The Director General does not believe that the level of service offered by BT at both wholesale and retail levels is irrelevant either to the reasonableness of the service levels offered by BT, even if the services being supplied under the Agreement are not identical to such wholesale or retail services, or to the question of whether or not discrimination has in fact taken place and these service levels should be taken into account when assessing the reasonableness or otherwise of BT’s service offering. Operators are also, of course, able to bring court action in the event of failure by BT to supply service to the contractually required level or in a manner which breaches the EC Regulation.

In the scheme of the ANF Agreement, some of BT’s obligations to do things will be absolute, but for other obligations BT will necessarily only have to endeavour to do the thing in question.

The operators argued that, where BT is only required to endeavour to perform a contractual obligation, the level of endeavour needed is "best endeavours". BT on the other hand argued that in certain cases it is unreasonable for it to be obliged to use its "best" endeavours to perform certain obligations and that it is sufficient that it should only have to use "reasonable" endeavours - a lesser test. BT takes the view that "best endeavours" would mean that BT would need to take all possible steps - however onerous - to fulfil the obligation in question. The Director General does not accept BT’s arguments for the following reasons.

1.    The basic standard in the Agreement must be that BT’s obligations to provide services at a particular quality level, or at a particular time or with a particular frequency should be unqualified. Wherever possible, the Director General has sought to impose absolute obligations on BT and not to qualify them by the term "best endeavours". A "best endeavours" obligation therefore already waters down what should otherwise be an absolute obligation on BT to do something.

2.    Analysis of the jurisprudence as to what is meant by the terms "best" and "reasonable" endeavours shows that there is a distinction between the two terms. Broadly, "best" endeavours means an obligation by the person giving the undertaking to try at least as hard as if they were looking after their own interests. It does not therefore mean that BT is required to do everything in its power to perform the obligation, however onerous. As against this the term "reasonable" endeavours appears to mean that the person under the obligation has to try to perform it, but when performance materially conflicts with his own interests, he can cease performing. Since the basis of the ANF Agreement is to oblige BT to do something which is unlikely to be in its own commercial interests, it would not be appropriate for BT only to be subject to an obligation to use its reasonable endeavours.

3.    A basic principle underpinning the Director General’s whole approach to setting the disputed terms of the ANF Agreement is that BT must not unduly discriminate against the OLOs or prefer itself by favouring its own business to a material extent. This means that BT must put the same effort into providing services to other operators under the ANF Agreement as it puts into managing its own business. That level of effort underlies the concept of "best" endeavours.

2.  Forecasting and Compensation

In the November 2000 consultation on this Determination Oftel proposed some changes to the provisions of Part I of the ANF Agreement relating to the compensation payable by OLOs for failing to order to forecast. BT has amended the relevant provisions of Part I, and the OLOs commented that their concerns have now been significantly addressed. Accordingly, the Determination is limited to directing BT to ensure that any compensation for failure to order to forecast is cost-orientated as required by Article 3(3) of Regulation 2887/2000.

3.   Limitations on Liability

Two broad issues were raised by the OLOs’ determination request:

1. the reasonableness of BT’s wish to exclude all liability for an OLO’s loss of profit, and other consequential loss resulting from BT’s fault and breach of contract; and
2. the reasonableness of any indemnity given by the OLOs for damage to BT under the Property Licence.

In the Director General’s view, to be reasonable, the terms covering these matters must give the correct incentive to BT to minimise the occasions when ANF services are not available to OLOs from any particular local exchange and to minimise delays in installation, so that OLOs can compete effectively. That means that in practice BT’s liability to OLO’s for breach of the Agreement must at least equal the economic incentive on BT to install equipment promptly and to avoid breakdown of the system when supplying DSL services to its own retail customers. There is considerable overlap with the issue of compensation for failure to supply to the service levels to be agreed (see above).

In the consultation BT made essentially two points:

1. that it would be sufficient for BT to have only a modest liability above a nominal level. That would be sufficient economic incentive for it to perform its obligations properly;
2. that the "per exchange" limitation on BT’s liability of £2 million per event and £5 million per operator proposed by Oftel exposed it potentially to liabilities many times value of the whole of BT’s business.

The Director General has approached the issue of limiting BT’s liability in this way:

1. A "cap" on liability only limits the potential liability. It does not set the actual liability in the event of default. The cap is only triggered once the liability has actually arisen and the key issue is to look at the likely level of exposure.
2. BT’s obligations under the ANF Agreement mirror, at least in part, its obligations to do certain things both under EC and UK competition law, under its licence itself and, now, under the EC Regulation on unbundled access to the local loop. Where BT is in breach of any of those obligations, there is no limit to its liability resulting from enforcement action by Oftel, or for other non-contractual loss;
3. The Director General nevertheless is alive to the fact that in many commercial agreements, where there are potentially large exposures, the parties will mutually agree to limit liability.

In their comments on BT’s response to the consultation the OLOs suggested that the cap on liability for loss of revenue should bear a reasonable relationship to the revenues which were forecast to be earned from an average MDF Site. They supplied, in confidence, some financial analysts reports dealing with this.

On the basis of these comments and this information the Director General has revised his proposal for the mutual limitation of liability under the ANF Agreement.

Clause 17 of the Main Body of the Agreement, as determined by the Director General, leaves the measure of damages at large, to be set by the general law. Liability for personal injury, death or physical (property) damage is unlimited. However neither party should have to take on any liability for the other’s customers’ economic loss (as distinct from the operator’s own direct loss of revenue from that customer or its other economic loss). BT and the OLOs may wish to consider insuring themselves against such loss to the extent that they are unable to protect themselves by including suitable exclusion clauses in their customer contracts.

Projections of likely revenue of co-locating operators vary, but having looked at the figures provided by the OLOs, the Director General has decided that a reasonable limit on claims for loss of revenue from its own customers by any operator which arises from events in any one exchange, is £500,000 in any year but with an overall limit of £20 million on all claims for such loss by any one operator in any one year. The caps would be mutual as between BT and each OLO.

In the November consultation, Oftel proposed that BT should be able to insure itself against further loss above these caps to a reasonable level and to pass on a reasonable charge by way of premium to the OLOs for this.

Both BT and the OLOs commented that this proposal is unnecessary. BT pointed out that, since it accepted (and required the acceptance of) unlimited liability for physical damage under the offer, provisions relating to insurance are superfluous. The OLOs were concerned that they were not being offered the choice of arranging their own insurance against their liabilities to BT, which they would prefer to do.

Oftel has therefore revised its view in the light of these representations and the Determination makes no provision in relation to BT’s ability to insure for loss of revenue or profit above the liability caps set out above. However, in relation to liability for physical losses (including personal injury and death), BT is entitled to be satisfied that it will be put in funds promptly to repair its property or otherwise compensate such liabilities caused by an OLOs negligent acts or omissions in its exchange buildings (which usually house equipment for providing a broad range of services including those which BT is under a legal obligation to provide). Accordingly the Determination permits BT to satisfy itself that each OLO has adequate insurance cover for these liabilities: if BT is not satisfied it may itself insure to a reasonable level against such losses and pass the cost on to the OLO in question.

There is no policy or legal reason why BT’s liability to an operator, or an operator’s liability to BT, should differ, depending on whether the liability arises under the ANF Agreement itself or under the property licence (in Part III of the ANF Agreement) which each OLO will enter into for each MDF Site at which it occupies space. Accordingly the indemnity offered by the licensee operator in the property licence would only cover losses caused to BT due to personal injury or death. Given this limitation to the scope of the indemnity, Oftel believes that it is reasonable that the indemnity should be unlimited. BT has provided for this in the 29 December revision of the ANF Agreement.

Both BT’s and an Operator’s liability is, under the ANF Agreement and under the Licence, limited by events which are beyond their reasonable control (the Force Majeure clause). Oftel sees no reason to intervene in this significantly, but does believe that it should provide that a party should take reasonable steps to avoid industrial disputes where possible.

4.    Interference/Suspension regime

Oftel accepts that there may be times when an OLO’s equipment, or services provided over its system or over BT’s system, risks the integrity of BT’s network by degrading the quality of services provided over it or, in extreme cases, causing partial breakdown.

The Director General wishes to emphasise that the robustness and integrity, not just of BT’s system, but also of OLO’s systems and of the national network as a whole, is a matter of great public interest. BT has had, and still has, a key role in maintaining the robustness and quality of the national telecommunications network.

Broadly, the Determination proposes that all interruptions of service by BT must be first notified to the Operator, unless in the case of emergency immediate action is unavoidable. Oftel does not believe that this will entail major changes in the offer made by BT on 4 September, since BT had already, after discussions with Oftel prior to that date, amended many of the relevant clauses so that they do, indeed, provide for this. The powers which BT will have to interrupt services in order to maintain network integrity are sufficient if BT needs to intervene in order to protect an OLOs network integrity where necessary. As an exception, OLOs’ staff may take action to suspend service where there is an immediate risk of death or personal injury.

Restrictions in the Agreement

1. Restrictions on connections

There are two related issues here. The first relates to the shared use of ‘backhaul’ (that is, the circuit by which the DSL modems operated by an OLO are connected to the rest of its system outside the exchange building). The second relates to the inter-connection of equipment belonging to two or more OLO’s within the exchange building.

BT’s 4 September ANF offer expressly permits the shared use of ‘backhaul’, and Oftel believes that this is reasonable.

In relation to ‘in-building’ connections, BT maintained that permitting such connections would encourage OLOs to install equipment above what is ‘necessary’ for the use of the local loop. Oftel does not accept this. The Determination properly makes it clear that BT is only required to provide co-location space to the extent required to allow an OLO to install equipment which is necessary for the use of ANF services. In Oftel’s view this gives BT adequate protection against the possibility that allowing in-building links would encourage OLOs to use space and install equipment for other purposes. Further, if BT does not allow OLOs to connect their DSL equipment between themselves in exchange buildings, but continues itself to connect its own relevant services to any of them, this might give BT some competitive advantage and therefore, in such a case, cut across the requirement on BT not to discriminate in favour of its own downstream business.

Accordingly, this Determination directs BT to permit such ‘in-building’ connections.

2.    Restrictions on subletting and assignment

Clause 3.15 of the property licence, as proposed by BT, would prevent any subletting or assignment of co-location space. In the Director General’s view the prohibition on sub-letting is reasonable – BT must have a direct contractual relationship with all persons using its sites and co-locating on them. That is not to say, however, that an operator having a licence should not be able to provide services to, or connect with, other OLOs with equipment located on the same site (see para 1 above).

As to the right to assign an interest in a property licence, Oftel’s policy is to try to ensure that space which is in short supply is used efficiently, and is not left unused, whether by BT or OLOs.

The Determination therefore directs BT to include in the ANF Agreement a transfer scheme for licences.

Further comment on this point is given in Chapter Seven, which sets out in more detail Oftel’s views on a suitable transfer regime.

Oftel also notes that, in its revision to its offer of an ANF Agreement published on 29 December 2000, BT included provisions which substantially comply with the transfer scheme now required.

3.    Termination of the Property Licence

The Director General takes the view that property licences should be transferable to ensure efficient use of space. BT’s August ANF Agreement (which was the version the subject of the determination request) included a form of licence for 4 years. The Director General takes the view that this period is too short. There would be little incentive on a licensee to pass on the benefit of a property licence with, say, only 18 months to run. The Director General has taken the view that the duration of the licence should be unlimited in time subject to:

1. an obligation on the OLO to use the space for the purposes of local loop unbundling, or lose the benefit of the licence;
2. a right for BT to terminate the licence if it is no longer legally obliged to make space available, either under Condition 83 or otherwise;
3. a right for BT to terminate the licence for material breach etc.; or
4. a direction by the Director General that a licence be terminated.

Again Oftel notes that, in the revision to the ANF Agreement offered on 29 December 2000 BT amended the termination provisions relating to the standard property licence so that the licence is for an indefinite duration subject to termination at any time in the circumstances described above and additionally, by BT on 12 months notice at any time after 10 years from when it was granted.

The Operator’s group argued that this formulation, which would allow BT to terminate after 10 years of occupation, merely pushed the issue they had with an unfettered right of termination for BT forward in time, but did not resolve it.

The Director General has some sympathy with the OLOs’ view that it would be quite inappropriate for a licensee OLO to work under the uncertainty that BT may terminate the licence at any time on 12 months notice once the ten years is up. However, Oftel has previously pointed out to BT that it is not able to terminate its property licence unreasonably without being in breach of the requirements of Regulation 2887/2000 or Condition 83 (or any replacement for it). Further, BT has now offered a considerably greater degree of certainty in occupation of BT’s premises than previously. Finally, the Director General is concerned to interfere now to regulate potential events 10 years hence which, if they happen at all, will almost certainly take place in very different circumstances, would be premature.

Accordingly, the Director General takes the view that a property Licence of indefinite duration, but with a greater flexibility for BT to terminate the licence (on the basis that it provides suitable alternative accommodation) after 10 years, appears reasonable and the Determination reflects this.

The Director General believes that it is reasonable for BT to make some information available to OLOs in advance of contracting. In particular, the EU Regulation includes minimum requirements for BT to provide information concerning the location of BT exchange sites, staff access, inspection facilities etc. In addition, BT should make available plans of its exchange buildings (which may be edited where necessary to protect confidentiality) where these exist, together with a written commentary if the actual lay out of the premises has changed materially since the plan was made.

However, BT will be under clear contractual obligations under the ANF Agreement (including under the service level agreement) to arrange co-location and provide other associated services within fixed deadlines or face damages if it does not do so. It will also be under a contractual obligation not to unduly prefer its own ADSL business (see above). On this basis the Director General takes the view that wide ranging information disclosure of the resources which BT has allocated to local loop unbundling is unnecessary.

As discussed in Chapter Five, Oftel takes the view that it is reasonable for BT to have a direct contractual relationship with anyone who occupies its premises, but this should not impede the objective of using co-location space, which may be in short supply at some exchanges, in the most efficient manner. This Chapter sets out the Director General’s conclusions, balancing BT’s right to use its property against the need for efficiency. BT’s ownership of its exchanges (MDF Sites) does not mean that there can be no changes of occupation of space used for co-location at those MDF Sites. Oftel’s policy objective of ensuring that available co-location space is used as effectively as possible therefore has two main implications in this context:

• firstly, where the allocation method results in less than optimal allocation of space for any operator, that operator should have the opportunity to transfer space allocated (whether in return for co-location space at another site or for money) so that it can move closer to an optimal set of co-location rights to give it the "critical mass" needed to achieve its business plans;

• secondly, operators which may have received an allocation of space under the bow-wave process which they subsequently do not wish to use, but which are perceived to be of use (and therefore value) to others, should be required to pass it on for re-allocation. This will, Oftel believes, enhance the efficient use of space in BT exchange buildings.

The operators’ group’s request for a determination, requested that co-location space should be transferable. The Director General takes the view that, in deciding what is reasonable, he is not required simply to choose one of the proposals put to him, but may determine that another position is appropriate. In addition, although the Director General takes the view that the use of a bow wave process is not unreasonable at present this does not mean that it can always deliver the desired result for every participating operator. Consequently, he is of the view that it is reasonable to determine that part of the dispute between the operators and BT relating to transferability under paragraph 20 of Condition 83. The Determination sets conditions for the transfer of co-location space. Any ANF Agreement which did not include such a regime would be unreasonable contrary to Condition 83.19 and to the aim of Regulation 2887/2000, which include the requirement that national regulatory authorities promote a competitive market in the provision of unbundled local loop services. Efficiency in the use of co-location space in BT exchanges requires that a method of transferring under-used space to operators who wish to use it must be included in any reference offer for unbundled access to the local loop.

The Determination requires BT to permit changes in occupation of co-location space on request. In order to ensure that BT’s property interests are safeguarded to the maximum extent possible consistent with this, the transfer process should proceed as follows:

There are a number of issues in this process which require further explanation.

• Step 1: A and B agree. The agreement between A and B should contain whatever terms A and B wish (subject to compliance with the general law). So, for example, the agreement may provide that B will purchase A’s DSL equipment in the exchange in conjunction with the transfer or it may provide that A will remove the equipment for installation elsewhere.

• Step 2: the same terms. B should be granted a licence in substantially the same terms as that originally held by A in respect of the co-location space in question. So, if A has agreed with BT to install further equipment in that co-location room (for example enhanced ventilation/air conditioning) either A will be required to discharge the balance outstanding or B will be required to take over that order and pay for (the balance of) the works.
• Step 3: reasons for refusal. BT should only be able to refuse to enter into a new licence where it would be able to refuse to enter into an ANF Agreement with a new operator entering the market for the first time. BT can only do this in the circumstances described in the table under Stage 3.

• Step 4: market licence fee. Oftel believes that BT should be entitled to ensure that it receives a market return from the use of its exchange space (subject to BT’s duty not to discriminate – see Oftel guidance Access to Bandwidth: Conclusions on charging principles - August 2000). Where co-location space changes hands, it may be apparent from the circumstances of the transfer that the licence fee set at the beginning of the current term of A’s occupation is too low. BT should therefore be given the opportunity to have it revalued to a market level. This should be the level at which rents for comparable properties in the area of the exchange are being set. Oftel believes that it would be good practice for BT, where it requests a review, to include a letter from an appropriate expert confirming the level of market rent in the relevant area.
• Stage 5: dispute resolution. If BT and A or B disagree as to the revised licence fee, the dispute resolution procedure used will be that provided for in Clause 20 of the main Body of the Agreement (see Chapter Eight).
• Stage 6: it should be noted that, particularly in cases where B is to take over equipment belonging to A, there should be no break between the termination of A’s licence and the commencement of B’s.

BT will be allowed to charge a fee to reflect its reasonable costs of carrying out the transfer.

4. Use it or lose it

Oftel’s objective is to ensure that, whilst respecting BT’s legitimate property rights, potentially scarce co-location space is used as efficiently as possible. It is, Oftel believes, contrary to the interests of consumers for operators which have been allocated space (at no cost to themselves) to retain that space without using it for the purposes of unbundling local loops.

Where co-location space has not been used for a specified period by an operator, BT should have the obligation to terminate the operator’s licence to occupy BT’s exchange building and to place the space thus freed into the allocation process for co-location space. It would not be appropriate for BT to be able to enter into a private agreement to licence that space without going through a transparent allocation procedure so that other operators wanting to occupy space for co-location at that exchange have the opportunity to bid for it.

In the November consultation, Oftel asked for views as to whether the proposed three-month period was appropriate as the time after which the exchange space in question should be subject to "use-it-or-lose-it" principles. Representations received suggested that 3 months might in a significant number of cases be too short a period for an operator to start service over unbundled loops. The Determination therefore provides that, for the first operator to occupy the space, the relevant period shall be 6 months, but for subsequent operators (who are unlikely to have to install significant amounts of new equipment) 3 months is appropriate.

Oftel believes that it would be unreasonable for the period to begin before the actual completion of any works BT has contracted to carry out or before the date on which the operator has the right actually to enter the premises, whichever is the later.

The relevant period should end when an operator has actually started installing DSL equipment in the space made available for co-location. So, where lead times for ordering equipment might be longer than the 3 or 6 month period (as the case may be), operators should be aware that they may need to order (or have available) appropriate DSL equipment in advance of the co-location space being ready for occupation.

If space has already been fitted out, but an OLO ceases using it after that time (for example, because its plans change), the period should start to run when the OLO ceases to provide any material ANF services from the exchange in question.

Oftel does not believe that operators should be compensated for the potential value of co-location space thus forfeit, since they can avoid the operation of the rule by using their co-location space to the maximum advantage. However, operators whose co-location space will be reallocated using the "use it or lose it" rule should be given reasonable notice of this by BT (not less than 10 working days) to give them the opportunity to remove any DSL equipment which may belong to them in the co-location space to be reallocated.

Oftel believes that OLOs and BT reasonably require the certainty of a contractual dispute resolution procedure in addition to that required by Regulation 2887/2000 and in Condition 83. This procedure should be flexible enough to be able to deal with the wide variety of factual disputes (for example of a technical, cost or other operational nature) which can be expected to arise as the local loop unbundling process moves forward.

In the November consultation, Oftel proposed that the contractual dispute resolution provisions which it put forward should apply to all disputes arising under the ANF Agreement. Both BT and the operators’ group commented that it was inappropriate for an independent expert to be engaged for disputes which were not essentially based on a difference over largely factual circumstances. BT, in its 29 December 2000 offer for the ANF Agreement, proposed that independent experts could be engaged in respect of certain disputes specified in the clause relating to dispute resolution.

The Director General takes the view that it is appropriate for an expert’s role to be limited to settling essentially technical or operational disputes. He notes that the ANF Agreement permits direct recourse to the courts in all cases, and also permits the reference of other types of contractual disputes to the Director General. Whilst the Director General would take on this role, he may, in appropriate cases, request the assistance of suitably experienced third parties to advise him. If BT and the OLOs wish the Director General to have a contractual role in settling disputes under the ANF Agreement, he should therefore be able to refer the matter to an independent expert (at their expense) himself.

It is important to distinguish between on the one hand the exercise by the Director General of his (public law) functions, either under Regulation 2887/2000 or under Condition 83, and on the other his function as (effectively) an arbitrator under the private law provisions of the ANF Agreement. Of course, the Director General will exercise both of these functions in a consistent manner and nothing in the ANF Agreement can prevent an operator referring a dispute to Oftel under the EC Regulation or Condition 83. Nevertheless Oftel believes that in the event of dispute the parties to an ANF Agreement should wherever possible use the contractual dispute resolution mechanism provided in the Agreement itself.

A reference to an expert by the parties is likely to be particularly useful where factual technical issues are in dispute (such as the suitability of a particular space in a BT exchange for co-location). However, particularly in circumstances where compensation is claimed, OLOs and BT may wish instead to present their dispute directly to the Court (the Director General has no power to award compensation). Major disputes - particularly those likely to affect a number of OLOs - may be suitable to be dealt with by Oftel, whether with or without external expert assistance.

As an illustration of how the suitability of different types of dispute resolution might apply, if there is a dispute as to, say, availability of co-location in a particular exchange, an operator could seek to refer the issue to the Director General for determination under Condition 83.20. However, on the basis of his powers under Condition 83.20 the Director General would in that case only be able to decide:

1. either, that a particular clause in the Agreement (relating, say, to the procedures and criteria to be used in determining under the Agreement that co-location space is or is not available) is not working and should therefore be changed for all operators; or
2. that BT’s failure to make co-location space available is in breach of BT’s obligations under the EC Regulation or Condition 83 (which of course overrides BT’s obligations under the Agreement in the case of conflict) and therefore the Director General should make an order for enforcement under section 16 of the Telecommunications Act, 1984.

Normally, therefore the Director General would expect disputes of this type go to an expert for resolution and not to him. If this kind of factual contractual dispute is referred to Oftel for a decision under the ANF Agreement (rather than under the Condition) it is very likely that the Director General would involve an expert in the resolution of the dispute, for the reasons given above. The Director General’s intervention is appropriate in the resolution of disputes which involve the application of regulatory principles: it is more appropriate for an independent expert to decide what are essentially matters of fact.

Condition 83. 21 requires parties to a dispute to take all reasonable steps to resolve the dispute before referring it to the Director General for determination and the Director General may decline to make a determination where it appears to him that the parties have not done so. The Director General intends to use this discretion where disputes are referred which could, in his view, be better resolved by other means.

3. Amendment to ANF Agreement

Oftel believes that Clause 20 of the 4 September ANF Agreement is broadly reasonable as drafted, but requires an additional sub-clause. A new Clause was inserted by BT in its 29 December offer permitting the parties to a dispute to appoint a suitably qualified expert by agreement to examine issues referred to him by them and produce a finding (if they do not wish to commence litigation immediately), and this is also broadly acceptable, although some further categories of dispute which are capable of reference may need to be added.

However, express provision will be needed for the Director General to remit disputes referred to him for contractual resolution to an independent expert.

Oftel would expect that independent experts will have regard to the Guidelines issued by the Director General from time to time on local loop unbundling. The instructions to the expert should expressly require him to do this. Significant divergence by an expert from Oftel Guidelines will need to be carefully explained in the event that the dispute is later referred to the Director General. BT and the operators should also be able to agree a standard set of terms of reference for independent experts on the same time scale as the service level agreements. If the terms of reference for independents expert cannot be agreed, the Director General may propose some.

The attachment to this Statement contains further comment on a number of minor drafting issues in relation to the Determination.

BT proposals for its property estate

BT has announced proposals to enter into arrangements with a third party for the management of its real estate portfolio, which might include some of its exchanges (MDF Sites) in the UK.

The Director General has not yet seen full details of BT’s proposals and cannot say whether the ANF Agreement will need modifying, so as to ensure that the management of BT’s property portfolio (in particular resulting in resiting of any exchange) does not cause unnecessary increased costs or operational difficulties to OLOs taking services over unbundled local loops. It would be for BT to ensure that resiting or closure of any exchange (or part of an exchange) resulting from the proposals did not involve BT in any breach of its legal obligations or cause unnecessary disruption. If BT decides to close a particular exchange or combine it on the site of another exchange the Determination provides that BT must offer reasonable alternative accommodation to other operators as BT already is obliged to do when it makes changes to its network which involves an interconnecting operator in additional costs, under clause 4 of its Standard Interconnect Agreement. The Determination further provides that in addition to this obligation, if BT gives less than 12 months notice then BT must pay all of an operators costs of relocation and removal on an indemnity basis.

Oftel takes the view that this Determination should take effect immediately. Accordingly, from the date of publication of this statement and Determination, neither BT nor an operator may enforce any provision in the ANF Agreement between them to the extent that it is inconsistent with this Determination.

BT is further required to produce a revised ANF Agreement which complies with the terms of the Determination by 31 March. In doing so, it shall promptly publish a draft of the revised ANF Agreement and invite comments on it (giving a reasonable opportunity for operators to do so) and, if necessary, further revise the ANF Agreement taking account of comments received. This further revision shall be published promptly and take effect as between BT and all operators who have signed an ANF Agreement or who wish to do so 5 working days from such publication. In the event that an operator believes that BT has failed properly to amend the ANF Agreement in accordance with this Determination, it may complain to Oftel.

1.2.2     Oftel agrees that it is not appropriate to incorporate reference to the Director’s guidelines on space allocation, which may change over time.

1.3.4    The costs of building works should include BT’s costs in obtaining planning permission, which BT could recover from an operator under Paragraph 3.5 of Part II.

2.4.5    BT alleged in its response that 72 hours was unworkable, but gave no reasons why this was so.

2.4.7 Oftel assumes BT would wish an operator to disconnect BT equipment if it threatened death or personal injury.

2.4.9 The best endeavours obligations (which apply only as respect that party’s own equipment) may need revisiting once the service level agreement is finalised.

3.2.1 BT objected to this but the Director sees no reason why cabling should not be laid by the OLOs subject to the normal caveats that the route and method be agreed with the landlord (here BT).

3.4.1 BT has made most of the amendments to the termination provision of the licence in its 29 December 2000 revision which will be necessary to conform with the determination save for some additional parts, eg. 8.4.2 of the 29.12.2000 version of the licence should be deleted and 8.4.5 of that version should reflect the new time periods set out herein.

3.4.2 The Director notes that BT has already sought to meet this requirement in its offer of 29 December 2000.

3.4.3 In order to provide BT with greater flexibility over the use of its property after 10 years, an additional right to terminate is granted provided that the full alternative site provision costs are paid for by BT.

4.1    It is not appropriate for the Director General to lay down in detail the personnel and other resources in BT to be allocated to supply Access Network Facilities. However the contractual commitments of BT should be strengthened so that the contractual risks to BT of non-performance ensure that it commits sufficient resources. Again these may need to be revisited when detailed service levels are agreed.

6.1.1 BT was concerned about the applicability of the Contracts (Rights of Third Parties) Act 1999 to a contract made between an original OLO and BT as regards payments by an unidentified, incoming OLO. By applying that Act only to those OLOs who have signed an ANF Agreement at the time of the breach, this concern should be met.

WHEREAS

1. The Secretary of State granted to British Telecommunications on 22 June 1984 a licence (the "BT Licence") under Section 7 of the Telecommunications Act 1984 (the "Act") for the running of the telecommunication systems specified in Annex A to the BT Licence.
2. By virtue of Section 109 of and paragraph 20 of Schedule 5 to the Act, the BT Licence has effect as if granted to British Telecommunications plc ("BT").
3. On 18th December 2000 the European Parliament and the Council adopted a regulation in unbundled access to the local loop (EC/2887/2000) (the "EC Regulation").
4. Article 3(1) of the EC Regulation requires notified operators (as defined in the EC Regulation and of which BT is one) to publish from 31 December 2000 and keep updated, a reference offer for unbundled access to their local loops and related facilities, on terms set out in the EC Regulation.
5. Article 4(2) gives the national regulatory authorities in each member state (which in the United Kingdom is the Director General of Telecommunications) the power to impose changes on the reference offer for unbundled access to the local loop and related facilities.
6. Condition 83 (the "Condition") of the BT Licence obliges BT to make available access to its local lines to consumers, space in its exchanges, use of certain circuits and reasonably necessary ancillary services (together "Access Network Facilities") so that other licensed operators having interconnection rights under the Interconnection Directive and the Regulations made under it ("OLOs" or "Operators") can provide telecommunications services (including DSL services) over those lines. The process is known as local loop unbundling.
7. Paragraph 19 of the Condition requires BT to secure that the offer of an agreement to provide any of the Access Network Facilities under the Condition contains only terms and conditions which are reasonable. In the event of a dispute arising out of the Condition between BT and other licensees (whether as to the reasonableness of any terms or conditions or otherwise) either party may refer the dispute for determination by the Director under paragraph 20 of the Condition, which enables the Director to settle terms which are reasonable.
8. The EC Regulation is now in force and it is appropriate that this determination is based on the Director’s powers both under the EC Regulation and under Condition 83 of BT’s Licence.
9. In the summer of 2000 BT entered into negotiations with a group of Operators to produce a standard form agreement for the provision of Access Network Facilities which would be available to all OLOs. After several months of negotiation, on 4 September 2000 BT published a version of an agreement which was open for acceptance by OLOs (the "ANF Agreement") and which took into account some, but not all, of the OLOs’ concerns. The Operators and BT failed to agree on the outstanding points.
10. The Director is therefore satisfied that there is a dispute on these matters. On 27 September a group of Operators made a request to the Director (inter alia) for a determination under paragraph 20 of the Condition. This asked the Director, amongst other things, to determine the terms of the ANF Agreement, in particular as respects five substantive issues:
1. the arrangements for the allocation of co-location space;
2. BT’s contractual commitments (including its exclusion of liability);
3. the imposition of certain restrictions;
4. the withholding of information about resources; and
5. a general complaint about the "quality" of the ANF Agreement offered by BT.
11. On 23 November 2000, the Director published a consultation document and draft determination inviting comments by 20 December 2000. The Director has considered the responses of the complainants, of BT and of others who responded to the consultation.
12. In deciding what is reasonable, the Director has had regard to certain basic principles:
1. the need to ensure that the terms offered are fair, having regard to the interests of all relevant parties;
2. EU legal requirements, in particular the EC Regulation;
3. ensuring effective and sustainable competition in the use of the local loop and the provision of services over it.
13. The Director has not determined the precise drafting of the terms of the Agreement. He is not required to do this either under paragraphs 19 or 20 of the Condition or by Article 4(2) of the EC Regulation. It is for BT to amend the text of the ANF Agreement to comply with this determination.
14. The Director has not determined in this determination;
1. the prices to be charged by BT for any Access Network Facilities; or
2. the complaint made by a group of OLOs that BT is unduly discriminating in favour of its own business in the installation of equipment allowing broadband access to the local loop contrary to the Condition and/or section 18 of the Competition Act 1998;
   
   and nothing in this Determination, or in the Statement accompanying it, should be read as implying the Director’s view on either of these matters, which have been or will be dealt with separately.
15. Paragraph 23 of the Condition requires the Director to state his reasons for his determination. His reasons for the changes to be made to the ANF Agreement are explained in this Determination and in the accompanying Statement.

Pursuant to Article 4(2)(a) of Regulation (EC) 2887/2000 and to Condition 83 paragraphs 19 and 20 of the BT Licence, the Director General of Telecommunications makes the following Determination:

1. The terms and conditions of the reference offer which BT must offer to any Operator, under Article 3(1) of the EC Regulation and Condition 83.19 of the BT Licence, shall be, or shall provide, as set out in the Annex to this Determination.

2. With effect from the date of publication of this Determination, any term or condition of any agreement for the provision of Access Network Facilities between BT and any Operator which is inconsistent with this Determination shall not be enforceable by BT

3. BT shall

4. Except as otherwise defined in this Determination or in the Annex to it:

                    4.3   in the Annex, references to Agreement or to Clauses or Parts shall be interpreted as references to the ANF                              Agreement in the version published by BT on 4 September 2000 and to Clauses or Parts of it.

February 2001

ANF Agreement Determination

Head 1

1.1    Allocation of Space (Part I)

There are no directions under this head.

1.2.1 BT shall on request disclose the amount and configuration (the location and the siting of connections and facilities) of space available for Co-location at an MDF Site.

1.2.2    BT shall make available on request floor plans for each MDF Site. The plans shall be annotated to show the space (if any) which exists and are available to Operators for Co-location. BT may exclude from the floor plan confidential information (for example as to the nature or function of its own equipment occupying space). Subject to reasonable confidentiality provisions, BT shall also disclose for each exchange at an OLOs’ request all information relating to its own use of that exchange building (whether actual or planned) which would restrict the amount of space available for Co-location in that exchange building. If the available plan is not up-to-date, BT must nevertheless disclose it, marking or describing later changes as appropriate.

1.2.3    The Agreement shall allow an Operator’s request for Co-location at a particular exchange to be treated as a request for distant (remote) Co-location if there is no space within that exchange building for Co-location.

1.2.4 BT shall be contractually obliged to offer Co-location to an operator wherever space is available and shall be obliged to provide the necessary facilities to link up with distant location facilities wherever these are established, on reasonable demand.

1.2.5 If BT informs the Operator that it is unable to provide co-location due to unavailability of space, the Operators may use the dispute resolution procedure under Clause 20

1.2.6 Survey results shall be made available to all Operators on reasonable request. The Agreement shall specify the conditions for Operators to inspect exchanges at which co-location is available, or where co-location has been refused on grounds of lack of capacity. BT shall not charge eac