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Report on the implementation of BT's Undertakings

Introduction

On 22nd September 2005 Ofcom decided, instead of making a reference to the Competition Commission, to accept undertakings from BT to address a number of competition concerns in the telecoms markets¹. This report, the fifth in a series of reports, provides information on BT’s progress toward implementation of its Undertakings.

In each area of the Undertakings, this report describes:

relevant sections in the Undertakings and the primary owner;
progress made by BT and/or Openreach towards delivering on its commitments (and, where relevant, relevant activity by Ofcom and others);
future commitments in the Undertakings that need to be delivered and dates/milestones where these are specified; and
any major outstanding issues or risks that have been identified to date.

To maintain clarity within the document, milestones which have passed, and on which there are currently no significant open issues, have been moved into Annex 1.

The aim of each report is to provide an up-to-date statement of recent progress in respect of the Undertakings and related areas and does not, therefore, contain the content of the previous report in an unedited form. Readers are therefore urged to read previous reports for information on progress prior to the last quarter and a more complete picture of overall progress.

It should be noted that whilst the implementation reports describe BT implementation in respect of its Undertakings, any statements will not be definitive as Ofcom can only reach a definitive view of compliance by undertaking the full process of enforcement action. Any statements made by Ofcom are based on the information currently before it and will not, and can not, prejudice the outcome of any enforcement action should a complaint be received or further information come to light.

Where reference is made to the content of the Undertakings, particularly in relation to future commitments/deliverables, in the event of any difference between this document and the Undertakings the text of the Undertakings takes precedence.

BT publishes a quarterly set of product key performance indicators. Included within that is a set of product KPIs, intended to compare product performance between BT’s external and internal customers².

More information on progress on implementation of the Undertakings is available on the Ofcom website at: http://www.ofcom.org.uk/telecoms/btundertakings/ and on the BT website at: http://www.undertakingsbulletin.com/.

Should you wish to discuss this report, or have comments on it, please contact Will Hayter on 020 7783 4197 or via email to: william.hayter@ofcom.org.uk

Summary

This section contains a summary of the most notable points from the comprehensive table over the following pages.

Since Ofcom's last quarterly report on BT's progress in implementation of its Undertakings, BT has missed three important deadlines. Ofcom will be working closely with BT to ensure that these problems are rectified as soon as possible.

In the meantime, discussions have been and are still ongoing on the remaining BT requests for exemption from equivalence of inputs for certain products.

Missed deadlines

In December, it was established that BT, either through BT announcements or following an assessment by the EAB, had missed or was going to miss three deadlines related to the delivery of EoI systems:

30 June 2006 LLU RFS: the EAB came to the independent view that BT was in breach of its LLU RFS commitment. The EAB’s description was that this was a “trivial” breach. As a consequence of this breach, BT has agreed to make allowances in accordance with section 3.2.2.
31 December 2006 WLR RFS good faith deadline: on 5 December 2006, BT announced that it would not meet its planned timetable of early delivery of RFS on analogue WLR by 31 December 2006. As a consequence, BT has agreed to make allowances in accordance with section 3.2.1 of the Undertakings.
31 December 2006 SMPF IBMC: BT has announced that it has failed to meet the Undertakings deadline for IPStream consuming LLU. The EAB has described this as a “non-trivial breach” of the Undertakings. BT has committed to resolve this failure by March.

The missing of these deadlines gives rise to concerns both on the part of Ofcom and of industry, both in terms of the delay in moving to equivalence and impact on future milestones.

Other developments

Ofcom is concerned that there needs to be a product/pricing strategy across the WES-A, WES-B and WEES portfolio that makes the whole Ethernet portfolio viable.

Ofcom remains concerned over the quality and stability of the existing EMP implementation for LLU. This, combined with the missed WLR early delivery milestone raises further concerns over BT’s ability to meet the WLR RFS date of 30 June 2007, given that ramp-up towards production volumes will not begin until April.

On 18 October, Ofcom published a variation to two sections of the undertakings relating to systems separation, putting in place three defined levels of separation. BT has committed to provide, by 30 June 2007 and following consultation with Ofcom, a roadmap describing the plan for reaching Level 2 separation by 2010 for listed systems.

BT made a number of requests for exemption of certain products from equivalence of inputs requirements under sections 5.46. Following consultation, Ofcom published a variation relating to nine of these requests on 21 December 2006. Four other requests, all relating to fibre, were also consulted on. Further time is required to consider these requests in light of consultation responses. As a result, a variation to the undertakings was made on 21 December 2006 to extend the deadline for agreement on these requests to 31 March 2007, and to extend the deadline for final expiry of the temporary exemption to 30 June 2007 if no agreement is reached³ .

On 21 December 2006, Ofcom also published a letter relating to two additional exemption requests which have not yet been consulted on (initial wideband planning and inter-exchange capacity planning), setting deadlines identical to the four fibre-related requests⁴.

Ofcom is closely monitoring the progress of implementation, and will continue to work actively with industry, Openreach and other parts of BT to ensure a successful resolution of the missed deadlines.

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

2 http://www.ofcom.org.uk/telecoms/btundertakings/exemptionsandvariations/ofcom201206.pdf

3 http://www.ofcom.org.uk/consult/condocs/statement_tsr/statement.pdf

4 http://www.btplc.com/Thegroup/Regulatoryinformation/Ourundertakings/KeyPerformanceIndicators/index.htm

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