Dispute between Opal Telecom and Openreach about Local Loop Unbundling migration charges

02 June 2006

Dispute between: Opal Telecom ("Opal") (part of the Carphone Warehouse Group) and Openreach (a BT Group business)
Case opened: 3 February 2006
Case closed: 1 June 2006
Issue: Opal requested that Ofcom resolve a dispute between Opal and Openreach over the rate charged by Openreach for bulk Loop Unbundling (LLU, otherwise known as Metallic Path Facility, or MPF) migration.
Relevant instrument: Ofcom resolved this dispute under Chapter 3 of Part 2 of the Communications Act 2003.

On 1 June 2006 Ofcom issued a Determination under Sections 188 and 190 of the Communications Act 2003 resolving this dispute.

Please see bottom of page.

Case Leader: Nick Morris (020 7783 4332 e-mail:nick.morris@ofcom.org.uk)
Case reference: CW/00889/01/06

Text published when the case was opened

Dispute between: Opal Telecom ("Opal") (part of the Carphone Warehouse Group) and Openreach (a BT Group business)
Case opened: 3 February 2006
Issue: Opal has requested that Ofcom resolve a dispute between Opal and Openreach over the rate charged by Openreach for bulk Loop Unbundling (LLU, otherwise known as Metallic Path Facility, or MPF) migration.
Relevant instrument: Ofcom intends to resolve the dispute under Chapter 3 of Part 2 of the Communications Act 2003.

Update note – 28 April 2006

Ofcom published its proposals to resolve this dispute on 28 April 2006. Please see the related item.

Ofcom will be consulting on its proposals until 5pm on 15 May 2006. Please send responses to:

Nick Morris
Competition and Markets
Ofcom
Riverside House
2a Southwark Bridge Road
London SE1 9HA

Or by e-mail to nick.morris@ofcom.org.uk

End of update note

Update note – 24 February 2006 :

Opal and Openreach are in dispute over the rate to be charged by Openreach for migration in bulk of customer lines from WLR services to full unbundled local loops (‘full bulk migration'). In particular, Opal has claimed that the refusal by Openreach to extend the offer rate of £20 per customer line (offered for migration in bulk of customer lines to ‘shared' loops, or ‘shared bulk migration') to full MPF is discriminatory, in contravention of Openreach's obligations under its Significant Market Power (“ SMP ”) Conditions, set following Ofcom's review of the wholesale local access market. Following failure to resolve the matter through commercial negotiation, Opal has referred the matter to Ofcom for resolution.

Ofcom recognises that on the face of the referral, there appears to be a dispute between the parties that commercial negotiation has failed to resolve.

Following submissions by the parties, Ofcom has revised the scope of this dispute.

The scope of the dispute is to determine the appropriate charge to be paid by Opal to Openreach for bulk migrations to full MPF, taking into account:

a. Openreach's obligation to offer a cost-oriented charge based on long-run incremental costs, as set out by SMP Condition FA 3.1; and

b. Openreach's obligation not to unduly discriminate against communications providers, as set out by SMP Condition FA 2.1, given the current limited period special offer price of £20 for shared bulk migration offered by Openreach.

End of Update note

Opal and Openreach are in dispute over the rate charged by Openreach for migration in bulk of customer lines from CPS/WLR services to full unbundled local loops ('full bulk migration'). In particular, Opal has claimed that the refusal by Openreach to extend the offer rate of £20 per customer line (offered for migration in bulk of customer lines to 'shared' loops, or 'shared bulk migration') to full MPF is discriminatory, in contravention of Openreach's obligations under its Significant Market Power ("SMP") Conditions, set following Ofcom's review of the wholesale local access market. Following failure to resolve the matter through commercial negotiation, Opal has referred the matter to Ofcom for resolution.

Ofcom recognises that on the face of the referral, there appears to be a dispute between the parties that commercial negotiation has failed to resolve. There is also likely to be an imbalance of market power between the two parties which Ofcom will consider when resolving the dispute.

Scope of the dispute:
The scope of the dispute is to determine as follows:

a. whether by charging lower rates (£20 per customer) for shared bulk migration than for full bulk migration (the £34.86 maximum charge prescribed by Ofcom in its review of the wholesale local access market), Openreach is unduly discriminating against communications providers such as Opal in contravention of SMP Condition FA 2.1 ; and

b. whether Openreach has contravened its obligation to offer a cost-oriented charge for full bulk migration based on long-run incremental costs, as set out by SMP Condition FA 3.1.

Procedural matters:
Guidance on the resolution of the dispute can be found in Ofcom's Guidelines for the handling of competition complaints, and complaints and disputes about breaches of conditions imposed under the EU Directives. Please see related items.

All representations on the scope of the dispute should be submitted to Ofcom by 13 February 2006.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 20 February 2006, describing the relevance of the outcome of the dispute to their business. Stakeholders with relevant information and evidence in respect of this dispute should submit this to Ofcom by 20 February 2006. Stakeholders who wish Ofcom to join them as parties to the dispute must provide evidence, as set out in Ofcom's Guidelines, that they are in dispute with Openreach.

Case Leader: Nick Morris (020 7783 4332 e-mail:nick.morris@ofcom.org.uk)
Case reference: CW/00889/01/06