Investigation into BT’s compliance with BCMR price regulation

18 July 2019

Open

Investigation into British Telecommunications plc (BT)
Case opened 18 July 2019
Summary

This investigation considers whether BT complied with its charging obligations under Ofcom’s Business Connectivity Market Reviews since 16 May 2014.

Relevant legal provision(s)

SMP Condition 5.2, which is set out at Annex 7 of the Business Connectivity Market Review statement dated 28 March 2013, and the accompanying Direction made pursuant to sections 49 and 49A of the Communications Act 2003 and paragraph (e) of SMP services Condition 5.2, which is set out at Annex 1 of the ECC Direction statement dated 16 May 2014.

SMP Condition 10F.8, which is set out at Annex 35 of the Business Connectivity Market Review statement dated 28 April 2016.

SMP Condition 9C, which is set out at Annex 1 of the Business Connectivity Market Review Temporary Conditions statement dated 23 November 2017.

Ofcom’s Business Connectivity Market Reviews examine the markets for the provision of leased lines in the UK. Leased lines are high speed, high-quality, point-to-point data connections that telecoms providers use for connecting offices, mobile base stations and broadband access networks. As such, they are essential to support the provision of mobile, business and residential broadband services, and form the backbone of the UK’s digital infrastructure.

Excess Construction Charges (ECCs) are charges levied by Openreach to recover the costs of customer-specific network construction required to extend BT’s existing network out to where the customer requires the new connection. ECCs are a product within the business connectivity markets.

Since 16 May 2014, BT has been subject to an obligation to exempt certain new provisions of business connectivity services from the first £2,800 of excess construction costs (the ECC exemption). BT is allowed to make up the resulting loss of revenue with a balancing charge which is part of the standard connection charge for all relevant business connectivity services.

BT has provided Ofcom with information indicating that Openreach may not have correctly applied the ECC exemption to a number of relevant business connectivity orders since the beginning of the ECC exemption regime.

Having considered the information provided by BT, we have decided to open an investigation to examine whether there are reasonable grounds to believe that BT has failed to comply with its obligations under the following SMP conditions from 16 May 2014:

  1. SMP Condition 5.2, which is set out at Annex 7 of the Business Connectivity Market Review statement dated 28 March 2013, and the accompanying Direction made pursuant to sections 49 and 49A of the Communications Act 2003 and paragraph (e) of SMP services Condition 5.2, which is set out at Annex 1 of the ECC Direction statement dated 16 May 2014.
  2. SMP Condition 10F.8, which is set out at Annex 35 of the Business Connectivity Market Review statement dated 28 April 2016.
  3. SMP Condition 9C, which is set out at Annex 1 of the Business Connectivity Market Review Temporary Conditions statement dated 23 November 2017.

Case leader

Georgi Pojarliev (Georgi.Pojarliev@ofcom.org.uk)

Case reference CW/01246/06/19