Companies wishing to provide high-speed telecoms lines for businesses would be granted access to BT’s fibre networks, under Ofcom proposals announced today.
The measure is designed to promote competition and innovation in the £2bn market for ‘leased lines’ - dedicated, high-speed data links used by large businesses and mobile and broadband operators to transfer data on their networks.
Leased lines also provide vital, high-capacity links for schools, universities, libraries and other public bodies.
Take-up of these lines is growing as consumers use more data on smartphones, tablets, and connected TVs, and companies shift ever-increasing amounts of information between locations to support sophisticated internet services.
To ensure that businesses have effective choice, and to encourage competition and innovation, Ofcom is proposing a new requirement on BT - the largest supplier in the market, upon whose network many competitors’ services rely - to supply ‘dark fibre’ in areas outside central London.1
Ofcom is proposing that BT should give competitors physical access to its fibre-optic cables, allowing competing operators to take direct control of the connection. This service is often referred to as dark fibre, because the fibre-optic cables would not be ‘lit’ using BT’s electronic equipment. Instead, they would be ‘lit’ by the competitor installing its own equipment at either end of the cable.
BT is already required to offer wholesale leased line products, which bundle the fibre-optic cable and BT’s own network equipment, at regulated prices to competitors. BT would still be required to provide these services, but the new proposal would go further, allowing operators to use BT’s fibre-optic cables with their own equipment, rather than rely on BT’s.
This should increase the opportunity for competitors to create tailored, high-capacity data links at cost-effective prices for their customers.
Today’s measures are part of Ofcom’s Business Connectivity Market Review. In the review, Ofcom is also proposing to place new, minimum quality of service performance requirements on Openreach, the division of BT that installs and maintains connections to BT's network on behalf of competing providers.
Ofcom is concerned that Openreach often takes too long to install leased lines, and too often changes the date on which it promises to deliver services.
Since 2011, the average time between a customer’s order and the line being ready2 has increased from 40 to 46 working days. The first new quality of service rule would require Openreach to return this average to 40 working days by 2017, and maintain it thereafter.
Leased lines often require complex, bespoke installations, and the completion date can change due to factors such as street works or difficulty accessing premises. Nonetheless, Ofcom is concerned that, last year, Openreach only completed around half of leased line installations on the initial date it promised to its customer.
So Ofcom is also proposing a second rule to require Openreach to meet the original dates it promises customers in 80% of cases by 2016, and then reach 90% by 2018.
These proposed requirements for business leased lines would follow strict quality of service performance standards that Ofcom has already imposed on Openreach in the consumer telecoms market. The new rules would apply to high-speed ‘Ethernet’ services, the most common type of leased line used by businesses.
Jonathan Oxley, Ofcom Competition Group Director, said: “High-speed, fibre optic leased lines are invisible to most people. But they form a critical building block in the UK’s infrastructure that underpins people’s personal and working lives.
“Today’s proposals should help businesses across the UK who rely on high-speed data lines. We want to see more innovation, faster installations and more competition, by providing operators with the opportunity to deploy the technologies of their choice.”
Ofcom is proposing to deregulate in some areas of the leased lines market, including lifting supply and pricing requirements on all but the oldest services in central London, where competition is now sufficient to make this unnecessary.
Ofcom is also proposing to remove requirements on BT applying to very low-bandwidth leased lines. These services are often analogue and operate at speeds below 2 Mbit/s. Although they are based on technology dating back to the 1980s, they are still used by a limited number of public and infrastructure organisations.
Many users of these lines are moving to modern, faster alternatives, and BT is managing an orderly withdrawal of very low-bandwidth lines. The company wants to cease accepting new orders in 2016, and complete the transition of remaining lines by 2020.
As the market is moving to newer, more sustainable alternatives, Ofcom is proposing to remove supply and pricing requirements on BT for very low-bandwidth networks. Ofcom will also help ensure customers understand how to migrate by engaging with industry regulators, user groups and providers over the coming years.
Today’s proposals are subject to consultation, closing on 31 July 2015. Ofcom expects to publish its final decisions in the first quarter of 2016, taking effect in April 2016.
As part of the dark fibre proposals, Ofcom would require BT to publish a draft ‘reference offer’ for industry, containing wholesale pricing and terms for access, in mid-2016.
This would then be subject to negotiation between BT and other providers, with a view to BT publishing a final reference offer before the end of 2016. Dark fibre access would then be available to telecoms providers from April 2017.3