1.1 In July 2013, Ofcom consulted on its proposals for market definition, SMP assessment and remedies across a number of fixed access markets ('the July 2013 FAMR Consultation').
1.2 In light of stakeholder responses, and our own further analysis, we consider that it is appropriate to consult further in relation to:
- the notification period for price reductions to the Wholesale Line Rental ('WLR') rental charge;
- the provision of information necessary to monitor BT's compliance with the fair and reasonable terms, conditions and charges requirement with regards to the margin for Virtual Unbundled Local Access ('VULA'); and
- pricing for Time Related Charges ('TRCs') and Special Fault Investigations ('SFIs').
Notification period for reductions to the WLR rental charge
1.3 In the July 2013 FAMR Consultation we proposed to apply a shorter notification period of 28 days for price reductions in the Wholesale Local Access ('WLA') market. However we retained the standard notification period of 90 days for WLR rental charges in the Wholesale Fixed Analogue Exchange Lines ('WFAEL') market.
1.4 In light of responses to the consultation, we consider that it is appropriate to propose a shorter notification period of 28 days for WLR rental price reductions in the WFAEL market, aligning the notification period with the WLA market.
VULA margin compliance
1.5 In the July 2013 FAMR Consultation, we proposed to impose on BT a requirement to provide network access on fair and reasonable terms, conditions and charges. We also set out proposed guidance on what is likely to constitute a margin between the price of VULA and downstream prices that is consistent with this obligation (the VULA margin).
1.6 We are now proposing to require BT to provide information necessary to monitor its compliance with this obligation in respect of the VULA margin. We therefore propose an obligation on BT to provide information on the VULA margin to Ofcom every six months.
TRCs and SFIs
1.7 In the July 2013 FAMR Consultation we proposed Basis of charges obligations for TRCs and SFIs provided by BT in relation to Local Loop Unbundling ('LLU') and WLR services, requiring BT to set charges on a forward looking fully allocated cost (FAC) basis (allowing for an appropriate return on capital employed), reflecting the average costs in any year.
1.8 In light of responses to the consultation we have conducted further analysis on the contestability of TRCs and SFIs and the costs involved in their provision. Following this, we now consider that a charge control is appropriate for those TRCs and SFIs which are reasonably necessary for the provision of services based on LLU, WLR, wholesale ISDN30 and wholesale ISDN2. We propose:
- a one-off reduction to each and every TRC charge in the range of 12-40% (with a base case reduction of 16%), with charges subsequently indexed to +0.2%; and
- that the hourly charge used to calculate SFI module prices should be aligned with the TRC "Additional Hour" charge, with charges subsequently indexed to +0.2%, and to extend the requirement for fair and reasonable charges on SFIs.
1.9 We invite comments from interested parties on the proposals in this document. The consultation period runs for one month, to 17 February 2014. Please see Annex 1 for details on how to respond.
1.10 Following consideration of consultation responses we expect to publish our Statement on the issues covered by the Fixed Access Market reviews in spring 2014.
Annex 6 (XLSX, 29.6 KB)