LLU and WLR Charge Control - Further Consultation

  • Start: 23 November 2011
  • Status: Statement published
  • End: 23 December 2011

On 3 February 2012, Ofcom notified the European Commission of provisional new charge controls that will apply to certain services provided by Openreach, BT's wholesale access division. Ofcom will adopt the new controls, subject to the outcome of the European Commission's new consultation process.

This draft Statement is the substance of that notification. It contains Ofcom's proposals for new charge controls for Local Loop Unbundling (LLU) and Wholesale Line Rental (WLR) services. Ofcom is publishing this draft statement to provide transparency of the European Commission notification process as this is the first time this new procedure has been used for a major regulatory decision on telecoms in the UK.

Under the revised European Framework that was transposed into UK law in May 2011, Ofcom is required to submit charge control proposals to the European Commission for their review. The European Commission has one month to review the draft decision during which it can comment and/or initiate further examination. The Body of European Regulators for Electronic Communications (BEREC) and other equivalent EU Member State national regulatory authorities also have the opportunity to comment during this one month period.

This is a change to the previous process under which Ofcom consulted with UK stakeholders and the EU at the same time. Following the changes, Ofcom is now required to consult the EU after having undertaken a UK consultation. In this case, Ofcom carried out consultations in March and November 2011 to obtain the views of stakeholders including BT Openreach, its customers and its competitors. The provisional prices being notified to the EU by Ofcom already take account of the outcome of these consultations.

Charge controls for these services are being set as a consequence of our 2010 reviews of the Wholesale Local Access (WLA) and Wholesale Fixed Analogue Exchange Line (WFAEL) markets. In both markets, we identified that BT (Openreach) has Significant Market Power (SMP) and that charge controls are necessary as a remedy to Openreach's ability to fix or maintain prices at an excessively high level for LLU and WLR services in the respective markets.

As part of this charge control review, we undertook a further examination of the WLA and WFAEL markets to satisfy ourselves that there has not been a material change in either market since Ofcom's market power determinations in relation to those markets. As set out in this draft Statement, we have determined that there has been no material change to either market since the 2010 determinations and that it remains appropriate to set charge controls.

The previous charge controls expired on 31 March 2011. Since 1 April 2011 Openreach has been setting charges in accordance with a voluntary commitment. This voluntary commitment expires on 31 March 2012.

The charge control will cover two years (2012/13 and 2013/14) after which any extension of the controls will be subject to further market reviews.

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