Europe gives Ofcom the greenlight for Dark Fibre plans

Having published new rules on Dark Fibre and ‘ducts and poles’ access in May, Ofcom has made no material changes following a review from the European Commission.

The rules are another attempt by Ofcom to encourage more competition in the fixed market and therefore increase investments made by the telcos in offering services in regions which could be deemed as less commercially attractive. Openreach might not be the happiest for the situation, but it is a step towards shortening the digital divide which has emerged in the UK.

Starting with the ducts and poles element, Ofcom has confirmed telcos laying fibre cables for broadband and mobile networks will benefit from greater access to Openreach’s existing infrastructure. The watchdog has used the phrase ‘unrestricted’ though we struggle to believe there are no loop-holes for Openreach to play around with.

This is not necessarily new from Ofcom, but it is an extension of rules which were passed last year. To this point, Openreach had been compelled into opening up access to the infrastructure for competitors serving residential customers and small businesses, though this update extends the rules to large businesses as well.

With enterprise services plugged as the biggest gain for telcos during the 5G era, the greater access to infrastructure competitor telcos have, the more attractive the business case will be for investment and therefore creating innovative services for the verticals. That said, Openreach will not be as happy as others.

This is a former-monopoly which has reaped the benefits of being the dominant player in the market. Employees will be tasked on protecting and profiting as greatly as possible from assets, though if the regulator keeps opening up infrastructure, this becomes more difficult.

The second area worth noting from this ratification from the European Commission addresses Dark Fibre across the country. This is an area Openreach has fought bitterly against though it seems it could only hold back the tide for so long.

The new rules will force Openreach to offer Dark Fibre as a product to other telcos in areas there are no rival networks present at Openreach’s exchanges. These are the areas where Openreach has a continued monopoly thanks to prior public investment and there is a risk of damaging the business case for competitors.

Under the new rules, in these areas where competition is unlikely to emerge organically, ‘dark fibre’ can now be ‘lit’ by competitors with their own equipment. Openreach will be required to give competitors physical access to its fibre-optic cables, at a price that reflects the cost of laying the infrastructure. In areas where there is competition, pricing regulations will be lighter.

Although these new rules are unlikely to be the most profitable for Openreach, there will be plenty of happy faces around the UK. Telcos have been complaining about the regulatory barriers to achieving the perfect 5G/fibre dream the Government has dreamt up, and this is one step in the right direction.

Ofcom forces Openreach to open up again and reintroduces Dark Fibre

Ofcom has proposed new rules which will force Openreach to open up more of its network to other communications service providers.

Access to ducts and poles owned by Openreach has been a point of interest for Ofcom for some time, and now it appears the regulator is gathering momentum. As it stands, Openreach has to offer rivals access to its telegraph poles and underground ducts when providing services to consumers and SMEs, though the new rules will extend this ‘co-operation’ to enterprise scale and mobile backhaul connectivity services.

“The amount of internet data used by people in the UK is expanding by around half every year,” said Jonathan Oxley, Ofcom’s Competition Group Director. “So, we’ll need faster, more reliable connections for our homes, offices and mobile networks.

“Our measures are designed to support the UK’s digital future by providing investment certainty for continued competitive investment in fibre and 5G networks across the country.”

Although the likes of Virgin Media, TalkTalk and CityFibre are among the firms already using Openreach’s ducts and poles, to date the rules have been somewhat of a halfway measure. Improving access to Openreach infrastructure will improve the potential business case for all telecom services, offering greater prospects for competition.

The draft rules also bring the Dark Fibre discussion back into the fray.

In areas where BT faces no competition, Openreach would be required to give competitors physical access to its fibre-optic cables, at a price that reflects its costs. BT has always argued against the Dark Fibre suggestions from Ofcom, with the telco challenging rules brought forward by the regulator in the 2016 Business Connectivity Market Review.

BT’s legal challenge focused on the market definitions Ofcom used in the market review, with the Competition Appeal Tribunal (CAT) agreeing with the telco:

“The Competition Appeal Tribunal has found Ofcom to have erred in relation to various aspects of the decisions concerning market definition under appeal and required Ofcom to look again at some specific matters concerning market definition.”

This of course did not end the pursuit of Dark Fibre, but it did send Ofcom back to the drawing board. What is worth noting is that BT is not the only infrastructure owner to find issues with the obsession with lighting up Dark Fibre.

Following the decision from CAT, Ofcom promised to do better next time, much to the dismay of CityFibre.

“However, whilst the quashing of the BCMR is welcome, Ofcom’s response today appears to double down on its misguided approach to assessing the scope for competition whilst maintaining its flawed fixation with regulated dark fibre access,” said Mark Collins, Director Strategy & Policy at CityFibre.

“It’s pessimism about the prospects for real, infrastructure-based competition perversely restricts alternative providers’ ability to compete.”

The argument from the likes of CityFibre and BT is relatively simple. Dark Fibre removes the drive for infrastructure investment. Why would rivals want to spend money on fibre deployment when they could just force those who are making the plunge into working with them. It could potentially create a position where everyone is sitting, waiting on the starting line, waiting for a rival to twitch first.

That said, Vodafone does not feel the Dark Fibre rules go far enough.

“We support competition, but Ofcom’s proposals to grant access to dark fibre only on the fringes while loosening its price controls on BT Openreach will mean businesses and the public sector paying more to meet their connectivity needs,” said a Vodafone spokesperson.

“There is an alternative. Providing universal access to dark fibre now would give the UK the connectivity it needs, at a price everyone can afford. Sadly this is another opportunity Ofcom has missed to plug the full fibre hole in the UK.”

What is worth noting is that these rules are draft proposals for the moment. There is likely to be push-back from the likes of Openreach and CityFibre, and perhaps legal challenges in the mid-term. What rules are eventually introduced might look very different in a couple of months.

UPDATE: 24/05/19, 12.20pm: Openreach has released the following statement:

“Last year we delivered our best ever service performance, but we want to keep improving and we share Ofcom’s desire to improve service across the industry.

“Our ducts and poles have been open to other companies since 2011, and we recognise that unrestricted access is a natural next step, so we had volunteered to get on with that, ahead of Ofcom’s original schedule.

“We welcome the greater clarity around Dark Fibre and the timeframe needed to deliver a fully functional product to market.

“We’ll consider the range of proposals carefully, and we’ll continue to work with Ofcom on developing an environment that encourages greater investment.”

A post-Brexit Ofcom worries us – Vodafone

With the anti-China rhetoric dominating the headlines in recent months, Brexit chatter has become unfashionable. But with the deadline fast approaching, what will Ofcom look like in the future?

Speaking at a breakfast briefing in London, Vodafone UK Chief Counsel and External Affairs Director Helen Lamprell let loose on the UK regulator. Cell tower height, rural roaming, potential reintroduction of international roaming charges, dark fibre and auction dilemmas, there seemed to be a lot of venting going on.

“The UK remains a challenging environment [regulatory], one of the most challenging in the world,” said Lamprell. “But we are seeing positive change.”

The issue which Vodafone is keeping an eye-on is Brexit. According to Lamprell, Ofcom is one of the most conservative regulators throughout the bloc, though when it is freed from the tethers of the Body of European Regulators for Electronic Communications (BEREC), there is a risk it could become even more so.

There isn’t necessarily one massive bugbear from the telco, but several little aggravations which all combine to a much larger nuisance. Let’s have a look at mast height to start with.

Everyone wants signal, but no-one wants towers

As it stands, UK cell towers are limited to 25 metres in height. This obviously doesn’t take into account those masts which are placed on the top of buildings, just the actual structure itself. In most cases, this doesn’t have a massive material impact on operations, such is the population density of the UK, but when you look at countryside locations it becomes a much larger discussion.

Part of the up-coming 5G spectrum auctions will place coverage obligations on telcos. This is a reasonable request by the government, as telcos have shown they will not bridge the digital divide on their own, though as it stands 99% of the UK population is currently covered. Geographical coverage is no-where near this figure, though as there is little commercial gain from providing coverage to these remote locations, reaching the 90% objective is difficult.

One way which this could be done is by providing exemptions to the 25-metre limit in certain situations, such as the countryside, as CTO Scott Petty pointed out, for every 10-metres you go up the coverage ring is doubled.

All four of the major UK MNOs (EE, O2, Vodafone and Three) are meeting with the Department of Digital, Culture, Media and Sport (DCMS) this afternoon, and this will be a point on the agenda. Should these exemptions be granted, it opens the door for shared infrastructure also, as the main cost of these structures is civil engineering and construction, not the equipment on the tower. Both of these developments combined would aid the telcos in reaching the geographical coverage objectives.

This brings us onto another interesting point raised by Lamprell, rural roaming.

My restless, roaming spirit would not allow me to remain at home very long

“Rural roaming takes away our incentive to invest,” Lamprell said. “It’s a really, really dumb idea.”

Three are one of the companies pushing for rural roaming, but as the Vodafone team points out, it is the only MNO which hasn’t built out its rural infrastructure. However, should rural roaming be introduced it would cause a stalemate for investment.

As Petty points out, why would any MNO invest in its own infrastructure when it could force its way onto a competitor’s? All the telcos would be sitting on the starting line, waiting for another to twitch first, such is the pressure on the CAPEX spreadsheet column when investing in future-proofed infrastructure.

Moving onto the international roaming question, Vodafone is staying pretty agile right now. As it stands, the status quo will be maintained, though the team will react to the commercial realities of a post-Brexit landscape. Currently, as a member of the European Union, Vodafone is protected from surcharges when it comes to termination charges, though those protections will end with Brexit.

Vodafone has quite a significant European footprint, in most cases there is little to worry about, but for those territories which fall outside the Vodafone stomp, negotiations will have to take place.

There are several countries, Estonia is an example, which has higher termination rates than the UK. If the reality of a post-Brexit world is Vodafone is swallowing up too many charges from international calls/SMS/data, roaming charges might have to re-introduced in certain markets. This is all very theoretical currently however Ofcom will prevent Vodafone from replicating these charges from the European nations. Vodafone is sitting and waiting for the realities of Brexit right now, though it will not be a broad-brush approach.

“Our position today is to maintain the position we are in, but we will have to evaluate the situation at the time,” said Lamprell.

Ignore Luke, the Dark Side is great

Dark fibre. It used to be a popular conversation, but everyone seems to have forgotten about it recently.

Not Lamprell.

The focus of Ofcom over the last 12 months or so has been on opening-up ducts and poles, and while this certainly is progress, it only addresses part of the problem. Dark fibre is an aspect of the regulatory landscape which could add significant benefits to the industry but has seemingly become unfashionable.

Dark fibre, fibre cabling which is not currently being utilised by Openreach, could answer the backhaul demands of the increasingly congested networks quickly and efficiently. Mainly as it is already there. There is no need to dig up roads, apply for planning permission or procure new materials, it could be as simple as flicking a switch.

Openreach resistance and Ofcom’s aggressive focus on ducts and poles is perhaps missing a trick.

Going, going, maybe not yet

The UK is currently in somewhat of an unusual and unprecedented situation. It is one of the nations leading the world into the 5G. This is not to say it is in a podium position, but compared to the 4G era, the UK is sitting pretty.

Part of the reason for this has been early auctions to divvy up spectrum assets, however, moving forward there are some irregularities which is causing some head-scratching.

Later this year, Ofcom will kick-start another auction which will see 120 Mhz of spectrum in the 3.6-3.8 GHz bands, as well as 80 MHz in the 700 MHz band go up for sale. For both Lamprell and Petty, this auction doesn’t make sense. These are two bands which will be used for different purposes (coverage and speed) so why auction them off together.

If Vodafone had known this was going to happen back in April 2018, during the first spectrum auction, it might have altered its strategy.

“We could end up with a very fragmented spectrum situation,” said Petty.

From the team’s perspective, it seems Ofcom has only just woken up to the coverage demands of the UK government, and is using this auction as a blunt tool to meet the objectives. From an engineering perspective it doesn’t seem to make much sense to Vodafone.

“We are not happy with the rules,” said Lamprell. “But it’s rare for us all [MNOs] to be happy.”

Looking good but looking suspect

The UK is currently in a good position ahead of the 5G bonanza from an engineering perspective. With test hubs being set up around the country and telcos who are acting proactively, the UK looks like an attractive environment to invest in for R&D. It is by no-means leading the global 5G race, but it is in a healthy position.

However, political and regulatory uncertainty are a threat to this perception. The activities and culture of both DCMS and Ofcom over the next couple of months will has a significant impact on the 5G fortunes of the UK, as well as the ability to attract new talent, companies and investment.

Ofcom’s competitiveness quest continues with another ducts and poles assault

Ofcom has unveiled its latest edition of its business connectivity market review with an all too familiar feel; how can it force Openreach and BT to play nicer with competitors.

As with any former state-owned monopoly, BT/Openreach is in the enviable position of having the groundwork already laid for future-proof infrastructure. Of course it has not done enough across the years to meet the demands of tomorrow’s fibre-based diet, though one factor behind this is a lack of external pressure on the business. Without competition, the enforced need to invest and innovate is not there. This is ultimately Ofcom’s objective; create an environment which encourages other ISPs to lay their own connectivity foundations, decrease the reliance on Openreach and improve connectivity options for the consumer.

“We want to give companies greater flexibility to lay fibre networks that serve residential or business customers,” Ofcom said in a statement. “So today, we are consulting on proposals to allow access to Openreach’s ducts and poles to companies offering any type of telecoms services including high-speed lines for large businesses, networks carrying data for mobile operators and high capacity lines supporting broadband services. We intend to implement this unrestricted duct access from spring 2019.”

This review focuses on the areas where there is minimised or no competition for BT. Ofcom believes BT currently has almost 5,600 local exchanges, though at roughly 5,000 of these sites there is competition from fewer than two competitors. BT’s position has been deemed unacceptable in these areas.

Starting with the areas where there is evidence of potential competition, but BT still maintains ‘significant market position’, Ofcom will no longer impose a cost-based charge control or quality of service standards on BT’s wholesale services, which combined with access to BT’s ducts and poles, the theory is competitors will have a stronger incentive to build their networks.

In areas where network competition is unlikely to be a reality, Ofcom has proposed a price cap for services at 1 Gbps and below to protect customers and provide certainty and stability over the course of the review. What is worth noting is that this is a relatively short-review, as while the proposals could come into play next spring, 2021 would see a new review and therefore new proposals.

The final proposal comes at the 4,300 exchanges where BT faces no competition from rival operators for inter-exchange connectivity, and Ofcom has deemed opening up the ducts and poles will have little impact. Rival networks are too far from these exchanges to make it economically viable to serve these exchanges, therefore BT is the only choice as a supplier for backhaul. Ofcom is proposing a requirement for dark fibre at cost for inter-exchange circuits that connect to these locations.

This is of course not the first time the dark fibre suggestion has emerged from Ofcom. In April, Openreach officially launched a compromise between full dark fibre access and full managed service after months of bickering and reviews with BT attempting to resist the Ofcom intervention. Ofcom seemingly lost that battle, with fingers being pointed at suspect market definitions, though now it appears ready to restart the assault.

This is of course only the consultation stage of the process, though the plans are to get the new rules in place by next spring. Whether this timetable is realistic with the almost guaranteed legal challenge from BT remains to be seen, but this is just another step in the never ending Ofcom quest to improve connectivity and competition across the UK.

The Openreach virtual dark fibre service finally sees the light of day

Six months after proposing a compromise between full dark fibre access and full managed service, Openreach has formally launched ‘virtual dark fibre’.

The proper name for this fibre wholesale service is Optical Spectrum Access Filter Connect and the thinking behind it was explained to us by Openreach General Manager of High Bandwidth and Passive Services, Darren Wallington, in October of last year. In essence it aims to combine the service assurance and response times of a managed service with the scalability and flexibility sought from dark fibre access.

“We’ve re-engineered our high-bandwidth optical services to give our wholesale customers far greater flexibility at a fantastic price,” said Wallington. “OSA Filter Connect allows providers to grow their needs affordably, at their own pace and using their choice of innovative equipment.

“By innovating a virtual dark fibre service, we can give customers that extra flexibility whilst still being able to monitor our network and respond to faults and issues proactively. With a regulated dark fibre access product, we would’ve literally been left in the dark with no monitoring capabilities and significantly longer service interruptions due to the reactive nature of fault reporting, but this means we can commit to a national five-hour response time.”

Pricing seems to be one of the things Openreach has worked on a fair bit on the last six months, much of which have been spent in what Openreach characterizes as ‘proper, constructive engagement’ with UK stakeholders. Additionally it has received a significantly increased level of direct lobbying from MNOs, keen to get ahead of the game on 5G fronthaul and backhaul.

“We’ve listened closely to our customers,” said Wallington. “They wanted something that would address the perceived failings of a ‘one size fits all’ regulated product and they’ve helped us to shape the product we’re launching”

“Both large and small customers told us they wanted a service that offered more competitive high bandwidth pricing with low incremental scaling costs. They also wanted more flexible and configurable services that give them more control, the ability to support fast evolving technology – like synchronization, and more efficient use of space and power.”

It’s not for us to say whether or not this is the right solution to the dark fibre access issue, but it does seem like a good-faith attempt by Openreach to balance a number of different factors and needs. We’ve copied the new pricing tables below to help you make up your own mind.

 

*Pricing – OSA filter connect prices below, note the 5 year term variant is less than our original consultation range

This provides CPs with a 10GB managed service with spare filter ports that they can use to scale to higher bandwidth by themselves with no additional costs from Openreach. We will continue to offer additional Managed Wavelengths for those CP’s who prefer a managed service at very competitive price points.

Product Minimum Period Connection £ Exc VAT Rental per annum £ Exc VAT
OSA Filter Connect FSP3000 – 12 month 12 month £15,550 £7,845
OSA Filter Connect FSP3000 – 36 month 36 month £12,233 £6,276
OSA Filter Connect FSP3000 – 60 month 60 month £12,233 £5,775

* Can be upgraded to 20Gb without a site visit

 

EAD 10Gb will see connection prices reduced by up to 32% and rentals by up to 53%

At the same time the 5 year term variant will now in effect make be a 3 year term product, as we’ve set the early termination charges for Year 4 and 5 to zero.

Product Charge type Current Price New price for 3 April 2018 Price reduction
EAD 10000 Connection £5,990 £5,590 -6%
EAD 10000 Rental £10,500 £4,980 -53%
EAD 10000 (60 month minimum period) Connection £5,990 £4,090 -32%
EAD 10000 (60 month minimum period) Rental £8,400 £4,380 -48%
EAD Local Access 10000 Connection £5,990 £5,590 -6%
EAD Local Access 10000 Rental £7,500 £4,146 -45%
EAD Local Access 10000 (60 month minimum period) Connection £5,990 £4,090 -32%
EAD Local Access 10000 (60 month minimum period) Rental £6,000 £3,648 -39%

 

Dual Fibre mainlink, the headline rate will be reduced from 37.2p to 24p

OSA Main Link charge feature Current price (pence per meter) Price on 3 April 2018 (pence per meter)
Main link per metre or part thereof  37.2 24.0
Main link + Standby link per metre or part thereof  82.8 57.6
Diverse main link per metre or part thereof 42.0 28.8

 

Ofcom is not giving up on its dark fibre quest

BT/Openreach has been accused of guarding its network for some time, and the latest consultation from Ofcom is another chapter in the watchdog’s mission to break the market dominance.

Despite BT’s legal team hitting back at Ofcom in July, Dark Fibre Access (DFA) is back in action with the launch of the new consultation. Let’s hope this time the Ofcom bods have got their own house in order after muddling market definitions was its downfall on the first assault.

“We consider in this consultation whether to add a requirement on BT to provide dark fibre in addition to the other remedies imposed in the BCMR Temporary Conditions Statement,” the document reads. “As part of this dark fibre consultation, we are also consulting on the market definition and SMP assessment set out in the BCMR Temporary Conditions Statement.”

The idea of course is simple. Ofcom’s believes BT is ready and able to provide dark fibre products, which would make the telco space in the UK better for everyone. Whether it is to improve productive efficiencies by allowing providers to reduce equipment costs, or enhancing dynamic efficiencies by offering telecoms providers more scope to innovate, there does seem to be arguments in Ofcom’s favour. Of course, another advantage for Ofcom is that it would make regulating the market simpler.

The new approach is as such; Ofcom has split contemporary interface symmetric broadband origination (CISBO) services into two areas to tighten up definitions. Lumping everything together is perhaps one of the reasons for the downfall, but of course that will be up to the courts to decide. Ofcom now looks at CISBO as two separate areas bandwidth up to 1 Gbps, and everything else above it.

Since giving the Ofcom bods a lesson in the courts, BT/Openreach has introduced an alternative Optical Spectrum Access (OSA) Filter Connect, which gives telcos access via an Openreach managed service, though Ofcom does not believe this is a suitable alternative to its own DFA idea. There might have been some initial good feedback for BT’s OSA, but this might be down to a ‘better than nothing’ mentality. But just because it is better, doesn’t mean that it is the best option for the telco industry.

“We’re very surprised by Ofcom’s decision and disappointed given the clarity of the CAT judgement and Openreach’s commitment to developing new, alternative products which can meet the demand for Dark Fibre,” said an Openreach spokesperson.

Ofcom is clearly not going to go away. BT/Openreach clearly wants to hold onto its dominant position in the market, and who wouldn’t want to. As with all of these arguments, it will probably end up in the courts before too long, and there is probably a logical solution in the middle somewhere. But of course it will take a while to find that logical middle position.

Openreach proposes dark fibre compromise

Having successfully resisted pressure to provide full dark fibre access to high bandwidth customers, Openreach is proposing a managed but scalable alternative.

Back in the middle of 2016 Ofcom decided Openreach should offer dark fibre access (DFA), but the latter referred the ruling to the Competition Appeal Tribunal, which overruled. Openreach accordingly pulled the plug on DFA, but promised to come up with an alternative.

In an interview with Telecoms.com, Openreach General Manager of High Bandwidth and Passive Services, Darren Wallington explained that alternative has been presented to Openreach customers this week and takes the form of OSA Filter Connect. OSA stands for Optical Spectrum Access and, in essence, this proposal aims to decouple connectivity and scalability. There will now be a one-month consultation period, the results of which Openreach aims to respond to by early December.

OSA itself has been around since 2009. It’s designed for B2B high bandwidth uses such as financial services, datacenters and public sector as well as optical backhaul. Historically it has been a fully managed service but it seems that customers want to be able to scale their bandwidth independently.

The diagram below illustrates Openreach’s proposed solution which combines at least one managed wavelength (the yellow/purple lines) but then all the other wavelengths are controlled directly by the customer. Currently OSA has 4 and 32 channel options, but Openreach intends to introduce 8 and 16 channel ones too. The technology currently supports up to 10 Gbps per channel but expects to support 100 Gbps at launch, which would, in theory, enable a bandwidth of over 3 Tbps.

Openreach OSA Filter Connect

We asked why Openreach is so resistant to DFA and Wallington explained the biggest drawback concerns response and repair time. While Openreach itself has at least one channel open it can monitor the network and commits to a 5-hour response time, but it has provided evidence to show that in the case of DFA the best it can offer is 18 hours.

Regarding the historical allegations that Openreach may not treat all its customers in the same way Wallington pointed to its Equivalence of Inputs obligations as well as the high level of scrutiny it faces from the likes of Ofcom. On the matter of pricing he was keen to point out how competitive the high bandwidth market is, and with the likes of Colt, Virgin Media, Verizon and Vodafone among its competitors, that’s hard to argue with.

Wallington said the proposal appeared to be warmly received by customers and if the consultation results in a green light OSA Filter Connect could be live as soon as 1 April 2018 and will even be backward compatible. There have been many legitimate grievances levelled at BT/Openreach by its customers in the past, but this comes over as an honest, well-intentioned proposal to resolve their concerns and deliver a solid solution. Let’s see if those customers agree.