News
U.K. altnet performs dramatic volte-face as prospect of competing against BT in dark fibre market hits home.
CityFibre on Wednesday filed a legal challenge against Ofcom’s plan to force BT’s Openreach arm to offer dark fibre access, arguing that it will not stimulate investment in new infrastructure.
However, the lawsuit, filed with the U.K. High Court’s Competition Appeal Tribunal (CAT), probably has more to do with the fact that CityFibre, which provides a range of dark fibre services, would prefer not to face off against BT.
"We need to ensure that CityFibre and other fibre-optic infrastructure builders can invest against the background of a fair and balanced regulatory regime. We believe Ofcom is implementing poor and inconsistent regulation," said Mark Collins, director of strategy and public affairs at CityFibre, in a statement.
"We will defend our decisions, which are designed to ensure that consumers and businesses benefit from competition and investment in the market for high-speed lines," countered an Ofcom spokesman, in an email to Total Telecom.
As part of its Business Connectivity Market Review, Ofcom confirmed that BT will have to provide rival operators with access to its dark fibre network in order to foster competition in the market for high-speed leased lines for businesses.
Under the plan, BT will have to publish a draft reference offer covering wholesale pricing and terms for access by 1 September and, following negotiations with other providers, a final reference offer by 1 December. It is expected to begin providing dark fibre access by 1 October 2017.
Not if CityFibre has anything to say about it though.
"We have a duty to robustly contest their decisions and policies in the normal course of business – especially where they conflict with stimulating long-term investment in the critical digital infrastructure which the U.K. so badly needs," Collins said.
Indeed, forcing Openreach to provide dark fibre access means rival telcos can provide high-speed connectivity to business customers without having to deploy their own fibre optic lines. While this saves time and money for telcos, it encourages them to continue to rely on Openreach rather than go out and dig their own fibre.
BT does not want to provide dark fibre access either. It warns that it could lead to more outages, and potentially higher prices for end users.
"We continue to believe that regulated dark fibre is the wrong approach. We believe this is a flawed piece of regulation that will not lead to the new networks that Ofcom wants to see in the future," said a BT spokesman, in an email to Total Telecom.
Another approach, one that does foster greater network-level competition, sees Openreach provide physical infrastructure access (PIA), i.e., access to its ducts and poles, to allow rivals to lay their own fibre.
Limited PIA is already on offer from Openreach, and Ofcom’s recent Strategic Review proposes to expand it with the aim of making it easier for alternative operators to deploy networks for providing high-speed residential and business services.
In fact, on Wednesday, BT revealed it has been trialling new processes that allow rivals to deploy equipment on its ducts and poles without having to seek permission from Openreach. The trial is aimed at making it easier for altnets to invest in new networks.
In addition, the position taken by CityFibre on Wednesday runs counter to that taken by mobile operators Vodafone, O2 and 3UK, all of which are vocal advocates of improving dark fibre access.
It also represents a volte-face for CityFibre itself, which initially appeared to be in favour of Ofcom’s dark fibre proposal.
"CityFibre welcomes Ofcom’s proposal that BT is compelled to make dark fibre available," said CityFibre CEO Greg Mesch, in a statement in May 2015.
At the time, he described dark fibre as "the only infrastructure platform to deliver cost-effective, future-proof digital connectivity fit for purpose in the decades to come."
However, a read of CityFibre’s recent financial reports shows that the company has well and truly changed its tune with regard to Ofcom’s dark fibre proposal.
According to its full-year results, during 2015 the board created a sub-committee dedicated to risk and strategy. Risks include the potential long-term impacts on CityFibre of Ofcom’s rulings around regulated dark fibre.
"We continue to assess the potential impacts of recent Ofcom decisions around availability and pricing of dark fibre, and to explore possible risk mitigation, including appeal," said CityFibre in April.
This suggests that CityFibre’s lawsuit against Ofcom has everything to do with the competitive threat posed by an Openreach offering dark fibre access, and very little to do with stimulating infrastructure competition.
Total Telecom reached out to CityFibre to discuss its new stance on the matter, but has yet to receive a response.
This story was updated at midday to include a comment from BT.
