On 12 September 2011 Ofcom published the consultation document and Notification entitled 'Waiver of BT's price notification requirements for wholesale analogue exchange line (basic and premium) and LLU metallic path facility services rental charges' (the 'September Waiver Consultation').
In that document we proposed to give consent to a waiver of the price notification requirements in relation to wholesale line rental (WLR) and metallic path facility (MPF) rental prices, which would allow BT (i.e. Openreach) to introduce a special pricing offer in advance of the normal 90 days' written notice period. We invited comments on BT's request and our proposal by 19 September 2011. This document sets out our decision to agree to BT's request and contains the formal Consents to do so in Annexes 1 and 2.
Significant Market Power (SMP) services condition AAAA6(a) was imposed on BT by Ofcom's 2010 statement Review of the wholesale fixed analogue exchange lines markets (the '2010 Exchange Lines Market Review'). In particular, Condition AAAA6(a).2 requires BT to give not less than 90 days' notice of any amendment to the Wholesale Line Rental Charge before any such amendment comes into effect.
SMP services condition FAA6 was imposed on BT by Ofcom's 2010 statement Review of the wholesale local access market (the '2010 WLA Market Review'). In particular, Condition FAA6.2 requires BT to give not less than 90 days' notice before any amendment to the charges, terms and conditions for Network Access, including MPF, before any such amendment comes into effect.
In the remainder of this document we refer to Openreach instead of BT, as this is the operating division within BT responsible for running the BT Group local access network.
On 22 August 2011, Openreach requested that Ofcom consent to a waiver of the notification periods referred to above to enable it to give effect to a temporary special offer price incentive scheme earlier than 90 days. Openreach subsequently published Access Charge Change Notice OR249 ('ACCN OR249') on 24 August 2011.
In ACCN OR249, Openreach set out the detail of its incentive scheme (called the 'Copper Incentive Scheme') available to its wholesale customers. The Copper Incentive Scheme consists of a cash incentive payment of 50 for each WLR analogue (Basic and Premium) and LLU MPF line activated during the offer period that is incremental to a Communication Provider's (CP's) prevailing Background Threshold run-rate of activations. The number of incremental copper line activations made during the offer period is to be measured against the average monthly run-rate for 1 April 2011 31 August 2011 for each registered CP. The average prevailing run-rate will be adjusted for historic seasonal changes using 2010/11 data to give two Background Thresholds for the first three months of the offer and the second three months of the offer respectively. ACCN OR249 provides that at the end of the offer period, appropriate rebates will be credited to each participating CP's bill within 60 calendar days.
Table 1 shows products in scope of Openreach's Copper Incentive Scheme and the payment incentive awarded to CPs for each copper line activation incremental to their prevailing run-rate.
| Growth during Offer Period | Incentive payment (Excluding VAT) | Connection services in scope |
|---|---|---|
| Average Background Threshold or Less | Not applicable | |
| Activated WLR analogue lines above the Background Threshold | 50 per line |
|
| Activated MPF lines above the Background Threshold | 50 per line |
|
Openreach notified Ofcom that it wished to bring forward the date on which the offer period starts from 23 November 2011 to 22 September 2011, or as soon as possible thereafter. To do this, Openreach needs Ofcom to consent to a reduction in the notification periods set out in the SMP services conditions referred to above. SMP conditions AAAA6(a).1 and FAA6.1 provide that:
Except in so far as Ofcom may otherwise consent in writing, the Dominant Provider shall publish charges and act in the manner set out below.