Ar gau
British Telecommunications plc (BT)
18 Gorffennaf 2019
28 Ionawr 2020
This investigation considers whether BT complied with its charging obligations under Ofcom’s Business Connectivity Market Reviews since 16 May 2014.
SMP Condition 5.2, which is set out at Annex 7 of the Business Connectivity Market Review statement dated 28 March 2013, and the accompanying Direction made pursuant to sections 49 and 49A of the Communications Act 2003 and paragraph (e) of SMP services Condition 5.2, which is set out at Annex 1 of the ECC Direction statement dated 16 May 2014. SMP Condition 5.3, which is set out at Annex 7 of the Business Connectivity Market Review statement dated 28 March 2013, and the accompanying Direction made pursuant to sections 49 and 49A of the Communications Act 2003 and to paragraph (o) of SMP services Condition 5.3, which is set out at Annex 1 of the ECC Direction statement dated 16 May 2014. SMP Condition 10F.8, which is set out at Annex 35 of the Business Connectivity Market Review statement dated 28 April 2016. SMP Condition 9C, which is set out at Annex 1 of the Business Connectivity Market Review Temporary Conditions statement dated 23 November 2017.
Ofcom has closed its investigation into Openreach’s billing of excess construction charges (ECCs) on ethernet access direct (EAD) orders.
Having gathered and reviewed further information from Openreach, we have decided not to proceed with the investigation on administrative priority grounds.
We have made this decision in light of the limited consumer harm and the proactive steps Openreach has taken to address the issue, including voluntarily reimbursing all affected telecoms providers for the full amount of the ECC overcharge including interest.
Compliance with significant market power (SMP) conditions remains one of the most important regulatory obligations on telecoms companies. We will continue to monitor Openreach’s compliance with SMP conditions. We are supportive of the proactive and comprehensive compliance and assurance review launched recently by Openreach, which aims to identify improvements in its processes and systems to ensure strong compliance going forward.
We have updated the scope of the investigation by adding one more relevant legal provision, namely SMP Condition 5.3, which is set out at Annex 7 of the Business Connectivity Market Review statement dated 28 March 2013, and the accompanying direction.
Ofcom’s Business Connectivity Market Reviews examine the markets for the provision of leased lines in the UK. Leased lines are high speed, high-quality, point-to-point data connections that telecoms providers use for connecting offices, mobile base stations and broadband access networks. As such, they are essential to support the provision of mobile, business and residential broadband services, and form the backbone of the UK’s digital infrastructure.
Excess Construction Charges (ECCs) are charges levied by Openreach to recover the costs of customer-specific network construction required to extend BT’s existing network out to where the customer requires the new connection. ECCs are a product within the business connectivity markets.
Since 16 May 2014, BT has been subject to an obligation to exempt certain new provisions of business connectivity services from the first £2,800 of excess construction costs (the ECC exemption). BT is allowed to make up the resulting loss of revenue with a balancing charge which is part of the standard connection charge for all relevant business connectivity services.
BT has provided Ofcom with information indicating that Openreach may not have correctly applied the ECC exemption to a number of relevant business connectivity orders since the beginning of the ECC exemption regime.
Having considered the information provided by BT, we have decided to open an investigation to examine whether there are reasonable grounds to believe that BT has failed to comply with its obligations under the following SMP conditions from 16 May 2014:
- SMP Condition 5.2, which is set out at Annex 7 of the Business Connectivity Market Review statement dated 28 March 2013, and the accompanying Direction made pursuant to sections 49 and 49A of the Communications Act 2003 and paragraph (e) of SMP services Condition 5.2, which is set out at Annex 1 of the ECC Direction statement dated 16 May 2014.
- SMP Condition 10F.8, which is set out at Annex 35 of the Business Connectivity Market Review statement dated 28 April 2016.
- SMP Condition 9C, which is set out at Annex 1 of the Business Connectivity Market Review Temporary Conditions statement dated 23 November 2017.
Enforcement team (enforcement@ofcom.org.uk)
CW/01246/06/19