This Statement contains Ofcom's proposals for new charge controls for Local Loop Unbundling (LLU) and Wholesale Line Rental (WLR) services.
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 address 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 Statement, we have determined that there has been no material change in either the WLA Market or the WFAEL Market since Ofcom's market power determinations in relation to those markets 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.
In reaching the conclusions set out in this Statement, we have taken account of stakeholder responses to our two consultations in March 2011 and November 2011. We have also considered, where relevant, the 2009 LLU Determination and the 2009 WLR Determination.
The charge controls will cover two years (2012/13 and 2013/14) after which any extension of the controls will be subject to further market reviews.
As a consequence of appeals to the Competition Appeals Tribunal by TalkTalk Group, Sky and BT, with respect to the Ofcom decision on LLU and WLR charges controls in 2012, the CAT has made the following direction which takes effect from 30 April 2013:
1.1 Pursuant to section 195(4) of the 2003 Act, the Tribunal has remitted the decision under appeal to Ofcom with the following directions:
" (...)
2. In order to correct the errors identified in Reference Questions 1(ii), (iv), (vi) and (vii) in BT's Appeal and Reference Question 1(i) in Sky and TalkTalk's appeal, OFCOM shall:
(a) amend Condition AAAA4(WLR) in Part IV, Schedule 1, to Annex 12 of the Statement, so that the charge ceiling for Analogue Core WLR Rental in the unelapsed period of the Second Relevant Year is 93.27;
(b) amend Condition FAA4(A) in Part I, Schedule 1, to Annex 12 of the Statement, so that the charge ceiling for MPF Rental in the unelapsed period of the Second Relevant Year is 84.26;
(c) amend Condition FAA4(A) in Part I, Schedule 1, to Annex 12 of the Statement, so that the charge ceiling for SMPF Rental in the unelapsed period of the Second Relevant Year is 9.75; and
(d) amend Condition FAA4(A) in Part I, Schedule 1, to Annex 12 of the Statement, so that the charge ceiling for each of MPF Transfer and SMPF Connection in the unelapsed period of the Second Relevant Year is 30.65.
3. In relation to the error identified in Reference Question 1(ii) of Sky and TalkTalk's Appeal, OFCOM shall correct the error in accordance with the Determinations, taking account of the guidance set out in paragraph 14.186 of the Determinations, and amend Conditions FAA4(A) in Part I, Schedule 1, to Annex 12 of the Statement and AAAA4(WLR) in Part IV, Schedule 1, to Annex 12 of the Statement accordingly as soon as reasonably practicable."