This statement relates to BT's Wavestream National ("WN") product. It sets out and explains our decision to agree to BT's request for an exemption from its Undertakings under section 154 of the Enterprise Act 2002 ("the Undertakings") in relation to the application of the principle of Equivalence of Inputs (EOI) to that product.
WN provides connectivity between any two end user sites, UK-wide, based on Dense Wavelength Division Multiplexing ("DWDM") technology. Each wavelength enables pointto-point transmission speeds up to 10 Gbit/s and can carry a range of different protocols. Once the end-to-end connection is set up, users can easily buy additional wavelengths. BT usually sells WN to large corporations, particularly in the IT, finance, media and public sectors, for high bandwidth applications such as private network build, data-centre connectivity and disaster recovery.
Depending on the customers' requirements and network availability, BT provides WN using two different architectures: a) point-to-point or dedicated-fibre infrastructure; and b) shared-fibre infrastructure. The former provides a dedicated fibre link between the end-customer's premises, whilst the latter multiplexes wavelengths over BT's shared core network.
On 6 October 2010, we published a consultation (the "Consultation") on BT's request to be permanently exempted from its EOI obligations in relation to WN. The exemption request submitted by BT (see Annex 1) relates to both WN shared fibre and WN dedicated fibre. Ofcom already granted BT an exemption for the dedicated version in 2008. However, that exemption would be subject to review every two years starting from the end of 2012. BT has therefore asked:
- to be exempted from its EOI obligations in relation to WN shared fibre; and
- not to be subject to a review for either version of the WN product every two years.
In the Consultation, we proposed to agree to BT's exemption request, subject to our being able to review the appropriateness of the proposed exemption following our next review of the market which includes the WN product. In order to assess any evidence of competition harm we said we would rely on evidence to be collected during our forthcoming review of the business connectivity market ("BCMR"). We considered that a decision on what would be a proportionate response to any potential competition concerns in the WN product market would be best taken in the context of our next BCMR. We set out that we would retain the option of reviewing this exemption if we found a competition problem in this market.
We have also sought a firm commitment from Openreach to continue to develop an upstream input based on the Optical Transport Network (OTN) technology that would allow its wholesale customers to develop downstream solutions which address broadly the same end-user needs as BT's WN product. Openreach has confirmed that it is willing to formalise this commitment to the industry as part of the Openreach Industry Commitments agreed in September 2009 . Openreach has confirmed to us that it would work towards having this solution ready on a commercial basis by 31 December 2011.
We received five consultation responses and, having carefully taken account of all representations made during the Consultation, we have concluded that it is appropriate to grant BT the exemption from its obligations concerning the application of the principle of EOI to the provision of WN, subject to review. If, following the forthcoming BCMR, we find BT to have SMP in a retail market or relevant upstream market which includes national Wavestream services, this exemption will be reviewed. In the absence of an SMP finding, the exemption will stand.