Exemptions to the BT Undertakings Agreed

The basis for exemptions

The BT Undertakings provide for BT and Ofcom to vary or amend them by agreement and to agree changes to the BT Undertakings over a transitional period of implementation.

 BT has been working with Ofcom on two broad categories of exemptions:

• Those driven by identification subsequent to the signing of the Undertakings of circumstances where the impact of the Undertakings could have unintended consequences

• Exemptions specific to Section 5.46 (products and services provided by Openreach) of the BT Undertakings in relation to Equivalence of Inputs (equivalence).

Section 5.46.1 of the BT Undertakings states that “[Openreach] will not supply any product to any other part of BT unless it also offers that product to other Communications providers on an Equivalence of Inputs basis.” Specified exceptions are set out, and provision is made for BT to agree other exemptions from time-to-time with Ofcom. Undertaking 5.46.1 is an important signal. It sets out the principle that Openreach must treat all its customers equivalently. The expectation was that exceptions would be required, but there would be few.

The BT Undertakings also recognise that a transitional period is required before Openreach is able to supply its full portfolio on equivalence terms. They set out a timetable for the delivery of equivalence on the most important services, and provide for other Openreach services to be identified and a decision then made as to whether (and when) equivalence is to be required, whether the service is to be withdrawn, or whether it is agreed to be exempt.

BT Undertaking 5.46.2 sets out the process for determining how to treat other products and services Openreach provides. This requires BT to review such products with Ofcom and to agree which of the above options apply. 

Products and services for which exemptions are sought under section 5.46.2 of the Undertakings

Prior to the BT Undertakings Openreach did not exist. BT did not sell to itself the services it provided to other Communications Providers, nor did it have access and backhaul wholesale products defined or in use for the totality of its downstream portfolio. Annex 1 of the BT Undertakings sets out how BT will move to equivalence for the relevant existing wholesale access and backhaul services. New Openreach services are to be equivalent from first supply. What remains to be dealt with are the Openreach services implied to exist by virtue of the existence of today’s downstream products.

Some examples may be helpful:

• BT Wholesale provides Communications Providers and others with antennae which can be fitted to street furniture and used to support both the services of cellular operators and the provision of other radio based services such as Wireless Local Area networks. The signals sent from and collected by the antennae route into the appropriate networks via a fibre link to the nearest BT exchange. Under the Undertakings Openreach own and manage backhaul and access fibre, but no defined service exists to support the BT Wholesale products

• Similarly, the BT Redcare business operates an alarm service for homes and businesses where the alarm capability rests on use of part of the electromagnetic spectrum available on a copper line. The copper access network is an Openreach asset, but there is as yet no portfolio product which Openreach produces and which can be provided on an equivalent basis to BT Redcare and other Communications Providers.

BT has identified 18 such examples. We have tested whether the implied Openreach input service could reasonably be characterised as an enduring economic bottleneck and sought to identify a service Openreach can offer equivalently and a timescale to deliver that service. In doing so we have taken account of the need to deliver as a priority equivalence for the Annex 1 services and to develop and launch the backhaul and other products the BT Undertakings mandate Openreach to provide.

Other Exceptions

BT has also identified to Ofcom 11 other proposed exceptions to the BT Undertakings. These cover a range of operational issues where implementation has highlighted conflict between the BT Undertakings and good practice/commercial reality, and where agreement from Ofcom is being sought on the proposed way forward.

Two examples illustrate the sort of issues covered:

• The BT Undertakings require that Openreach provide services only to Communications Providers. But an Openreach engineer investigating a fault may find that the fault lies in the end-user’s wiring rather than the access service provided by a Communications Provider. The end-user may find it helpful for the engineer to fix the fault while already on the premises and the Communications Provider may wish Openreach to provide this service directly to its customer. But that would breach the BT Undertakings. An exception allowing Openreach to offer this service directly to the end-user provides improved efficiency and a better end-user experience

• The BT Undertakings require that Openreach manages the physical layer of the network and BT Wholesale the transmission layer. When seeking to implement this separation for the engineering workforce delivering private circuits BT found that the engineers concerned dealt with both the physical and transmission layer, and that separation of the two would create significant inefficiencies, to the disbenefit of customers of both BT and Communications Providers buying Wholesale Private Circuits, Partial Private Circuits and, in future, the TILLAP and TILLBP products of Openreach. The problem can be avoided if all private circuit engineers are managed by Openreach.

Ofcom’s Consultation

Ofcom’s publication deals with those BT requests which Ofcom has already decided to accept. We understand Ofcom plan to consult on further requests later in the year.