Ofcom review of Wholesale Line/Broadband Access
The WBA review mainly examines the current broadband field which is separated into 4 markets based on availability of providers at a telephone exchange within that area. The Hull area is deemed a separate market due to its separation from the BT network. Market 1 is the area with no prospect of wholesale competition so only BT provide wholesale services from that exchange. Ofcom are proposing that in this area a charge control is imposed that requires prices to be based on costs, with an obligation to provide transparency of cost data. A separate consultation will detail the charge controls later in 2010. A similar proposal is being put forward for Market 2 which will see freedom within a pricing range based on costs. Market 3 covers areas with competition between 4 or more operators, and no operator holds a significant market power in this area. No pricing controls are suggested in this area.
The WBA review also looks to define, for Ofcom's purpose at least, that super-fast broadband covers speeds greater than 24Mbit/s. This would therefore include BT's fibre-to-the-cabinet based services and aims squarely at what has so far been termed next-generation access (NGA).
The more interesting stuff is within the WLA consultation which proposes two new wholesale products must be provided by BT. The first, deemed 'VULA' is Virtual Unbundled Local Access which provides a virtual connection to link a user back to a communications provider (CP) in the exchange over BT's next generation FTTC or FTTP networks. The CP would effectively be buying the local access segment which would offer an Ethernet connection to the end user with an active NTE provided by BT. The CP would be offered some control of the NTE to ensure that they aren't unnecessarily prevented or limited in their ability to offered different and innovative products. Pricing would be set by BT as Ofcom believe price regulation could risk stifling investment. VULA would largely be based on BT's current Generic Ethernet Access (GEA) product that is available in both a FTTC and FTTP variant.
The second product, Physical Infrastructure Access (PIA) will allow CP's to deploy fibre to the access network using BT's duct and pole network so that they could provider either FTTP or FTTC based services. Ofcom estimate that deploying the passive infrastructure based around ducts and poles to deploy next-generation access accounts for around 50-70%, and the network that BT inherited as the incumbent operator gives it a significant competitive advantage. Ofcoms surveys indicate that there is a significant amount of unoccupied space within the ducts, but it is unclear how this would translate into usable capacity, particularly with respect to poles. Where capacity isn't available, Ofcom believe that BT should be required to relieve congestion, but at the cost of the requesting CP. BT would be required to introduce this 3months after the market review policy statement has been published, with a view to launching the service 8months after this.
BT had earlier this year announced that they would be proceeding with PIA, but have also called for equality with competitors ducts to be opened up in a similar way. The Ofcom report does not make any mention of requiring other operators to do this, but it's likely that BT will continue to put pressure towards this goal.