BT Kicks Up Stink Over Dark Fiber Proposals
BT has lashed out angrily after the UK's national regulator said the operator would be forced to provide dark fiber services to other companies under forthcoming rules.
In a statement provided to Light Reading, the operator said that "mandating dark fiber risks favoring a few companies that have the greatest capability to deploy it, to the disadvantage of all other firms."
"It will undermine investment -- as a number of service providers have warned -- and it would also increase costs, divert resources and add more complexity just when we're beginning to make progress on improving service," added BT Group plc (NYSE: BT; London: BTA).
Besides requiring BT to provide dark fiber services, regulatory authority Ofcom also plans to impose tougher quality-of-service requirements on Openreach , accusing the BT access division of dragging its heels on service rollout.
The moves follow the recent launch by Ofcom of its first major strategic review of the sector in a decade and indicate a willingness on the regulator's part to take a much harder line with the incumbent amid the current market shake-up. (See Eurobites: Ofcom Assesses State of the Digital Nation and Eurobites: Ofcom Puts the Squeeze on BT.)
BT is set to become even more dominant if it completes its £12.5 billion ($19.7 billion) takeover of EE , the country's biggest mobile phone business, while a separate merger between Telefónica UK Ltd. and Three UK -- the UK's second- and fourth-biggest mobile operators -- would further reduce competition in the mobile market. (See BT Locks Down £12.5B EE Takeover Deal and Telefónica Seals $15.2B O2 Sale to Hutchison.)
Ofcom believes the dark fiber regulations would spur competition in the market for leased lines, which currently generates £2 billion ($3.14 billion) in revenues each year.
Leased lines provide dedicated, high-speed connections and are used by businesses, mobile operators and public sector institutions, such as schools and libraries.
Through wholesale arrangements with BT, other service providers are currently able to provide leased-line services but must rely on BT's electronic equipment. The new regime would let them take control of the connection and install their own equipment at each end.
The move would allow BT's competitors to innovate and develop new services in a way they cannot at the moment -- much as the introduction of local loop unbundling gave a boost to broadband rivals that had previously been resellers of BT products.
Openreach would also have to pick up the pace at which it installs leased lines under the new rules. According to Ofcom, the average time it takes for a leased line to become ready from the time of the order has grown from 40 to 46 working days since 2011. Openreach will be penalized if the average exceeds 40 from 2017 onwards.
Moreover, it will have to meet dates it promises customers in 80% of cases by 2016 and 90% by 2018, having last year failed to complete around half of the installations on time, according to the regulator.
Next page: Vigorous defense