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Vodafone and TalkTalk appeal Ofcom’s Business Connectivity Market Review

The operators dispute Ofcom’s plan to relax regulation on wholesale fibre access.

Background: Ofcom recently reviewed the markets for physical infrastructure and for business connectivity. Through these reviews, Ofcom aimed to enable widespread competition and investment in full-fibre networks, moving away from simply access-based model of regulation. In particular, the Business Connectivity Market Review (BCMR) resulted in reduced regulation for BT’s access services, with minimal price controls and no QoS standards in areas where BT faces two or more competitors.

Not everyone is happy: Ofcom’s decision was not well received by all operators. In a statement to journalists, Vodafone’s external affairs director Helen Lamprell announced the firm’s decision to lodge a formal appeal to the Competition Appeals Tribunal (CAT), arguing that the increase in fibre access rates will be passed onto customers, and also affect Vodafone to the tune of millions of pounds. Businesses will either have to pay an extra £230m over the next 20 months, or “throttle the higher bandwidth needed for new digital services”. It was also argued that 5G deployment will also be hampered, due to the higher costs of connecting to 5G masts. Lamprell lamented that Ofcom has come up with a conclusion based on regulatory policy and on “what it hopes will happen in the future”, as opposed to evidence.

What happens now? Vodafone has appealed Ofcom's ruling in the parts stating that BT does not have significant market power in the Central London Area; its decision not to set the charge control as cost-based; and the decision not to impose a price cap in areas identified as "high network reach". The operator said it expects the process to take between seven and 12 months.