Competition and Markets Authority determines TalkTalk and CityFibre appeals over BT leased lines
First published by Admin on January 26, 2018 in the following categories: Latest and tagged with cma
The Competition and Markets Authority (CMA) has made a determination after TalkTalk and CityFibre have allegedly been overcharged for BT leased lines.
Leased lines are “high quality, dedicated, point-to-point data transmissions services” for essential communication services. BT leases out these lines to other telecommunication provides like TalkTalk and CityFibre, but the control they have other the prices has been disputed by the two users.
In April 2016, the Office of Communications (Ofcom) produced its three year Business Connectivity Market Review (BCMR). In this review, it identifies any providers that have Significant Market Power; companies that are so strong and possibly so dominant that other competitor’s actions cannot impact them. Ofcom looks at the market to see if it’s balanced or whether it’s distorted. If the latter, Ofcom can impose rules and regulations to address the problems and to straighten out the playing field.
TalkTalk appealed an Ofcom decision that Non Domestic Rates costs should be deducted from the price of the reference active products. It said that the cost should be based on an attribution of BT’s rates costs to the fibre. The CMA determined that Ofcom “made an error” in the methodology used for calculating the price for Dark Fibre Access for TalkTalk. The authorities informed CAT of its findings and recommendations so that Ofcom can amend its methodology and calculations of the charges made to TalkTalk.
CityFibre’s wanted to appeal Ofcom’s decision to charge according to the costs of replacement of its network rather than costs of a reasonably efficient operator or a modified equally efficient operator. The CMA disagreed and dismissed CityFibre’s appeal, noting that Ofcom was not wrong “to set the LLCC by reference to BT’s costs of replacement of its network (albeit with modern equivalent technology, specifically BT’s CCA FAC), instead of the costs of a reasonably efficient operator (REO) or a modified equally efficient operator (MEEO)“.
The CMA gave its final determination on 6th April 2017 and closed the case several months later in December.
It is important for the CMA to review cases like these to make sure that a costs-balance is struck between providers and users.
When someone is in a position of control like BT, other companies may not have much choice but to purchase or lease from them and only them. While the CMA encourages organisations of any size to join the market, sometimes the market may only allow for a finite number of suppliers like BT.
Telephone lines are vital for communication but that doesn’t mean everyone and anyone should make their own all over the country. The CMA must therefore make sure that BT charges its users properly to ensure it’s fair and still competitive.