CityFibre loses appeal against Openreach discounts for ISPs British broadband outfit CityFibre has lost its appeal against an Ofcom decision that allowed Openreach to offer discounts for internet service providers (ISPs) to access its fiber-to-the-premises (FTTP) products. In its ruling published on July 15, the Competition Appeal Tribunal (CAT) unanimously rejected CityFibre's appeal …
I have commented in the past that American spelling doesn't bother me, but I assumed it was down to the personal preference of the author.
However, it does indeed seem to be a site wide thing, which does bother me a bit, especially if written by a British person about a British topic.
The issue is the question of a "natural monopoly" abusing its dominant position in an existing market by unfairly competing to gain a dominant position in a new (or related) market
The New Zealand Ministry of Commerce wrote a pretty good report on the ways that BT was abusing the British market as the reasoning behind its rejection of the BT/Openreach model proposed by Telecom New Zealand back in the 2000s - a decision that culminated in the full cleaving of lines and dialtone operations into two fully separated companies in 2011
Ironically in the years since then, Chorus (NZ's version of Openreach) has gone from strength to strength and is robustly healthy(*), whilst Spark (The BT equivalent) has been looking pretty sick. The pensions liability argument was advanced there too, but it was mostly on the external plant side (lines company) and Chorus has no problems servicing it.
(*) Without the dead hand of manglement holding it back, Chorus found itself free to sell its services to anyone and promptly set about doing so. Imagine Openreach actively flogging off duct space to Virgin and digging trenches for the Altnets, etc.
So if I make a product, hire local people to make it and it costs £500 (as I have to pay wages, office, materials - which have to meet the regulations) and then six months later very similar product shows up on Amazon for £49. It's cheaper because it is using forced labour and economy of scale and lack of care for standards, but for consumer it's good enough.
Is it okay or not?
So far stores like Amazon or EBay have been allowed to facilitate this.
I suspect the issue is that being so much smaller (than Openreach), CityFibre doesn't have the deep pockets and revenue stream needed to gain the same economies of scale that Openreach enjoys and hence was/is unable to match price.
However, if CityFibre had won, it would have meant that Ofcom approved Openreach customers being overcharged - in the interests of competition intended to lower prices...
I suspect the solution is for Ofcom to be more proactive in reining in predatory practises, so Openreach can't do market spoiling installations, as we saw with BDUK.
So CityFibre don't want to compete by offering their own discounts
Apart from the issues already mentioned (OpenRetch have the ability to cross subsidise from other revenue streams and are massive by comparison) it is much more subtle.
From my reading of the article, OR made a conditional discount based on the proportion of orders for fibre and copper lines. In other words, sell x% as fibre and you get a discount - though it's not clear exactly what that discount would be on or how widespread it might be.
So lets say that an ISP sells 1.5x% of its lines as fibre, but half of those are in a CityFibre area and they use CF for them. It's now only buying 0.75x% of its OR lines as fibre - so fails to get the discount from OR. Unless the cost from CF is sufficiently below that from OR, the ISP is now worse off than if they'd just bought all the fibre lines from OR.
So on the face of it, it does sound like OR designed the discount scheme so as to disadvantage altnets which by their nature have less coverage than OR has. That wider coverage isn't in itself an issue (after all, they've had a long time to build that up), but it is if you then abuse your position of a very dominant participant to distort the market in your favour.
Well we had CityFibre laying around us and I received an email offering fibre from BT.
I get two or three leaflets a week from CItyFibre but OpenReach has installed fibre to both us and the not semi neighbour.
Then I get another provider (some mobile company) waffling about their package when I pointed out the fibre connection. Still not shutting up. Had to shut door on them.
Been with BT now for years, had done smaller before and they kept being bought up by poorer companies was on ISDN and they just turned off, so went BT.
CityFibre are currently digging up roads left right and centre round us while not offering us the chance to use the service as a form of recompense. Seems that both them and Openreach are planning to offer FTTP to us at about the same time. Have to wait and see who A&A will offer us connections with.
CF dug up all our pavements last year some time - slightly annoying at the time but not serious.
Now offering gigabit up/down link for £50/pm.
Am on BT fttp at the mo, but max they offer is 300mbps for £80/pm.
Annoyingly I'm only halfway into a 24 month contract with BT but will be jumping ship once contract is up.
In fairness to BT the link has been rock solid for the last 4 years but their customer service is appalling. Any changes I need to get made on my account are almost never done properly the first time and I have to phone up and slowly feel my life drain as I get "put through to someone else" who also can't help.
Unfortunately where I live the only fibre provider currently is price gouging the local area which I suspect won't stop until BT finally roll out fibre here.
Had a major row with one of their door to doors sales people that got aggressive after I said no, not interested. Believed he was entititled to know all the reasons why I would not switch there and then. His attitude pretty much sealed why they would never get my business even without considering their eye watering prices.
BT currently listed my area as before 2025 but I suspect will be after the heat death of the universe.
The whole legal framework is an utter shambles, designed only to attract investment by awarding and rewarding local monopolies.
We need what happened to the roads and railways: nationalise the infrastructure and enforce full FTTP (not just stopping short at a cabinet), but allow competition for corporately-provided services.
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