Response to Promoting competition & investment in fibre networks – BT Regulatory Financial Reporting

ukcta_public Policy papers

20 May 2020
UKCTA RESPONSE

RESPONDING TO OFCOM’S CONSULTATION: Regulatory reporting in the review of wholesale fixed telecoms markets 2021-26

REPORT FOR UKCTA: Competition Finance Limited.  51 PROVIDENCE SQUARE, LONDON SE1 2EB

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1 EXECUTIVE SUMMARY

BACKGROUND
Ofcom issued a consultation paper on the regulation of the UK’s wholesale fixed telecoms markets (the “WFTMR Consultation”) on 10 January 20201. A subsequent consultation paper, issued on 6 February,2 (the “Reporting Consultation”) addresses regulatory reporting for BT’s activities in thesemarkets.
The WFTMR Consultation proposes what is probably the most significant change to UK telecoms regulation for over 20 years. In particular:

  •  It is the first market review to address all of BT’s wholesale fixed access markets (i.e. Openreach) together in a single review;
  • The pricing regime proposed follows other UK regulators in moving away from RPI-X price caps to a more holistic “RAB based” approach, intended to encourage investment;
  • It is the first review since Openreach took on new governance and separation arrangements (BT’s “Commitments”) in 2017;
  • The review period has increased from three to five years, in line with the practice in other regulated sectors.

AN OPPORTUNITY FOR A NEW APPROACH TO REPORTING

The review of reporting by Ofcom is a unique opportunity to revise the BT/Openreach Regulatory Financial Statements (“RFS”) to give stakeholders the financial information they legitimately need to assess Openreach’s performance, to assess the effectiveness of regulation and to inform future market reviews.

However, the Reporting Consultation advocates only incremental change to the existing RFS, which was developed for the earlier BT-wide, product focussed, RPI-X controlled regime. A fresh approach to reporting is needed to reflect the step change in price regulation which is proposed in the WFTMR Consultation.

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