Judgment

Judgment of the Tribunal in connection with an appeal brought by Colt Technology Services (“Colt”) under section 192 of the Communications Act 2003 against a determination by OFCOM published in its statement of 28 March 2013 entitled “Business Connectivity Market Review” (the “Statement”).

In the Statement OFCOM found, inter alia, that BT had significant market power in various business connectivity markets. OFCOM imposed on BT various access remedies for active products (i.e. including electronics) in the wholesale markets in which it was found to have SMP. OFCOM also imposed a charge control. OFCOM did not, however, impose a “passive remedy” on BT. Colt, supported by an intervening group of communications providers (“CPs”), challenged this latter aspect of the Statement only.

Passive remedies might involve giving a CP access to BT’s physical network assets, such as its ducts and poles or unlit fibre. They can be distinguished from “active remedies”, which refer to regulated access to communications services which BT (or another regulated firm) provides using infrastructure including electronic equipment.

For the reasons set out in the judgment, the Tribunal rejected each of Colt’s grounds of appeal, and concluded that:

1. OFCOM did not view active and passive remedies as necessarily alternatives rather than complementary remedies. OFCOM was alive to the potential benefits of passive remedies, but, having analysed the potential risks such remedies entailed, did not consider these to outweigh the possible downsides. It engaged in genuine consultation with stakeholders in order to ascertain their views on the role that passive remedies might play in the business connectivity market for the promotion of downstream competition and what the implications might be for active remedies. Therefore, OFCOM had not reached an internal fait accompli in relation to the possible coexistence of active and passive remedies.

2. OFCOM had not erred in its factual assessment when concluding that it had seen no evidence that any CP would invest “substantially” in infrastructure based on passive remedies. Throughout the consultation process on this point, OFCOM gave Colt an adequate opportunity to make its views on investment in passive remedies known to OFCOM. Moreover, it was apparent that evidence of an intention to invest substantially was not sufficient to justify introducing passive remedies: the limited evidence of intention to invest therefore reinforced the overall Decision not to impose passive remedies, but was not fundamental to its validity.

3. OFCOM did not operate under any theoretical or de facto prejudice or presumption in relation to the use or otherwise of passive remedies. Instead OFCOM considered whether, in this particular case, their use would or would not be beneficial.

4. OFCOM did not err in its assessment of the relative merits of active and passive remedies and, in particular, whether active remedies could achieve the same benefits as passive remedies. OFCOM, as an experienced and careful regulator operating under a comprehensive legal and regulatory framework, followed an open and fair consultation process, made its objectives and concerns clear, took account of the responses it received and, as a result, asked itself the right question on the basis of appropriate and relevant material.