SISTEMAS DE TRANSMISIÓN POR CORREAS DENTADAS:

5.338 Based on the above, we propose the following conditions are required to address our competition concerns:

 Requirement to provide Network Access on reasonable request;

 Requirement not to unduly discriminate;

 Transparency obligations;

o Requirement to publish a reference offer;

o Requirement to notify charges, terms and conditions;

o Requirement to publish technical information;

o Transparency as to quality of service; and

o Requirement to account separately. 5.339 We discuss each of these specific conditions below.

Requirement to provide Network Access on reasonable request

5.340 The proposed condition will require KCOM as a result of its SMP to meet reasonable requests for Network Access. The condition will also require KCOM to provide Network Access in response to such a reasonable request on fair and reasonable terms and conditions, including charges. BT will also be obliged to provide Network Access on such terms and conditions, including charges, as Ofcom may from time to time direct.

5.341 The aims and effects of a condition to provide Network Access in the Hull area would be the same as those discussed above in Market 1, as would the proposed condition. As such we do not repeat those discussions here.

Legal tests

5.342 Section 47(2) of the Act requires conditions to be objectively justifiable, non- discriminatory, proportionate and transparent.

5.343 With regard to the tests in Section 47 of the Act, an obligation to provide Network Access is objectively justifiable in that it will encourage greater access to KCOM’s network and will therefore foster competition. The obligation does not discriminate unduly between providers, as it is imposed on KCOM and KCOM is the only operator which has been provisionally found to hold SMP in the Hull area. The proposed obligation is also proportionate in what it is trying to achieve since it is directly targeted at addressing the market power which Ofcom believes that KCOM holds in this market and it does not require KCOM to provide access where it is not

technically feasible or reasonable. The proposed obligation also passes the requirement of transparency since its aims and effects are clear on the face of the condition itself, as set out in the notification at Annex 5.

5.344 Ofcom has also taken into account the factors set out in Section 87(4) of the Act. In particular, the proposed obligation would require KCOM to meet requests that are reasonable only, by which it is meant, inter alia, that the terms of access are

technically and economically viable, and feasible. The requirement on KCOM only to meet reasonable network access requests also ensures that due account is taken of the investment made by KCOM initially in providing the network whilst ensuring that effective competition is secured in the long term.

5.345 Ofcom has considered its duties under section 3 of the Act. We consider that, in ensuring Network Access upon reasonable request, the proposed condition in particular furthers the interests of citizens and furthers the interests of consumers in relevant markets by the promotion of competition.

5.346 Ofcom has also considered the Community requirements as set out in section 4 of the Act. We consider the proposed condition in particular promotes competition in relation to the provision of electronic communications networks and encourage the provision of Network Access for the purpose of securing efficiency and sustainable competition in downstream markets for electronic communications networks and services, resulting in the maximum benefit for retail consumers of broadband internet access services.

5.347 For all the reasons set out above, we consider that the proposed condition is

appropriate to address the competition concerns identified, in line with section 87(1) of the Act.

Requirement not to unduly discriminate

5.348 The proposed condition will provide that KCOM must not unduly discriminate against particular persons or against a particular description of persons in relation to matters connected with Network Access.

5.349 The aims and effects of a condition not to unduly discriminate in the Hull area would be the same as those discussed above in Market 1, as would the proposed condition. As such we do not repeat those discussions here.

Legal tests

5.350 Section 47(2) of the Act requires conditions to be objectively justifiable, non- discriminatory, proportionate and transparent.

5.351 Ofcom considers that the proposed obligation is objectively justifiable, in that it provides safeguards to ensure that competitors, and hence consumers, are not disadvantaged by KCOM discriminating unduly in favour of its own retail activities or

between different providers. The proposed obligation does not discriminate unduly between providers, as the proposed obligation is imposed on KCOM and KCOM is the only operator which has been provisionally found to hold SMP in the Hull area. The proposed obligation is proportionate since it only prevents behaviour which is unduly discriminatory. Behaviour that is unduly discriminatory (particular in favour of the dominant provider’s own retail divisions) is likely to have a negative effect on consumers by reducing the effectiveness of competitors to the dominant provider, as their wholesale input products would be of inferior quality (or not competitively priced), compared to those available to the dominant provider’s own retail division. However, it is no more intrusive than necessary to achieve its purpose effectively as it only relates to undue discrimination. Differences that reflect, for example, costs of provision, are not necessarily undue discriminatory.

5.352 Finally, the proposed obligation is transparent since its aims and effects are clear on the face of the condition itself, as set out in the notification at Annex 5. In addition, Ofcom has given guidance as to how it might treat undue discrimination in the Discrimination Guidelines.

5.353 We have considered our statutory obligations and the Community requirements set out in Sections 3 and 4 of the Act.

5.354 In particular, as Ofcom considers that KCOM should be required to provide Network Access, the proposed obligation would encourage the provision of Network Access and service interoperability for the purpose of efficiency and sustainable competition in downstream markets by ensuring that KCOM does not unduly discriminate. This is necessary to ensure that there is a competitive level playing field. As Ofcom

considers that KCOM has SMP in the provision of wholesale broadband access in the Hull area, it controls a key input into a range of downstream services, principally asymmetric broadband internet access. Ofcom considers that an obligation designed to prevent undue discrimination would promote competition and the interests of consumers and maximise choice in downstream markets.

5.355 For the above reasons, we consider that the proposed condition in particular furthers the interests of citizens and furthers the interests of consumers in relevant markets by the promotion of competition, in line with section 3 of the Act.

5.356 We also consider the proposed condition, in line with section 4 of the Act, in particular promotes competition in relation to the provision of electronic

communications networks and encourage the provision of Network Access for the purpose of securing efficiency and sustainable competition in downstream markets for electronic communications networks and services, resulting in the maximum benefit for retail consumers of broadband internet access services.

5.357 For all the reasons set out above, we consider that the proposed condition is

appropriate to address the competition concerns identified, in line with section 87(1) of the Act.

Requirement to publish a Reference Offer

5.358 Ofcom believes that it is appropriate to impose a requirement on KCOM as a result of its SMP to publish a Reference Offer (RO). The main terms of the RO are

summarised above in relation to Market 1. The main reasons for the publication of an RO are to assist transparency for the monitoring of potential anti-competitive

behaviour and to give visibility to the terms and conditions on which other providers would be able to purchase wholesale access services.

5.359 The aims and effects of a condition to publish a reference offer in the Hull area would be the same as those discussed above in Market 1, as would the proposed condition. As such we do not repeat those discussions here.

Legal tests

5.360 Section 47(2) of the Act requires conditions to be objectively justifiable, non- discriminatory, proportionate and transparent.

5.361 The proposed obligation is objectively justifiable, in that it relates to the need to ensure that competition develops to the benefit of consumers. The proposed obligation does not discriminate unduly between providers since KCOM is the only operator which has been provisionally found to hold SMP in the Hull area. The proposed obligation is proportionate in that only information that is necessary to ensure that there is no material adverse effect on competition is required to be provided. The proposed obligation meets the test of transparency set out in the Act since its aims and effects are clear on the face of the condition itself, as set out in the notification at Annex 5.

5.362 We have considered our statutory obligations and the Community requirements set out in Sections 3 and 4 of the Act.

5.363 In particular, the proposed obligation would encourage the provision of Network Access and service interoperability for the purpose of securing efficiency and sustainable competition and the maximum benefit for customers of CPs. The requirement to publish a RO would, in combination with a requirement not to discriminate unduly, facilitate service interoperability and secure freedom of choice for potential wholesale customers of KCOM. Other CPs would have the necessary information readily available to allow them to make informed decisions about entry into the market. Finally, the proposed obligation would make it easier for Ofcom and KCOM’s potential competitors to monitor any instances of discrimination.

5.364 For the above reasons, we consider that the proposed condition in particular furthers the interests of citizens and furthers the interests of consumers in relevant markets by the promotion of competition, in line with section 3 of the Act.

5.365 We consider the proposed condition, in line with section 4 of the Act, in particular promotes competition in relation to the provision of electronic communications

networks and encourage the provision of Network Access for the purpose of securing efficiency and sustainable competition in downstream markets for electronic

communications networks and services, resulting in the maximum benefit for retail consumers of broadband internet access services.

5.366 For all the reasons set out above, we consider that the proposed condition is

appropriate to address the competition concerns identified, in line with section 87(1) of the Act.

Requirement to notify charges, terms and conditions

5.367 We believe that it is appropriate to impose a requirement on KCOM as a result of its SMP to publish any planned changes to charges, terms and conditions in advance of those changes taking place. The main benefit of this in wholesale markets is that other CPs would have sufficient notice to consider whether these changes necessitate a change in their retail offerings.

5.368 The aims and effects of a condition to publish charges, terms and conditions in the Hull area would be the same as those discussed above in Market 1, as would the proposed condition. As such we do not repeat those discussions here.

Legal tests

5.369 Section 47(2) of the Act requires conditions to be objectively justifiable, non- discriminatory, proportionate and transparent.

5.370 The objective justification for imposing such an obligation is that general and reliable visibility of a dominant operator’s prices is needed to enable Ofcom and potential competitors to monitor KCOM’s prices for possible anti-competitive behaviour. The proposed obligation does not discriminate unduly between providers, as the proposed obligation is to be imposed on KCOM and KCOM is the only operator which has been provisionally found to hold SMP in the Hull area. We consider that a 28 day notification period achieves the purpose of allowing third party providers a sufficiently long period to plan for changes to terms, conditions and charges and adjust their own offerings, whilst not being unduly burdensome for KCOM. The proposed obligation meets the test of transparency since its aims and effects are clear on the face of the condition itself, as set out in the notification at Annex 5. 5.371 We have considered our statutory obligations and the Community requirements set

out in Sections 3 and 4 of the Act.

5.372 In particular, the proposed obligation would encourage compliance with

transparency, for the purpose of facilitating service interoperability and securing freedom of choice for the customers of CPs. The proposed obligation would promote the interests of purchasers of wholesale broadband access by enabling them to adjust their downstream offerings in competition with KCOM, in response to changes in KCOM’s terms and conditions. The proposed obligation would also promote competition in downstream markets by allowing KCOM’s competitors to make

appropriate changes to their products. Finally, the proposed obligation would make it easier for Ofcom and KCOM’s competitors to monitor any instances of discrimination. 5.373 For the above reasons, we consider that the proposed condition in particular furthers

the interests of citizens and furthers the interests of consumers in relevant markets by the promotion of competition, in line with section 3 of the Act.

5.374 We consider the proposed condition, in line with section 4 of the Act, in particular promotes competition in relation to the provision of electronic communications

networks and encourage the provision of Network Access for the purpose of securing efficiency and sustainable competition in downstream markets for electronic

communications networks and services, resulting in the maximum benefit for retail consumers of broadband internet access services.

5.375 For all the reasons set out above, we consider that the proposed condition is

appropriate to address the competition concerns identified, in line with section 87(1) of the Act.

Requirement to publish technical information

5.376 As a result of our proposal that KCOM has SMP in the Hull area we believe it is appropriate to require KCOM to publish any changes to technical information 90 days in advance of making such changes to existing Network Access unless Ofcom

5.377 The aims and effects of a condition to publish technical information in the Hull area would be the same as those discussed above in Market 1, as would the proposed condition. As such we do not repeat those discussions here.

Legal tests

5.378 Section 47(2) of the Act requires conditions to be objectively justifiable, non- discriminatory, proportionate and transparent.

5.379 The proposed obligation is objectively justifiable in that it enables any future

competing operators to make full and effective use of Network Access. The proposed obligation does not discriminate unduly between providers, as the proposed

obligation is imposed on KCOM and KCOM is the only operator which has been provisionally found to hold SMP in the Hull area. The proposed obligation is proportionate in that in most circumstances 90 days is the minimum necessary to allow any future competing providers to modify their networks and any extension would be required only where it was reasonable to do so. The proposed obligation is also transparent since its aims and effects are clear on the face of the condition itself, as set out in the notification at Annex 5.

5.380 Ofcom has considered its duties under section 3 of the Act. We consider that, in ensuring that CPs’ systems are interoperable with any changes to technical specifications that would likely affect their business, the proposed condition in particular furthers the interests of citizens and furthers the interests of consumers in relevant markets by the promotion of competition.

5.381 Ofcom has also considered the Community requirements as set out in section 4 of the Act. We consider the proposed condition in particular promotes competition in relation to the provision of electronic communications networks and encourage the provision of Network Access for the purpose of securing efficiency and sustainable competition in downstream markets for electronic communications networks and services, resulting in the maximum benefit for retail consumers of broadband internet access services.

5.382 For all the reasons set out above, we consider that the proposed condition is

appropriate to address the competition concerns identified, in line with section 87(1) of the Act.

Transparency as to quality of service

5.383 We believe that it is appropriate to impose a requirement on KCOM, as a result of its SMP, to publish information related to transparency as to quality of service. The main benefit of this in wholesale markets is that other CPs could ensure that the service they receive from KCOM is equitable to that provided by KCOM to its own retail divisions. The obligation will require KCOM to publish information as directed by Ofcom, rather than requiring KCOM to publish specific information from the date of the imposition of the obligation. This is the same as the condition imposed in

previous reviews. As we have not considered it necessary to issue any such direction based on concerns that KCOM may be discriminating in the quality of service it provides, we are of the view that it is appropriate to continue this approach.

5.384 The aims and effects of a condition to provide transparency as to quality of service in the Hull area would be the same as those discussed above in Market 1, as would the proposed condition. As such we do not repeat those discussions here.

Legal tests

5.385 Section 47(2) of the Act requires conditions to be objectively justifiable, non- discriminatory, proportionate and transparent.

5.386 The proposed obligation is objectively justifiable in that it enables competing operators to make full and effective use of Network Access and to ensure that, in purchasing this access, they are not unduly discriminated against. The proposed obligation does not discriminate unduly between providers, as the proposed obligation is imposed on KCOM and KCOM is the only operator which has been provisionally found to hold SMP in the Hull area. The proposed obligation is proportionate because it only requires KCOM to publish information as directed by Ofcom in the event we consider such information is required to monitor KCOM’s compliance with its obligations. The proposed obligation is also transparent since its aims and effects are clear on the face of the condition itself, as set out in the

notification at Annex 5.

5.387 Ofcom has considered its duties under section 3 of the Act. We consider that, in ensuring the Network Access CPs receive from KCOM is equitable to that provided by KCOM to its own retail divisions, the proposed condition in particular furthers the interests of citizens and furthers the interests of consumers in relevant markets by the promotion of competition.

5.388 Ofcom has also considered the Community requirements as set out in section 4 of the Act. We consider the proposed condition in particular promotes competition in