BT Group (LON:BT.A) shares rose after the Competition Appeals Tribunal quashed rules set by Ofcom last year for a new market in so-called ‘dark fibre’.
Ofcom had ordered BT to introduce a dark fibre product that would allow its rivals to install their own equipment to send signals along fibre optics rather than paying to use that provided by the company’s network subsidiary Openreach.
The watchdog also cracked down on the services offered by Openreach, which is being legally separated from BT.
It set new targets on the time it takes to connect a line and introduced plans to cut costs that Sky plc (LON:SKY), Vodafone Group plc (LON:VOD) and Talktalk Telecom Group plc (LON:TALK) pay to source a high speed line from Openreach by 12%.
The rules were set in place to improve competition and challenge Openreach’s dominance over the lucrative market of leased lines. Leased lines are worth about £800mln a year to Openreach.
Dark fibre in doubt
However, BT will no longer be required to launch a dark fibre product in October after the CAT ruled that Ofcom made an error in its definitions of the business market. Ofcom will have to launch a fresh consultation on the business market to introduce its proposals.
BT will have to agree interim pricing for its wholesale business products with its competitors while Ofcom completes the new market review.
A spokesman for Openreach said: “We note today’s ruling by the Competition Appeals Tribunal which found that Ofcom’s market review definitions were inaccurate.
“The UK has a vibrant business connectivity market with a large, diverse and growing choice of providers – and this decision means that future regulation, where necessary, can be placed on a sound footing.”
Ofcom disappointed
An Ofcom spokesman said the regulator was disappointed with the judgement. Ofcom has right to appeal the decision but awaiting to hear CAT’s reasoning before deciding how to proceed in order to protect competition and consumers.
“We continue to believe that dark fibre can bring significant benefits for businesses and consumers.”
Shares in BT rose 1.30%, or 3.89p, at 310.90p in afternoon trading.
Demand for leased lines to provide high-speed mobile data is growing as more Britons use the internet on their phones and tablets. BT’s rivals have argued that dark fibre will be crucial to the introduction of next generation 5G mobile networks, which is expected to be released in the next few years.