KCOM Group PLC Switching fixed voice and broadband providers on the Openreach copper network Response by KCOM 4 October 2013 Summary KCOM Group PLC delivers communications services to a range of businesses and consumers throughout the UK under a number of different brands. Kcom provides communications services for national multi-site enterprise and public sector organisations across the UK. Eclipse Internet delivers a portfolio of communications services with a focus on the national SME market. In Hull and East Yorkshire, KC provides a range of communications services to businesses and consumers. KC is the incumbent fixed operator in the Hull area and has a network footprint the majority of which does not overlap the Openreach copper access network. Kcom and Eclipse both deliver services to end-users using Openreach infrastructure outside of the Hull area, while KC uses Openreach infrastructure in very limited areas. This consultation is therefore of interest to KCOM, both from the point of view of services we provide over Openreach infrastructure and for any consequences for KC in the Hull area, where we act as both a wholesale and retail provider. KCOM has serious concerns over Ofcom’s current drafting of the legal instruments. The proposed GC22 excludes cable-delivered services, but much of the drafting does not exclude switching on KC’s network. This despite Ofcom suggesting networks other than Openreach would be dealt with in a future workstream. Switching does occur between providers on the KC Hull area network between KC’s retail business and CPs taking KC Wholesale products, as well as between those third-party CPs. As some paragraphs in the proposed GC22 would appear to apply to the Hull area while others do not, we would effectively be forced into a fragmented and unclear switching process. Although Ofcom has not consulted on switching in the Hull area and therefore arguably is not yet empowered to amend a GC that would significantly change arrangements, we do think Ofcom’s proposed approach for the Openreach network would be proportionate for KC. Considering the Openreach proposals, we remain of the view a LPL process would have been preferable. Nevertheless we do agree there is value in harmonising switching processes. We also welcome that Ofcom has taken a more proportionate approach with its current proposals than it was previously considering. 1 KCOM Group PLC We note that many of the improvements Ofcom is seeking will be driven by Openreach systems development, including better address to line information and an increased number of services able to use simultaneous provide. Given the dependency on Openreach to deliver many of these changes, in some areas we question whether placing obligations on the gaining retail provider through the GCs is necessary. We accept the removal of the MAC process requires a change to the GCs, but for several of the other supporting changes providers already have a strong commercial incentive to make the switching experience for their new customers as smooth as possible. In the remainder of our response we first briefly address Ofcom’s proposals in relation to Openreach infrastructure before discussing our primary concerns regarding the impact the proposals would inadvertently have in the Hull area. 2 KCOM Group PLC Switching on the Openreach copper network Question 1: Do you agree with our assessment of the Record of Consent Requirement? KCOM understands Ofcom’s desire to be able to successfully use enforcement action to reduce slamming, and as such we do not disagree with Ofcom’s proposals to require retention of consent records for 12 months. Question 2: Do you agree with our assessment of the requirement for better information on the implications of switching? We believe that consumers being in possession of relevant information is important for an effective switching process and a functioning communications market generally. In relation to the LP and GP letters, Ofcom notes at paragraph 9.68 that “for the majority of consumers, being in possession of a written record of the direct and indirect impacts will make it easier to comprehend and understand the trade-offs, and they will therefore be more capable of reaching an informed and reasoned decision”. We would highlight that an inherent issue with GPL switching processes is, even though the LP would be required to send this information, it would be after the consumer has taken the decision to switch. It is implicit that Ofcom is expecting a significant number of consumers to make a reasoned final decision only after they entered into a contract with the GP. Although this would be possible given the right to terminate within the transfer period, it is not necessarily the most efficient use of switching procedures. For example, we would be concerned about occasions when a consumer receives information from the LP on likely due ETCs that although accurate and fair, they were not expecting. When inevitably contacted by the consumer, LPs may be too limited in discussion of a customer’s legitimate options to avoid the fees due to the ban on representations that could induce a customer to continue their existing contract. In contrast, gaining providers at this point would not have a comparable obligation to avoid reactive save activity should the customer contact them with the intention of cancelling an order during the proposed ten day transfer period. Question 3: Do you agree with our assessment of mandating use of functionality to ensure seamless transfer of bundled voice and broadband services? KCOM would welcome functionality improvements to Openreach systems ensuring simultaneous provide orders can be submitted for a wider range of wholesale products. However from a regulatory perspective we question whether mandating providers to actually submit orders in this way is necessary. Providers have a commercial incentive to maximise their new customers’ experience, and therefore have an incentive to submit orders as a simultaneous transfer where they are offering bundled services to customers and Openreach 3 KCOM Group PLC systems enable them to do so. We believe this is more a question of delivery from the Openreach end and therefore not something it is necessary to address in the GCs. Question 4: Do you agree with our assessment of requirements to reduce the occurrence of ETs under the WLT process? KCOM agrees that reducing the number of ETs is a worthwhile objective and as such we have no objection to mandating the existing WLT process through the GCs. However, we are concerned that the exact match requirement may be difficult to implement operationally. There are circumstances where there may be more than one line in a property, in different locations in the building. This is particularly likely with some small business customers. There could also be circumstances in which customers supply incorrect address information leading to the incorrect line being identified by the GP. In these situations we struggle to see how a GP can be entirely certain the correct line is being identified and therefore the obligation seems an unreasonably high compliance standard to be imposed without unduly restricting the ability to use WLT over cease and re-provide. We believe the key issue with WLT is the quality of the Openreach database, and this is not an issue appropriate to address through the GCs. We consider the proposed mandated requirement on incumbent providers to contact the account holder of a target line and for gaining providers to send a letter to the address are sufficient and pragmatic measures to minimise the number of WLT transfers that are completed erroneously. If Ofcom felt it needed to ensure a greater degree of protection, Ofcom might better word the proposed GC22 A2.3 as: A Gaining Provider may only place a Working Line Takeover Order if it has taken all reasonable measures to ensure it has identified a correct match for the Target Line. Question 5: Do you agree with the estimated implementation timescales of GPL NoT+ we have outlined? We are concerned Ofcom may be underestimating the timescales required to implement the measures it is proposing. While Ofcom’s proposals are certainly less onerous and more proportionate than suggested in previous switching consultations, timing of implementation remains an important issue. Particularly with broadband transfers currently using the MAC process, it is vital that all of the industry can move to the new process at the same time. Improvements in Openreach’s systems and the associated interoperability with CPs’ own systems are key to the assessment of timescales. In several cases, for example improvements in address information required for WLT, CPs compliance to an amended GC22 would depend on Openreach delivering changes to its systems first. 4 KCOM Group PLC Switching on the KC copper network Question 6: Are there any other key issues that need to be taken into consideration? KCOM has serious concerns that the drafting of the proposed amended GC22 is unworkable in terms of how it would apply in the Hull area. We have set out below some background on switching in the Hull area as well as our specific concerns and suggested approaches to addressing the issue. Switching in the Hull area The Hull area1 does not have any Openreach access infrastructure present. Instead, KC, part of the KCOM Group, is the owner of the access infrastructure, with significant market power in the relevant Ofcom-defined fixed wholesale markets. In addition KC is the largest retail provider of fixed services in the Hull area, although there are a number of CPs taking KC Wholesale’s voice and broadband products2. These products are not the same as the products offered by Openreach. Instead we have developed much simpler alternatives to full wholesale products to meet the demands of alternative CPs competing in the Hull market.