More UK homes are set to benefit from ultrafast Internet speeds, after a draft decision by comms regulator Ofcom that it says will will halve the upfront cost of building ‘full-fibre’ broadband networks.
Full-fibre broadband is many times faster – and around five times more reliable – than today’s superfast internet services. But it is available to just 3 per cent of UK homes and offices.
Accordingly Ofcom has announced a package of measures to increase investment further in this future-proof form of broadband, following a range of recent commitments by broadband companies that could see up to six million premises covered by full fibre by 2020.
Cheaper, better, faster networks
BT must make its telegraph poles and underground tunnels open to rival providers, making it quicker and easier for them to build their own full-fibre networks directly to households around the UK.
This measure, which is already being used by providers such as Virgin Media and CityFibre, will fundamentally change the business case for building new networks. It could cut the upfront costs of laying fibre cables by around 50 per cent – from £500 per home, to £250. It could also reduce the time required for digging works, enabling fibre to be installed in some streets in a matter of hours, where it would have taken days.
Openreach, BT’s network division, will have to repair faulty infrastructure and clear blocked tunnels where necessary for providers to access them.
Openreach must ensure there is space on its telegraph poles for extra fibre cables connecting homes to a competitor’s network. And it must release a ‘digital map’ of its duct and pole network, so competitors can plan where to lay fibre.
Boosting incentives to invest
Competing providers will invest in building their own networks only if this is more attractive than buying wholesale services from BT.
These companies also need confidence that, in return for investing in full fibre, they will be able to recoup some of the costs through future prices on their network.
Ofcom’s decision not to regulate the prices of Openreach’s fastest wholesale superfast broadband products, including its new full-fibre services, supports the incentives for operators to build full-fibre networks.
To prevent BT from stifling new investment by rivals as network competition emerges, BT will not be allowed to make targeted wholesale price reductions in areas where rivals are starting to build new networks.
Protecting consumers, particularly in rural areas
At the same time, Ofcom has a role to ensure affordable access to superfast broadband for people and businesses. It wishes to protect against high prices, particularly in places that are unlikely to benefit from competitive investment, such as rural areas.
Ofcom will do this by cutting the wholesale price that Openreach can charge telecoms companies for its basic superfast broadband service, which has a ‘download’ speed of up to 40 Mbit/s, and an ‘upload’ speed of 10 Mbit/s.
Regulating this price will also help BT’s rivals to compete for customers, while several build out their own full-fibre networks, as well as protect consumers from high prices during this period. In March 2017, Ofcom proposed to set the monthly charge for Openreach’s ‘40/10’ Mbit/s broadband package by 2021 at £11.23. Following its consultation, it is adjusting this figure to £11.92.
The draft decisions confirm pro-investment measures set out by Ofcom in 2017. Since it put these forward, strong momentum has built towards full-fibre broadband in the UK. A range of broadband companies have announced plans to invest, including:
These plans could take coverage of full fibre in the UK from 3 per cent today to up to 20 per cent by 2020. The measures are designed to help deliver this and promote further investment beyond these ambitions.
Jonathan Oxley, Ofcom’s Competition Group Director, said: “Full fibre meets the country’s future broadband needs, as demand for data soars.”
“Ultrafast speeds will allow people to download entire films, or businesses to share huge files, almost instantly. Full fibre will also underpin exciting technology like remote healthcare diagnostics, 5G mobile and connected devices.”
“The measures we’ve set out today will support the growing number of companies who have already announced plans to build full-fibre networks, and open the way for even more ambitious investment around the UK.”
Improving repairs and installations
Moving customers to full-fibre broadband will be a gradual process. In the meantime, Ofcom wants to ensure that Openreach installs new lines on its existing network, and fixes faults, more quickly.
So Ofcom has decided that, in future, Openreach will be required to:
These new requirements must be met by 2020/21. Ofcom has also set out interim targets to ensure progressive improvements in its service before then. It will monitor Openreach’s performance closely and step in if these mandated standards are not met.
These rules are part of a range of measures designed to ensure all telecoms companies provide the quality of service customers expect. For example, Ofcom has already announced that broadband and landline users will receive automatic compensation when things go wrong.
Ofcom is also supporting the UK Government’s plans for homes and businesses across the country – including in rural and remote areas – to have the right to request a decent broadband connection.
The draft decisions follow Ofcom’s ‘Wholesale Local Access’ market review, which sets how much Openreach can charge telecoms providers for selling today’s superfast broadband services over its network. They cover the period April 2018 to March 2021.Ofcom’s measures have been submitted to the European Commission for comment, after which the regulator will publish its final statement in March 2018.