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Ofcom: ‘BT must go fibre or fail’

April 27, 2018

By Colin Mann

Sharon White, Chief Executive, of UK comms regulator Ofcom, has warned incumbent telco BT to upgrade its copper network to fibre or risk fading away.

Delivering closing remarks at an industry event in London on ‘Building a Full Fibre Future’, White told delegates – who included major investors, Chief Executives, a Secretary of State and government officials – that modernising the UK’s infrastructure was a pressing priority, with recent months seeing growing momentum, with Ofcom’s vision being to move the UK decisively away from a Victorian-era copper network to a modern, full-fibre network fitting for an advanced economy.

“We have put our weight behind opening up [BT infrastructure subsidiary] Openreach’s telegraph poles and underground ducts, making it quicker and cheaper for other operators to build networks,” she advised, suggesting that this reform could transform the economics of full-fibre investment, and was Ofcom’s single, most important intervention.

“It could halve the upfront cost of building a fibre network and has already powered a substantial upgrading of networks in Spain and Portugal. Companies in the room today have started to trial ‘duct and pole access’, and interest is growing. We have also given companies the freedom to make a fair return for the highest-speed broadband,” she noted.

“You look to the regulator for consistency, stability, and rules that encourage, rather than inhibit, investment. We understand that we are relying on the private sector to make the investment. Drills and diggers in the ground that mean we all have the networks we need to access the next must-have Apple product or Netflix-style streaming service,” she suggested, adding that she was “very conscious” that investors had a choice as to where it put their money.

“The global funds represented today manage hundreds of billions-worth of assets dedicated to infrastructure investments. And there is a compelling business case for investing in full fibre. Competition is growing. If incumbents who rely on copper don’t change course, they risk losing swathes of customers to full- fibre rivals. Incumbents face a choice in my view – fibre-up, or risk fading away,” she warned.

“History is strewn with once-successful companies that failed to anticipate and act on shifts in customer demands and to innovate. Think Kodak, Polaroid, Palm and Blockbuster. The UK cannot afford for BT to be added to that list,” she declared.

“Which is why it was so reassuring to hear comments from [Openreach CEO] Clive Selley that Openreach is fibre-first. Importantly, we have also heard today how the Government is supporting the drive for full fibre. They are already providing funding for local fibre networks and taking action to remove planning and other barriers. The Government’s upcoming Future Infrastructure Review will set out new proposals to boost investment,” she stated. “We welcome and fully support that review.”

She confirmed that Ofcom was also looking ahead to how its regulation could provide the consistency and coherence needed to support long-term investment. “Our approach will continue to be anchored in the principle of the ‘fair bet’. In other words, the certainty that risky investments will earn a fair return. We will also be looking to extend the time between our big regulatory interventions – or ‘market reviews’ – from three years to five. We are also considering giving more coherence to the business and residential markets. I am an optimist by nature. Even the most pessimistic among us should be cheered by the wave of new investments now planned,” she said.

“Over the next few years, the number of homes and businesses able to benefit from full fibre is set to rise from one to six million. That is one fifth of homes and businesses – good progress. But some way short of the ambition that full-fibre is available nationwide. So we must build on the early momentum,” she concluded.

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