Ofcom boost for fibre investment

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Companies laying high-speed fibre cables for broadband and mobile networks will benefit from greater access to Openreach’s telegraph poles and underground tunnels, under draft decisions announced by communications regulator Ofcom.

Openreach, which maintains the UK’s main broadband network, is already required to let rival companies use its telegraph poles and underground ‘ducts’ to lay their own fibre networks, under rules set by Ofcom in 2018.

Until now, this measure – which can cut the upfront cost of building full-fibre networks by around half – has been available to companies focusing on residential and small-business customers. The draft decision would extend it to firms serving large businesses, as well as companies laying high-speed lines that support mobile and broadband networks.

Virgin Media, TalkTalk and CityFibre are among the firms already using Openreach’s ducts and poles to connect thousands of homes and businesses to faster, more reliable broadband. Between them, competing providers are using around 12,000 Openreach telegraph poles and 2,500 km of underground duct.

Extending access to business networks would allow companies to use Openreach’s infrastructure for all telecoms services, improving the business case for them to invest in cutting edge, full fibre and 5G networks.

Ultrafast broadband, which offers download speeds of at least 300 Mbit/s, is now available to more than half of homes in the UK. Full fibre, a form of ultrafast broadband that uses fibre cables all the way from the exchange to people’s homes, is now available to 7 per cent of UK properties. And while the number of full-fibre lines more than doubled last year, Ofcom wants to see coverage extended to millions of properties in the coming months.

Supporting competition and investment certainty in business markets

Ofcom is also refreshing its regulation of ‘leased lines’ – high-speed data connections used by large organisations, which form the backbone of the UK’s mobile and broadband networks.

Under the draft decision, in areas of the country where Openreach faces limited competition from other leased-line networks, Ofcom would continue to regulate what it can charge providers to use these services, keeping prices flat. It would also impose strict requirements on Openreach for repairs and installations, to ensure high service standards are delivered.

Also, in many areas, there are no rival networks present at BT’s exchanges. Even with duct and pole access, network competition is unlikely to emerge for connections from these exchanges. Here, Openreach would be required to give competitors physical access to its fibre-optic cables, at a price that reflects its costs.

This service is called ‘dark fibre’, because the cables are ‘lit’ by competitors with their own equipment. Introducing dark fibre in only these areas would significantly reduce the cost for mobile and broadband operators to connect their networks, without undermining their incentives to lay new, competing fibre cables where it is economic to do so.

Where there is stronger network competition, or prospective competition, regulation would be lighter than existing rules, to allow this competition to flourish.

“The amount of Internet data used by people in the UK is expanding by around half every year,” explained Jonathan Oxley, Ofcom’s Competition Group Director. “So, we’ll need faster, more reliable connections for our homes, offices and mobile networks. Our measures are designed to support the UK’s digital future by providing investment certainty for continued competitive investment in fibre and 5G networks across the country.”

Supporting widespread fibre investment

The latest measures are the latest in Ofcom’s programme of work to support long-term investment nationwide in full-fibre networks.

It recently set out initial views on how its regulation could evolve to encourage competition and further investment from new alternative networks, Openreach and Virgin Media. In addition to the measures, this long-term strategy includes:

  • Regulating business and residential markets together from 2021 – so companies investing in full fibre can offer a range of services over a common underlying network, serving both homes and businesses.
  • Extending the duration of regulation from three to five years – to help provide longer-term certainty to investors.
  • Different regulatory approaches in different parts of the country – to ensure that rural areas, where there is no prospect for competing networks and a weaker commercial case for investment, are not being left behind.

Next steps

The latest draft decisions follow Ofcom’s reviews of the physical infrastructure and business connectivity markets. The new regulations will cover the period from our final decisions, until April 2021.

As required for all market reviews, Ofcom’s draft decisions have been submitted to the European Commission for comment, after which it will publish its final statement in June 2019.

It intends to consult in December 2019 on detailed proposals for a single, holistic residential and business telecoms market review, covering the period 2021 to 2026.

Responding to announcement of the measures, an Openreach spokesperson said: “Last year we delivered our best ever service performance, but we want to keep improving and we share Ofcom’s desire to improve service across the industry.

“Our ducts and poles have been open to other companies since 2011, and we recognise that unrestricted access is a natural next step so we had volunteered to get on with that, ahead of Ofcom’s original schedule.

“We welcome the greater clarity around Dark Fibre and the timeframe needed to deliver a fully functional product to market.

“We’ll consider the range of proposals carefully, and we’ll continue to work with Ofcom on developing an environment that encourages greater investment.”

“This is a huge boost for fibre broadband rollout and will appease most stakeholders,” commented Paolo Pescatore, TMT Analyst at PP Foresight. “Fibre represents a key foundation for the future digital infrastructure in the UK. More so with the arrival of 5G, which will require a bigger pipe in the backhaul to deal with an explosion in data traffic.”


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