Ofcom UK full fibre plan
January 8, 2020
By Colin Mann
Homes and businesses up and down the UK are set to benefit from much faster and more reliable fibre broadband, under major proposals set out by comms regulator Ofcom.
As demand for Internet data accelerates, the UK’s infrastructure needs to be upgraded. Full-fibre broadband connections can deliver much faster speeds than copper – up to one gigabit per second. They are also up to five times more reliable, and less likely to slow down when lots of people use them at the same time.
Accordingly Ofcom is proposing new, flexible regulation that will help fuel a full-fibre future for the whole of the UK.
Having a choice of networks has delivered significant benefits to people, such as innovation, better services and competitive prices. In 2017, Ofcom set out a range of pro-investment measures that kickstarted full fibre rollout by a range of broadband companies. Since then, full fibre coverage has trebled.
Ofcom is now building on that momentum with proposals that will transform the business case for fibre investment – for towns, cities and villages alike. Next year, Ofcom plans to vary its regulation for different parts of the country, which – combined with the Government’s planned £5 billion (€5.9bn) funding for rural areas – will help ensure nobody gets left behind.
The proposals are part of its review of wholesale telecoms used for residential and business services in the UK. This maps out how Ofcom will regulate BT for the period from April 2021 to March 2026.
Driving competition and investment
The regulator’s focus on promoting broadband network competition has helped full fibre coverage increase at its fastest ever rate.
Ofcom has already made it cheaper, quicker and easier for BT’s rivals to lay fibre cables by giving them better and cheaper access to Openreach’s underground pipes and telegraph poles. Several firms are now using this to connect thousands of properties without having to dig up streets multiple times.
Ofcom is now proposing to supercharge the strategy with a four-point plan to support competitive investment in fibre networks.
- Improving the business case for fibre investment. In more urban areas, where there is likely to be a choice of networks, Ofcom will set Openreach’s wholesale prices in a way that encourages competition from new networks, as well as investment by Openreach – by giving it the opportunity to make a fair return.
In these areas, Ofcom is proposing that the wholesale price Openreach charges retail providers for its entry-level (40 Mbit/s) superfast broadband service is capped to inflation. This follows a significant cut Ofcom made to this product in its 2018 review, and still provides for a margin on fibre investment, as build costs fall.
Full fibre is consistently faster, and much more reliable, than copper-based broadband. So Ofcom is proposing that Openreach can charge a small premium for regulated products if they are delivered over full fibre, to help the business case. Its fastest fibre services would remain free from pricing regulation, to support the investment race between network builders.
- Protecting customers and driving competition. Ofcom will ensure people can still access affordable broadband by capping Openreach’s wholesale charges on its slower copper broadband services. To prevent Openreach from harming competition, it would be restricted from being able to offer discounts that could stifle investment by its rivals.
- Taking rural areas into the fast lane. In more sparsely-populated rural areas, where there is no prospect of multiple networks being built, Ofcom plans to support investment by Openreach – the only operator with a large-scale rural network.
Ofcom would allow Openreach to recover investment costs across the wholesale prices of a wider range of services, reducing the risk of its investment. If BT provides a firm commitment to build fibre in these parts of the country, Ofcom can include these costs in its prices upfront. If not, Ofcom would only allow it to recover these costs after it lays new fibre.
Public funding will also be vital in connecting rural areas. The UK Government is planning to invest £5 billion to reach the most challenging 20 per cent of the UK and Ofcom is working closely with Government on its plans for this.
- Closing the copper network. Ofcom recognises that Openreach needs to retire its ageing copper wires so it does not have the unnecessary costs of running two parallel networks. Ofcom plans to remove regulation on Openreach’s copper products in areas where full fibre is built. This will support Openreach in switching customers over to the new fibre network.
Ofcom will also protect customers during this transition, by transferring its regulation – including price protections – from copper to new fibre services.
“These plans will help fuel a full-fibre future for the whole country,” declared Jonathan Oxley, Ofcom Interim Chief Executive. “We’re removing the remaining roadblocks to investment and supporting competition, so companies can build the networks that will drive the UK into the digital fast lane.
“Full-fibre broadband is much faster and more reliable. It’s vital that people and businesses everywhere – whether in rural areas, smaller towns or cities – can enjoy these benefits. So we’re making sure companies have the right incentives to accelerate full fibre to every part of the UK.”
Supporting 5G and business
Ofcom has also today set out how it intends to regulate Openreach’s ‘leased lines’ – high-speed connections used by large organisations, which also form the data highways of the UK’s mobile and broadband networks.
Similar to its approach for broadband, Ofcom plans to vary its regulation depending on the level of current or potential competition in a given area. This would involve Openreach having to provide companies with access to its ‘dark fibre’ – cables that are ‘lit’ by competitors – in non-competitive areas, at a price that reflects its costs. This would significantly reduce the cost for mobile operators to roll out their new 5G networks.
Next steps
The consultation closes on April 1st 2020, and Ofcom will publish its decisions in early 2021 before the current rules expire in April 2021.
An Openreach spokesperson said that the proposals appear to be a big step in the right direction to give clarity and investment certainty. “Like the Government and Ofcom, we want to upgrade the UK to faster, more reliable full fibre broadband. We’re getting on with the job, building to 26,000 premises each week and we remain on track to reach 4 million homes and businesses by the end of March 2021.”
“We’ll consider the range of proposals carefully and will continue to work with Ofcom and industry on getting the conditions right to help achieve the Government’s ambition of rolling out gigabit capable broadband across the UK as soon as possible.”
Evan Wienburg, Truespeed CEO, noting Ofcom’s plans for rural areas, said: “We all agree that rural Britain deserves full fibre broadband. It’s well understood there are a growing number of privately funded infrastructure providers already investing in these network builds and customers are benefiting from brilliant products and services. Ofcom must take account of the work that providers such as Truespeed and others are doing in rural areas and not muddy the playing field by allowing Openreach to waste money on overbuilding projects in these areas.”
“We urge Ofcom to ensure a fair and level playing field between private and part public-funded infrastructure providers as the industry ramps up to deliver on the promise of full fibre broadband for all, regardless of post code.”