Package of new measures to increase investment in full fibre networks to UK homes and businesses
The communications watchdog Ofcom has unveiled a new package of measures designed to increase the investment in full fibre or FTTP (fibre to the premise) networks in the UK.
Openreach will be forced to carry out faster repairs and installations, and open its telephone poll and underground ducts, so that other firms can ‘blow’ fibre cables into people’s homes.
And Ofcom said that the new measures will mean that more UK homes will benefit from ultrafast internet speeds, and that its draft decisions “will halve the upfront cost of building ‘full-fibre’ broadband networks.’”
The government has made no secret of the fact that it wants the UK to have a full fibre network as well as 5G connectivity going forward.
But rollouts of FTTP have been patchy at best, and only 3 percent of UK homes can currently access a FTTP connection.
And earlier this month TalkTalk announced that it intends to build a full fibre to the premise (FTTP) network to some 3 million homes and businesses in the UK.
But now Ofcom with its Wholesale Local Access review (WLA) draft statement has stepped in and said that its proposals will see the upfront cost of building ultrafast broadband networks halve, as well as new pricing decisions to encourage investment in full-fibre networks.
It said these new measures could see up to six million premises covered by full fibre by 2020, and raise the 3 percent coverage to 20 percent coverage by 2020.
As part of this, BT has to make its telegraph poles and underground tunnels (ducts) open to rival providers. It should be noted that ability is already being used by rival ISPs such as Virgin Media and CityFibre.
By doing this, Ofcom said it could cut the upfront costs of laying fibre cables by around 50 percent 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,” said Ofcom.
And Openreach will have to repair faulty infrastructure and clear blocked tunnels where necessary for providers to access them.
Essentially, Openreach has to ensure there is space on its telegraph poles for extra fibre cables, and it must release a ‘digital map’ of its duct and pole network, so competitors can plan where to lay fibre.
Openreach has to complete at least 88 percent of fault repairs within one or two working days of being notified, up from 80 percent currently. It also has to complete at least 97 percent of repairs within seven working days.
Ofcom said that ISPs installing their own FTTP networks will only do so if building their own networks is more attractive than buying wholesale services from BT.
Therefore Ofcom has opted not to regulate the prices of Openreach’s fastest wholesale superfast broadband products, including its new full-fibre services, to support the incentives for operators to build full-fibre networks.
And to prevent BT from stifling new investment by rivals, BT will not be allowed to make targeted wholesale price reductions in areas where rivals are starting to build new networks.
But the danger is of course that rural consumers will be left in the broadband slow lane.
But to prevent the high costs associated with rural broadband, Ofcom will cut the wholesale price that Openreach can charge telecoms companies for its basic superfast broadband service in these areas, which has a ‘download’ speed of up to 40Mbps, and an ‘upload’ speed of 10Mbps.
“Full fibre meets the country’s future broadband needs, as demand for data soars,” said Jonathan Oxley, Ofcom’s Competition Group Director. “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,” said Oxley.
Ofcom’s measures have been submitted to the European Commission for comment, after which it will publish it final statement next month.
It should be noted that Openreach already planned to reach 12 million homes by the end of the decade using a combination of fibre to the premise (FTTP) and G.Fast, which speeds up copper connections.
And it welcomed Ofcom statement that gives it “certainty on the pricing of key products for the next three years,” but did admit it will have an adverse financial impact going forward.
BT said the changes will have a year on year adverse financial impact on Openreach’s revenue and profit in 2018/19 in the range £80m – £120m.
There will also be ongoing annual costs, and Openreach’s cost base will increase as a result of meeting the more demanding minimum service levels required in WLA markets.
“BT anticipates a further adverse financial impact on Openreach’s revenue and profit as a result of market pressure on the wholesale prices of other products not directly charge controlled in the WLA draft statement,” said the former incumbent. “The net impact at the Group level will depend on the retail market dynamics.”
“We are considering the implications for full and fair competition of the restriction on BT’s ability to vary its FTTC and G.fast wholesale rental charges between different geographic areas,” it said.
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