Millions of UK residents are set to benefit from faster, more reliable broadband, under new regulations announced yesterday by communications regulator Ofcom. The regulator said in a statement:
The Ofcom statement in full:
The coronavirus pandemic has underlined the importance of a reliable internet connection. The UK’s copper telephone network – some of which was laid over 100 years ago – has helped deliver superfast broadband to 96% of homes. And people have generally been getting better services in recent years, without spending more in real terms.
But as demand for data continues to accelerate, the UK’s infrastructure urgently needs an upgrade. This will require significant private investment in full-fibre broadband, which is much faster and more reliable than the networks most people use today.
A full fibre future for the whole of the UK
Following public consultation, Ofcom has today confirmed how it will regulate the wholesale telecoms markets used to deliver broadband, mobile and business connections in the UK, for the next five years and beyond.
Network competition has helped full fibre coverage increase at its fastest ever rate over the last year – and that momentum has continued throughout the pandemic. Our regulations build on this momentum – driving competitive commercial investment and supporting the closure of the country’s 100-year-old copper network; while ensuring consumers are protected from high prices.
We believe this approach will lead to properties in around 70% of the UK having a choice of networks from competitive commercial rollout. Openreach has committed to deploy full fibre to a further 3.2 million properties (10%) in more rural areas. And the Government plans to cover the remaining 20% of the country through public funding, to help ensure nobody gets left behind.
Driving competitive investment
How we are doing this:
Wholesale price regulation that encourages investment and promotes competition
Over the last few years, we have brought down the wholesale price Openreach charges retail providers for its entry-level (40 Mbit/s) superfast copper broadband service, in line with its falling costs. We are now keeping this price – and the prices of slower copper broadband packages – flat in real terms.
Openreach’s fastest fibre services will continue to be free from pricing regulation. The ability of networks to raise wholesale prices significantly for the faster, unregulated products is constrained by the fact that people can choose the entry-level service as an alternative.
Openreach can also charge a bit more for regulated products that are delivered over full fibre instead of copper. This reflects the fact that full fibre is consistently faster, and much more reliable, than copper-based broadband.
This approach improves the investment case for BT and its rivals by providing them with a margin to build the new networks. It also helps make sure people can still access affordable broadband.
We recognise that full fibre is a long-term investment, taking more than a decade – if not two – to pay back. So, we aim to allow all companies the opportunity to achieve a fair return over their whole investment period, and do not expect to introduce cost-based prices for fibre services for at least ten years.
Closing the copper network
As it lays new fibre to replace ageing copper lines, Openreach should not have the unnecessary costs of running two parallel networks. So when Openreach has rolled out full fibre in a particular area, we will progressively remove regulation on its copper products over a number of years.
This will improve the business case for Openreach to invest, by removing the need for it to maintain two networks, while promoting the take-up of faster fibre services.
Customers will be protected during this transition to ensure they can continue to access their services – particularly those in vulnerable circumstances.
Duct and pole access
We have already levelled the playing field by making it significantly cheaper, quicker and easier for BT’s rivals to build their networks, by giving them better access to Openreach’s underground ducts and telegraph poles. This can halve the upfront costs of connecting a home.
Order volumes last year to use this infrastructure covered over 23,000km of duct and over 140,000 poles, up from 2,500km and 12,000 respectively the previous year.
Preventing anti-competitive behaviour
We will prevent Openreach from harming competition, by reviewing all long-term discount agreements it offers its wholesale customers, and restricting them if they could stifle investment by its rivals.
Openreach will continue to be prohibited from offering geographic discounts on its superfast broadband wholesale services and we have decided to extend this to full fibre.
Dame Melanie Dawes, Ofcom Chief Executive, Ofcom said:
“Over the past year, being connected has never mattered more. But millions of homes are still using the copper lines that were first laid over 100 years ago. Now it’s time to ramp up the rollout of better broadband across the UK. We’re playing our part – setting the right conditions for companies to step up and invest in the country’s full-fibre future. This is a once-in-a-century chance to help make the UK a world-leading digital economy.”
The new regulations will apply to BT from April 2021 until March 2026.
Kevin Billings, Director and Communications Industry Principal, Pegasystems welcomed the announcement, saying:
“The ruling creates a regulatory environment that enables BT (Openreach) to feel more comfortable about the investment it needs to make in delivering full-fibre broadband to 20 million homes in the future. It means that Openreach will have reasonable control over the prices it charges to other operators who use their network (Sky, Vodafone etc).
“Today, most of their high-speed broadband services are delivered over the existing copper wires into premises over the ‘last mile’ (or however far the property is from the green box on the street where the fibre currently reaches) and they are being overtaken by providers of direct fibre to premises, who are typically smaller, and regional players, who have been helped by the government to roll out their services and compete with the larger players.
“In tandem, over the last year, broadband connectivity has become a critical lifeline to ensure business continuity, reflecting the changing working patterns. But this has placed additional cost and operational pressure on BT and other CSPs to improve the coverage, capacity and quality of their broadband networks.
“To fulfil Ofcom’s goal and maintain the current pace of full-fibre rollout, CSPs need to streamline and rationalize older legacy broadband networks, migrate to next-generation high-speed services and extend connectivity to broader (rural) areas. However, managing deployment migration and maintenance of these new services is costly and highly complex. But technologies such as automation and streamlining of operations can be implemented to manage costs, protect profitability, speed up rollout and respond to maintenance issues.”