The regulator said its proposals will ‘transform the business case for fibre investment’ in both rural and urban areas in the UK
Last year, the UK PM Boris Johnson promised every home will gain access to a gigabit-capable broadband network by the end of 2025, pledging to invest £5 billion in the project. However, the UK’s current Fibre-to-the-Premises (FTTP) network only covers around 3 million premises in the UK, barely a tenth of the UK’s homes.
Around 2 million of this total is provided by Openreach, who have plans to expand their coverage to 4 million by 2021.
Ofcom’s new strategy aims to accelerate such growth, not only for Openreach but also for the local alternative network operators.
“These plans will help fuel a full-fibre future for the whole country. 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,” said Jonathan Oxley, Ofcom’s interim CEO. “We’re making sure companies have the right incentives to accelerate full fibre to every part of the UK.”
The plan involves four main strategic points, which Ofcom summarises as:
1. Improving the business case for fibre investment, by setting Openreach’s wholesale prices in a way that encourages competition from new networks, as well as investment by Openreach.
2. Protecting customers and driving competition, by making sure people can still access affordable broadband and preventing Openreach from stifling competition.
3. Taking rural areas into the fast lane, by supporting investment by Openreach in these areas.
4. Closing the copper network, as full fibre is built, so Openreach does not have the unnecessary costs of running two parallel networks.
These plans should offer Openreach more incentive to bring full fibre to a more diverse customer base by allowing them to recover a portion of their investment costs from both copper and fibre products.
Meanwhile, alternative network operators like CityFibre will be pleased that Ofcom intends to keep Openreach in check by restricting them from “being able to offer discounts that could stifle investment by its rivals.”
As always, the regulator must tread lightly so not to upset the balance of the coming decades fibre ecosystem.
Tristia Harrison, chief executive of TalkTalk said: “It’s essential the regulatory environment allows competition and investment to thrive. Ofcom must avoid raising wholesale prices too early and only do so when competition has been established. This is the best way to encourage investment from new entrants, support retail competition and protect consumers from higher charges before they have access to faster, more reliable services.”
Meanwhile, Virgin Media was less reserved about the news, with a spokesperson saying: “These measures are an important step forward in providing the long-term certainty and clarity network investment requires.”
Update: Openreach also appears pleased with the announcement, with a spokesperson commenting: “Today’s 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 4m 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.”
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