Ofcom’s proposals for stimulating greater investment in fibre broadband

Ofcom’s proposals for stimulating greater investment in fibre broadband

Ofcom has published its first combined five-year review of Wholesale Fixed Telecoms regulation which maps out how it will regulate Openreach between April 2021 and March 2026 for both the residential and businesses connectivity markets (previously the regulator separately assessed the Wholesale Local Access Market Review of residential, and the Business Connectivity Market Review).

Ofcom’s four-point plan aims to support competitive investment in fibre networks and competition in gigabit capable services, ensuring world class broadband services are available to as many people and businesses as possible.

  1. Improving the business case for fibre investment. In more urban areas, Ofcom proposes that the wholesale price that Openreach charges retail providers for its entry-level (40 Mbit/s) superfast broadband service is capped to inflation. This follows a cut Ofcom made to this product in its 2018 review. Ofcom also proposes that Openreach can charge a small premium for regulated products if they are delivered over full fibre. Openreach’s fastest fibre services will remain free from pricing regulation to support the investment competition between network builders.
  2. Protecting customers and driving competition. Ofcom will ensure that people can still access affordable broadband by capping Openreach’s wholesale charges on its slower copper broadband services. Openreach will be restricted from being able to offer discounts that could stifle investment by its rivals.
  3. Taking rural areas into the fast lane. In rural areas where there is no prospect of multiple networks being built, Ofcom will support investment by Openreach which is the only operator with a large-scale rural network, by allowing it 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 will include these costs in its prices upfront. If not, Ofcom will only allow it to recover these costs after it lays new fibre. The UK Government is planning to invest £5bn to reach the most challenging 20% of the UK and is working closely with Ofcom on its plans for this.
  4. Closing the copper network. Ofcom plans to remove regulation on Openreach’s copper products in areas where full fibre is built to support the migration/switching of customers to the new fibre network. Ofcom will be transferring its regulation – including price protections – from copper to new fibre services.

On 5G, Ofcom has set out how it will regulate Openreach’s leased lines which are needed by the UK’s mobile and broadband networks. Regulation will vary depending on the level of current or potential competition in a given area. This will involve Openreach providing companies with access to its dark fibre in non-competitive areas at a price that reflects its costs. The aim is to drive 5G build and reduce roll-out costs for mobile network operators.

The consultation closes on 1 April 2020. This current rules expire in April 2021 so the decisions are expected to be published in early 2021.

BSG welcomes the launch of Ofcom’s review to boost investment in competing full fibre networks, and by extension 5G infrastructure capable of offering gigabit speeds for UK consumers and businesses alike. The regulatory framework is a critical enabler for the clarity and long-term investment required by our industry sponsors across the broadband, mobile and wireless value chain, alongside an accelerated policy agenda implementing the key “barrier busting” measures in support of Government’s deployment targets.