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EU attempts to bring some regulatory certainty to broadband market
Friday 13 July 2012 09:24:41 by Andrew Ferguson

The UK largely through the work of Openreach has been improving in terms of broadband speeds offered, though some would say the pace of change is not fast enough. Additionally there is some very vocal complaints that the favouring of FTTC technology is short sighted. We believe that while some questioning of the Openreach projects is justified, at least they are out there doing something on a scale that will affect millions. The issue over competition and the various BDUK local authority projects has been at the forefront of the news for a few weeks, and the biggest hurdle for these projects has been getting EU State Aid approval.

On Thursday 12th July, EU Vice President Neelie Kroes' stood up and issued statements whose core tenet is to try and provide some regulatory certainty and ensure that EU 2020 targets such as half of the EU actually using 100 Mbps connections by 2020 becomes a reality.

So far a lot of the UK press coverage has been similar to what CityAM has published, suggesting that the EU has sided with the big telcos on fibre broadband. Now while we can see why this might be the perception, it is clear that the EU wants a level playing field, so incumbents will not be able to do what Verizon has done in the US, and create a closed fibre network.

"We have thoroughly examined the contributions made, and I can now announce the decisions I intend to propose to ensure that Europe finds its place as the connected, competitive continent, in particular through investment in high-speed, next generation access (NGA) broadband networks.

Regulatory policy should clearly be an enabler not an obstacle. Regulation that is stable over time and consistent throughout Europe can underpin sustainable competition and efficient investment.

  1. Competition needs a level playing field
  2. Too much intervention constrains flexibility
  3. We should be aware of both direct and indirect effects of regulation
  4. We should be wary of picking winners. "Technology neutrality"
  5. In general, regulated wholesale access prices should get the "buy or build" signals right
  6. Regulatory stability and consistency over time is a value in itself
  7. The question whether a rise or fall of copper prices would spur NGA investment is complex

But more importantly, after examining all the evidence, and given the significant competitive relationship between copper and NGA networks, we are not convinced that a phased decrease in copper prices would spur NGA investment. Indeed, we now see fibre investment progressing relatively well in some Member States where copper prices are around or above the EU average."

The problem for the EU is that the broadband markets across Europe are very diverse, and from attending Digital Agenda conference the impression one gets is that a great deal of the concern in other EU countries is introducing competition in the cities. The UK with most cities (48% of UK households) having a choice of two local loops already does better than many parts of the EU and the world. There is of course countries like Sweden where local authorities have often embarked on their own fibre projects, which in many cases have subsequently being sold on to commercial operators - the closest example in the UK would be Digital Region in South Yorkshire.

The value of the incremental approach to broadband improvement which Openreach and BT have embraced, and to some extent is the same with Virgin Media, appears to have been recognised as a cost-effective approach to meeting the goals. So why the change from what has been perceived as a full fibre or nothing type approach previously, perhaps it has been the realisation of the scale of the task involved, both in terms of physical work and the investment needed. The EU's €8bn investment is not much when split over 27 countries, and while we complain about UK broadband, the issue of final thirds and halves is repeated across the EU. The EU now has to encourage investment from both incumbents and the altnets, to create enough investment to meet its targets across the EU, rather than in just one or two countries.

So maybe BT has played the right card, with its majority FTTC deployment, some FTTP to gain experience and understand costs, so that where money is available Fibre on Demand can be made available. For example, the many semi-rural buildings that have been converted into 4 or 5 offices should be able to buy a single Fibre on Demand link and get connectivity as good as almost any EU city business.

Not everything has fallen in BT's lap, it still needs to ensure a level playing field, and the national regulator has a big part to play in understanding the pricing pressures in different parts of the UK, and ensuring BT does not abuse its position.

Altnets still have a massively important place in the UK market, and the entrepreneur/can do spirit will continue to keep the big operators on their toes, so long as the UK Government, Ofcom and EU do not legislate them out of existence.

One size fits all in any manufacturing/product arena is usually a path to failure, and so long as in the UK we remember this and encourage some diversity, the new companies that emerge like evolving lifeforms will flourish, some may burn bright for a short time, but some will be so disruptive they become dominant over a period of decades.

Comments

Posted by Kushan over 4 years ago
Good article, but it really could do with some better editing and more proofreading. Don't take offence, Andrew, I don't mean it in a horrible way I just mean it was actually hard to read parts of it.
Posted by andrew (Favicon staff member) over 4 years ago
A couple of double words removed which will make it clearer.



Posted by AndrueC over 4 years ago
Re-converted rural buildings. We can't get FoD because our cabinet isn't enabled but apparently BT won't charge to blow fibre to us because ducting is already in place. Even then it's only about £3k for the site installation.
Posted by andrew (Favicon staff member) over 4 years ago
@AndrueC well the majority cannot get FTTC at present, but things are changing, you might get in a year or two.
Posted by otester over 4 years ago
"so long as the UK Government, Ofcom and EU do not legislate them out of existence."

Bit late for that lol.
Posted by ribble over 4 years ago
@AndrueC I dont believe FoD (FIbre on Demand) if/when it appears will actually require an active FTTC cabinet, it utilises the fibre spine cables already provided for FTTC in a given exchange area.
Posted by herdwick over 4 years ago
@ribble so you're saying FoD is PON using fibres blown through the tubes installed for FTTC ? The fibres to the cab are presumably spoken for at 1G per 48 customers.
Posted by ribble over 4 years ago
@ herdwick thats basically how I understand it, so whether a premises is connected to an FTTC cab or even E/O should not automatically exclude the possibility of FoD.
Posted by Going_Digital over 4 years ago
The government on the one hand claims to want to encourage high speed internet and yet on the other has a ridiculous fibre tax, duh! Left hand and right hand not knowing what each are doing I think.
Posted by andrew (Favicon staff member) over 4 years ago
Once the FOD trials are more underway will chase for exact architecture, so people can get a sense of whether they will high or low cost, e.g. what relationship D and E lengths will have on the install fee.
Posted by Dixinormous over 4 years ago
The MSANs can hold line cards serving VDSL and line cards serving EPON.

An example, not the one BT are using I don't think though, is http://chucheng.en.alibaba.com/product/432965539-212063434/Huawei_MA5616_IP_Based_MSAN.html

Either way pretty much everything that does VDSL can do FTTP with a line card.
Posted by bigluap over 4 years ago
Notice how it was rolled out in areas which already had Fibre first. We had a big push by BT to Virgin Media customers, get the card with the post every other week. Think of all the countryside that could have got something quicker.
Posted by New_Londoner over 4 years ago
@bigluap
In terms of "all the countryside that could have got something quicker", FTTC/P will get to around two thirds of properties with commercial funding. It will not get to the rest without some form of public funding such as BDUK.

So not deploying to the two thirds would not mean the final third got anything more quickly without the funding in place, it's still uneconomic.
Posted by AndrueC over 4 years ago
Re:FoD without a cab - but isn't that already available? That's what we are ordering for our site. BT are going to blow us some fibre from the exchange down the existing ducting. It'll be a leased line rather than a contended business connection but we demanded fibre and BT have said "yes".
Posted by GMAN99 over 4 years ago
"We had a big push by BT to Virgin Media customers, get the card with the post every other week."

Only every other week? You are lucky. I get one or two from Virgin each week
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