The UK broadband market has operated with a degree of stability for some ten years now and the Ofcom review into how Openreach operates and interacts with other providers has now been published. Although much of the precise detail is still unknown, we know the direction Ofcom wants to go. Hopefully the changes are enough to stave off protracted legal fights and will allow even larger investment in network infrastructure both by Openreach and its competitors.
- A choice of networks for consumers and businesses. Openreach must open up its network of telegraph poles and underground tunnels to allow rivals to build their own, advanced fibre networks, connected directly to homes and offices.
- Reform of Openreach. Openreach needs to change, taking its own decisions on budget, investment and strategy, in consultation with the wider industry.
- Better quality of service across the telecoms industry. Ofcom intends to introduce tougher rules on faults, repairs and installations; transparent information on service quality; and automatic compensation for consumers when things go wrong.
- Better broadband and mobile coverage. Ofcom will work with the Government to deliver a new universal right to fast, affordable broadband for every household and business in the UK. We also intend to place new obligations in future spectrum licences to improve rural mobile coverage.Keypoints from Ofcom Digital Communications Review
The key change for Openreach is that Ofcom wants the division with the BT Group to become more independent in how it decides strategy and investment decisions, with Ofcom stating that Openreach has in the past not consulted enough with other telecoms providers about its plans. The points on opening up poles and ducts is interesting as PIA which in theory allows for this already is therefore clearly seen as not working. No firm information is forthcoming on pricing or time scales but with Ofcom saying that it will consider referring Openreach to the CMA (Competition Markets Authority) if Openreach does not play ball fully, the pressure is on Openreach to make duct sharing work for as many providers as possible.
The rumours of the last few days with Openreach being more ring fenced and gaining its own board is described as something that might need to happen, but won't be known for sure until details are thrashed out later in 2016, this gives Openreach a period of a few months to show what it can do in its current format, or this may be something that will now naturally happen with the potential for one or two members of the board being from the major providers.
The most immediate changes for the consumer is that rules around faults, missed appointments and other issues will be toughened up and rather than consumers having to plead for compensation, this will become an automatic process. We presume these automatic 'refunds' will go via the retail and wholesale providers and this is sometimes the bottleneck for existing compensation schemes, so hopefully Ofcom will monitor both Openreach and the providers to make sure they do pass on the full level of compensation due.
We presume 'advanced fibre networks' is a different way of saying Fibre to the Home and Fibre to the Premises and if the price and ease of access is correct this could stimulate the growth of FTTH which Sky and TalkTalk are saying they want to do, though whether this just means competing with Virgin Media to add a third local loop option in the most commercial part of the UK will only be known in time. Even if Openreach was mandated to provide free access to ducts there is still considerable amounts of labour involved in laying subduct and the subsequent fibre runs, so unless someone has a very low cost work force of 100,000's of staff widespread FTTH is still some years away.
Update 11:45am Added comment from Virgin Media.
Update 9:20am A steady stream of operator comments have appeared and rather than include them all we will have to be a bit selective, but here are some of the responses so far.
"The UK is ahead of its European peers when it comes to superfast broadband and we want it to maintain that position. That is why BT is keen to make significant additional investments over the next five years and beyond.
We want to build an even faster network and we also plan to address slow speeds in the final five per cent of the country. It is also important that we give small businesses further options aside from dedicated lines, which suit many but not all. Customer expectations have increased dramatically in recent years and we are keen to work with Ofcom and industry to meet those expectations. We all want to improve service. Openreach is already subject to regulated service standards and we are happy to work with Ofcom to improve them
Our plans would help ensure the UK remains the leading digital nation in the G20 and we are keen to get on with the job. They involve large scale investment however and that requires a high degree of regulatory clarity and certainty, something that is missing at present.
Ofcom have today explained why breaking up BT would not lead to better service or more investment and that structural separation would be a last resort. We welcome those comments. The focus now needs to be on a strengthened but proportionate form of the current model and we have put forward a positive proposal that we believe can form the basis for further discussions with both Ofcom and the wider industry.
Our proposal includes a new governance structure for Openreach as well a clear commitment on investment. Openreach is already one of the most heavily regulated businesses in the world but we have volunteered to accept tighter regulation to bring matters to a clear and speedy conclusion.
We are happy to let other companies use our ducts and poles if they are genuinely keen to invest very large sums as we have done. Our ducts and poles have been open to competitors since 2009 but there has been little very interest to date. We will see if that now changes. “We are keen to understand and address Ofcom’s concerns so we will review their paper in detail. A great deal of what they are proposing is already in place and we are open to discussions about how the current rules can be amended and updated. A voluntary, binding settlement is in everyone’s interests and we will work hard to ensure one is reached"BT Group Chief Executive - Gavin Patterson
"Hyperoptic, the U.K's leading 1 Gb provider, welcomes Ofcoms decision to force Openreach to properly open its duct and pole network to allow other operators to rollout competing infrastructure services. Having already trialled using those ducts to offer our 1 Gb service, we will be able to reliably and affordably offer our market leading 1 Gb service to even more consumers.
We also advise Ofcom to ensure that all customers of Openreach have a voice in future network decisions and not just those that resell the plain old vanilla FTTC services – it is those that are truly innovating that offer the UK the best chance at a digital future."Hyperoptic comment
"We welcome Ofcom’s recognition that the current Openreach model is not working and that fundamental change is required. BT must now be held to account for improving service and enabling delivery of fibre to Britain’s homes and businesses. Ofcom's actions today are not the end of the debate but a staging post towards delivering the network and service that Britain needs. We believe the simplest and most effective way to fix the current broken market structure is for Openreach to be completely independent. We are pleased to see that separation is still on the table.
We will work with Ofcom to deliver change at Openreach and we look forward to playing a positive role in helping make Britain a digital world leader."Comment from Sky spokesperson
"We are disappointed that Ofcom hasn't gone further to challenge the control BT exercises over the communications market, but pleased that Sharon White and her team have recognised the need for significant changes. INCA members build new fibre and wireless networks, often in the most challenging areas of the UK. For too long they have struggled to make sense of the rules and restrictions surrounding access to BT's ducts and poles. A few stout-hearted companies are having a go - notably Warwicknet, Callflow Solutions and Hyperoptic - so steps to make it it easier for competitors to use the existing infrastructure are welcome. It means faster deployment of the high speed, affordable broadband services that consumers and businesses need"Malcolm Corbett, INCA's Chief Executive
"CityFibre welcomes the recommendations published today by Ofcom following its Strategic Review of Digital Communications. The report’s conclusions are clear – that to meet the UK’s current and future digital communication needs, and enable widespread availability of competing fibre to the premises networks, a strategic shift to support large-scale investment in end-to-end fibre is required. To accelerate this, Ofcom recommends the promotion of investment and competition, and provisions such as the assurance of meaningful access to BT’s physical infrastructure. The conclusions in today’s report will considerably strengthen CityFibre’s capability to drive forward an alternative fibre future for Britain."Greg Mesch, CityFibre CEO
"The best way to provide competition against BT and its inherited advantages is to support infrastructure investors like Virgin Media. We are challenging the incumbent with £3bn of investment in new network and providing choice.
Ofcom has done the right thing by resisting separating Openreach, which would have sent a negative signal to infrastructure investors.Virgin Media CEO, Tom Mockridge
"ISPA is pleased that Ofcom has an ambitious vision and proposals on how the UK connectivity needs can be transformed over the next decade. With ISPA members investing heavily in their networks across the country - locally and nationally utilising a range of technologies - ISPA supports the report’s objectives to improve performance, enhance competition and investment and make rolling out networks easier in this data-driven age."ISPA Comment
"I welcome these initial conclusions from Ofcom and the new policy direction that is emerging. I think that the policy proposals are certainly moving in a direction that will prioritise FTTH and accelerate deployment in the UK. While the UK ranks close to last in FTTH in Europe hence does not qualify to be listed in the Global FTTH rankings, with the right policy response Ofcom can help the UK to quickly move to the other end of the table and join the league of FTTH leading economies."FTTH Council Europe President Edgar Aker