BT accepts green go light from Ofcom
In about a year's time we should start to see the deployment of fibre to the cabinet by the BT Group, with access available at a wholesale level to ensure retail competition. Ofcom has published a statement entitled "Delivering super-fast broadband in the UK".
The approach Ofcom is adopting is not a totally 'hands off' position; they are simply outlining the framework they will use to regulate the product, the key points being:
- allow wholesale pricing flexibility to enable returns appropriate to the considerable risks of building new networks, but constrained by the market in the interests of customers;
- ensure that any regulatory pricing allows investors the opportunity to earn a rate of return that genuinely reflects the cost of deployment and the associated level of risk;
- minimise unnecessary inefficiencies in network design and build as a result of regulatory policies, while continuing to protect the consumer interest;
- support the use of new, more flexible wholesale services by BT to offer super-fast services to other service providers and consumers at competitive prices; and
- safeguard the opportunity for further competition based on physical infrastructure, by facilitating fair opportunities for companies to synchronise their investments with BT’s deployments, should reasonable demand arise, and encouraging network design that takes future potential competition into account.
For those keen to know potential prices and product specs it is too early to know for sure, though we have seen indication of possible product speeds from BT, and there are wholesale prices for the fibre to the home services at Ebbsfleet.
"Today's announcement gives us the green light to push ahead with our 1.5 billion pounds superfast broadband investment plans to reach at least 40 percent of UK households by 2012.
Today's announcement from Ofcom has set expectations for the whole UK industry as the market evolves into a fibre-based world."Statement from BT Group Chief Executive Ian Livingston
One key point is that this latest statement from Ofcom concerns Fibre to the Cabinet (FTTC), not Fibre to the Home (FTTH). The majority of the £1.5bn spend on fibre will be mainly on the cabinet based service, the regulatory requirements for the FTTH service have previously been covered by Ofcom. The current recession means new build housing is down in volume, so it is likely less greenfield sites will be developed to benefit from Fibre to the Home. The deployment of the cabinet based solutions in an area will not affect existing services such as LLU or WLR/CPS deals since the intention for now is that the copper network between exchange and homes/businesses will be left in place.
So where does this leave everyone in the UK? Well a lucky 40% to maybe 60% of households by 2012 will have the choice of one or more of Virgin Media 50Mbps or a BT 40Mbps service. Ofcom accepts that purely commercial approaches will not fully cover the UK, at least not in the short or medium terms, but suggests at present it is unclear how far they will go and thus is difficult to regulate.
If the wholesale product provided via FTTC and other changes such as better access to duct space prove attractive to providers like TalkTalk and Sky then we may see them pushing for more expansion or even engaging in their own sub loop unbundling, that might see speeds of 25Mbps and faster reaching coverage levels approaching that of LLU now. One example of sub-loop unbundling is the Digital Region project underway in Yorkshire.
For those of us who are still to see LLU, then we are largely left with the Community Broadband Network and the fledgling USO for broadband.