Broadband News

Ofcom CEO says Openreach needs to be more ambitious

The pressure on Openreach to be seen to be doing a lot more in terms of full fibre roll-outs is growing, unfortunately for the operator the pressure does not come with any extra money and this increasing pressure on Openreach carries a massive risk that it may discourage more of the investment that others such as CityFibre, TalkTalk, Vodafone, Hyperoptic, Gigaclear are making in their own full fibre roll-outs and not forgetting the expansion by Virgin Media.

Sharon White the Ofcom CEO has been talking to the Daily Mail and the part that is apparently a direct quote is reproduced below:

Why should we be any different from Spain or Portugal? Openreach have made a good start but I would like them to set a much more ambitious target.

It is inexcusable that millions still do not have access to a decent broadband connection.

Now Openreach and its parent could say it did try to do more, with its USO proposal that rather than waiting to 2020 for people to be able to request a better connection would see them rolling out USO capable services ahead of that time, the downside though was that to reach 100% the date pushed more into 2021. Though the great unsaid thing around the broadband USO after the rejection of the BT offer is that with the legal USO being on-demand led you may well have people moving home in 2024 and having to invoke the USO to get a decent service.

The success story of Spain with its high availability of full fibre resurfaces but you don't have to look too hard to see that rural areas of Spain are not really that different to the rural areas of the UK. Chasing higher levels of full fibre is good goal but there needs to be a clear and total break from the technology agnostic rules of the past immediately if this is what both Ofcom and Government want and the realisation that the current plans for increasing the full fibre coverage levels massively alone is still not going to solve the rural broadband problem, since the commercial projects are aimed at urban parts of the UK. Yes full fibre removes all the distance worries around service speeds that plague xDSL, fixed wireless and mobile services but the downside is that those rolling out the full fibre end up paying out more in wages due to the time it takes in rolling out to say 20,000 premises in a large rural area rather than 100 xDSL cabinets or wireless masts, the full fibre technology itself is NOT expensive.

Some of the other reasons why other countries in Europe are doing better is that more people live in apartment blocks and some of those with the best full fibre coverage actually skipped the ADSL and cable broadband era in the 2000-2010 timeframe but opted for fibre to the building with cheap and easy to deploy Ethernet.

There is a prediction from the Ofcom boss that the existing proposals from Openreach and others will take the UK to 25% full fibre fibre coverage by 2025, we are not committing to any specific estimate ourselves since we don't know to what degree the CityFibre 5 million ambition by 2025 (1 million by 2020) and Openreach 3 million by 2020 will overlap each other. The question though is whether the UK will be truly behind well before 2025 we expect Virgin Media to be selling DOCSIS 3.1 services over its cable network footprint and by 2025 the product range is likely to be a choice 1 Gbps, 500 Mbps and 200 Mbps products from them. Virgin Media could have a coverage footprint of 60% of UK premises by 2025, and while we expect a significant overlap by the full fibre providers we might have 70% of the UK with access to Gigabit download speeds.

So yes it would be great if Openreach was to do more, but our realistic streak means that given they've not yet built the 3 million premises of FTTP, announcing another target for their aims beyond 2020 is premature. Also given how everyone hates the dominant player if Openreach was to be as ambitious as desired we are willing to bet that things would quickly end up in regulatory battles as other operators would cry foul, especially if the ultimate goal of retiring the copper network was accelerated. Removing the copper network is not the cash gold mine some have suggested in the past, but it will free up lots of duct space that is going to be needed for other operators too, since PIA and shared duct is needed to avoid constant micro-trenching in residential areas.

Comments

I think Sharon white needs to look at the markets:

Spain - 4 main operators who have spent billions to build their own networks. Rural coverage remains an issue.

Portugal - Portugal Telecom, the former state monopoly, built its own fibre network that it did not have to wholesale out. Vodafone/Sonaecom and NOS built their own networks.

The question OFCOM needs to answer is why have operators in Portugal and Spain been investing billions over the past decade to build their own networks, yet in the UK we've only seen Openreach, Virgin Media and a few smaller operators build their own networks?

  • AndyCZ
  • 6 months ago

Hmm. If only Ms White could pull herself away from politicking and spend some time acting in her capacity as regulator, which seems only fair as it’s what she paid to do as a public servant!

If there was a coherent regulatory regime in place that encouraged investment, linked to a tax regime that did the same (including business rates) then she might see more investment. Instead we have the current half-baked, economically illiterate system overseen by a CEO more interested in politics than doing her job.

The Chair of Ofcom has changed recently, let’s have a new, competent CEO too!

  • New_Londoner
  • 6 months ago

Yes, let's look at Spain. Telefonica had no requirement to wholesale their FTTP network above ADSL-level speeds put into law until 2016 and, even now, have no need to wholesale where there are 3 or more operators offering FTTP or DOCSIS 3.0 cable.

With the introduction of that law they veered away from investment in areas where wholesale was a requirement. They did, however, reach voluntary agreements to wholesale.

Is this what Ms White had in mind? Permitting Openreach / BT not to wholesale FTTP? Would certainly help with rollouts.

  • CarlThomas
  • 6 months ago

Given the behaviour of the Sky, TalkTalk, Vodafone groups if we are just worrying about the big few then allowing full vertical integration of GEA-FTTP would not change much in terms of what the average member of the public sees as provider choice in Openreach FTTP areas.

But I suspect that proposal would be not be allowed by the same people who currently refuse to sell the wholesale service, or if they intend to sell it are doing a very good job at hiding their ambition.

  • andrew
  • thinkbroadband staff
  • 6 months ago

Frankly I find the comparison disingenuous in the extreme. Either Ms White is intentionally misleading or is clueless.

Portugal: incumbent didn't wholesale FTTP until 2016.
Spain: incumbent didn't wholesale FTTP worth buying until 2017, and exclusions where other infrastructures are in place.

Both: far higher proportion of properties in MDUs than the UK, and overhead infrastructure more tolerated.

A nice reminder that Ofcom are largely a waste of space; a politically motivated hangover from New Labour that needs putting on the fire and a fit for purpose replacement conceived.

  • CarlThomas
  • 6 months ago

I think it's highly likely that Sky, TalkTalk and Vodafone will not sell Openreach's FTTP in the coming years. If this is the case, then it does make it a difficult business case for BT to make significantly more investment in a wholesale product that the majority of the market refuses to sell.

If OFCOM were to agree to a sunset of copper services where Openreach have full FTTP deployment, then this could be a game changer.

  • AndyCZ
  • 6 months ago

I've put my points onto an open collaboration document.

In summary though:

Portugal had no wholesale until 2017.
Spain none until 2017, then only partial.
Portugal plan on retiring their copper by 2020, Telefonica started in 2015. Openreach can't even deploy LR-VDSL due to complaints from OLOs.

All of those are regulatory issues.

Lastly, Portugal's properties are 40% MDUs, Spain's 68%, UK's 12%. Hyperoptic spend £170 per premises passed in MDUs, VM £660 per premises in standard streets, Openreach even with pre-existing infrastructure £300-600 per premises.

Not a valid comparison at all.

  • CarlThomas
  • 6 months ago

The sad thing is these arguments around MDUs are not new, although Carl has obviously put numbers to them in this thread - how is it then that both Ms White, and presumably her advisors, are either ignorant of them or have chosen to dismiss them?

  • Gadget
  • 6 months ago

Ofcom appear to be too busy playing politics to care about such minor things as facts.

  • CarlThomas
  • 6 months ago

@Carl
The Ofcom team does have form in inventing “alternative facts” when the actual facts don’t fit its political narrative. It’s sad that a regulatory body has been allowed to drift so far from its brief, let’s hope a new CEO comes along soon to get it back on track.

  • New_Londoner
  • 6 months ago

Is this woman related to Trump? Or Boris? Would she know the truth if it came up and bit her?

I'd have made the same points that @Ignition does about Spain and Portugal. Especially that both places incentivised the incumbents with allowing a wholesale-holiday and an end to copper. That indirectly incentivised competitors to build physical networks too.

The EU's digital progress report shows that incumbents in both countries have a higher BB market share than the UK, yet incentives were still allowed.
...

  • WWWombat
  • 6 months ago

In contrast, government & Ofcom here seem determined to drive BT to less of a market share, and allow no incentive. The LR-VDSL debacle shows that Ofcom will give more credence to Sky/TalkTalk's desire to keep copper as long as possible ...

... which directly feeds into BT's plans for G.Fast

Does Sharon think all these things are disconnected?

  • WWWombat
  • 6 months ago

I'd not got the MDU figures to hand but fly over any EU capital and the difference is pretty obvious from the sky.

  • andrew
  • thinkbroadband staff
  • 6 months ago

It is also worth pointing out that both Spain and Portugal appear to be more expensive than the UK.

According to Ofcom themselves (in the 2017 ICMR scorecard), Spain is £10-15pm more expensive for the 3 bundles they've chosen.

In the EU's digital progress report, they say that the high prices might be an important reason for low broadband takeup: "the country's entry-level prices are amongst the highest in the EU".

Is it really a surprise that high prices go alongside a full-fibre rollout?

It should be no surprise that low prices and enforced copper goes alongside ... keeping copper. Duh

  • WWWombat
  • 6 months ago

@andrew
https://en.wikipedia.org/wiki/Housing_in_Europe

  • WWWombat
  • 6 months ago

Ofcom's CEOs have always played politics. The difference with this one is that she is not feeding the BT line to the politicians but feeding the politician's anti BT line to BT

  • gerarda
  • 6 months ago

Has Ofcom ever worked on BT's side toward the politicians? I'm not convinced.

Ofcom needs to always take a measured stance against BT. But go too far with an anti-BT stance, and you stop having a reluctant-but-cooperative partner, and find an uncooperative one instead.

From my perspective, the current governmental drive for fibre is lead by the embarrassment of not getting onto the FTTH council's charts. There's no current need for BT to follow that line right now

  • WWWombat
  • 6 months ago

I once sent Ofcom an organisation chart showing their CEO reporting to BT. They did not demur.

  • gerarda
  • 6 months ago

I think it was the Ofcom 2013 infrastructure report which triggered that. It was so stuffed full of regurgitated BT spin it might as well have been written by BT's PR department.

  • gerarda
  • 6 months ago

Maybe the response is held up by the busy respond-to-crackpot department

  • WWWombat
  • 6 months ago

Ofcom ,Ofgem ,Oftwat they all fail in the primary duty of regulating. Sharon White , how did she get the job as she sure can't do it. The UK structure of regulators just doesn't work. They are not independent they are political and that needs sorting

  • Marlon88
  • 6 months ago

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