Ofcom announces proposals for increasing full fibre investment
The much anticipated Ofcom Fixed Telecoms Market Review (FTMR) has been published and is destined to define how the telecoms market will be regulated between 2021 and 2026. The regulation is less about rules for the alt-nets but a mixture of restrictions and incentives for Openreach to both encourage the old copper beast to build a lot more full fibre and at the same time allow enough space for new and existing full fibre competitors to grow.
We plead for people to not print out the full four volumes, plus a Welsh language summary, a 42 page report by Cartesian modelling the costs of building a full fibre network and 23 other appendices. There is a consultation period that ends on 1st April 2020 so full fibre operators and others with an interest will have a chance to respond and possibly shape the proposals. For those dipping into the documents be ready for acronym overload, e.g. SBB is Standard Broadband and SFBB is Superfast Broadband
The usual 50 to 80 page Ofcom reports are lengthy reading but can usually be skimmed through over the morning coffee but after four hours, it still feels like we are skimming the surface, so a quick summary of what the review is proposing:
- While they don't intend defining any such areas as yet, the regulations include the proposal to define areas where Openreach would be free of regulation on its broadband products. The idea is that in areas with multiple infrastructure operators doing this will encourage investment and innovation.
- Potentially competitive areas: The Openreach entry level FTTP 40/10 service would be regulated i.e. inflation adjusted pricing with the price set slighting above the equivalent VDSL2 40/10 product, this is essentially what happens today. Openreach would not be regulated on the prices it charges for the faster FTTP services. Openreach would be banned from geographically targeted pricing and changes to commercial terms would have to be notified to Ofcom 90 days before coming into effect - the aim being to allow Ofcom to stop Openreach undermining any alternate operator that arrives in an area.
- Non-competitive areas: Regulation will be handled so that it allows Openreach to recover the cost of building a full fibre network in these areas e.g. if it gives a firm commitment to a FTTP roll-out in an area pricing can take into account the roll-out costs from the offset, otherwise increased prices will only be allowed after the FTTP network has been built. In these areas there will be a requirement to provide dark fibre to help mobile network operators add more masts and alt-net operators to build too.
The three areas are referred to as Area 1, Area 2 and Area 3. Only Area 2 and Area 3 have proposed locations in them as yet, and this is a set of postcode districts e.g. AB15 7 is in Area 2 while AB 21 7 is proposed to be in Area 3. We have downloaded the appendix and will look at adding this to the information we present when you search by postcode on ours labs site and once adopted will be added to our availability API
The sort of areas we would expect to be in Area 1 if any areas eventually get added would be places like Coventry which has good availability of Virgin Media, plus a growing CityFibre FTTP footprint and several Openreach Fibre First exchange areas.
A more detailed version of what the regulation in Area 2 and Area 3 involves borrowing the exact Ofcom wording follows:
Summary of price regulation in Area 2
|Wholesale Line access (WLA) services in Area 2||
a charge control on MPF and FTTC 40/10 rental charges, inflation-adjusted from 2021 levels
pricing flexibility, subject to a fair and reasonable condition, on rental charges for higher bandwidths
a charge control on FTTP 40/10 rental charges where a copper based 40/10 service is not available, set at a premium to the FTTC 40/10 price
|Leased line access in Area 2||a charge control on rental and connection charges for leased lines of all bandwidths, inflation-adjusted from 2021 levels|
|Leased line access in High Network Reach (HNR) Areas||a requirement that charges are fair and reasonable|
Summary of price regulation in Area 3
|WLA services in Area 3||
a cost-based charge control on MPF and FTTC rental charges across all bandwidths
a RAB charge control to support Openreach’s investment in fibre networks whereby MPF and FTTC charges are marked-up to allow the recovery of BT’s fibre investment costs where pre-specified investment targets are met
|LL access in Area 3||a charge control on rental and connection charges for leased lines of all bandwidths, inflation-adjusted from 2021 levels a cost-based charge control on dark fibre access|
At this time it is impossible to say with certaintity what effect the proposals will have, obviously the aim is to see a lot more FTTP being built across the United Kingdom.
The area of concern we have is exactly how will this dovetail with the £5 billion of public money the Government is saying it will invest into full fibre in the 10 to 20% of UK where commercial FTTP roll-outs are not expected to happen before 2025. For those without access to any superfast broadband option the questions will be when will they see some of this fabled full fibre technology. We would talk about the broadband USO but this is looking to be following the path of the older USC i.e. USC was declared done by virtue of satellite broadband availability and the broadband USO is likely to be declared a success by virtue of availability of 4G solutions for all but a handful and that handful is likely to be those who have missed out on any help from the USC.
A number of responses have been received so here are the ones we have so far i.e. as of 11:40am
Today’s proposals appear to be a big step in the right direction to give clarity and investment certainty.
Like the Government and Ofcom, we want to upgrade the UK to faster, more reliable full fibre broadband. We’re getting on with the job, building to 26,000 premises each week and we remain on track to reach 4m homes and businesses by the end of March 2021.
We’ll consider the range of proposals carefully and will continue to work with Ofcom and industry on getting the conditions right to help achieve the Government’s ambition of rolling out gigabit capable broadband across the UK as soon as possible.Openreach spokesperson
We fully support the goal of accelerating full fibre roll-out in Britain. We are clear, however, that a competitive market is the only way to deliver this goal.
It’s essential the regulatory environment allows competition and investment to thrive. Ofcom must avoid raising wholesale prices too early and only do so when competition has been established. This is the best way to encourage investment from new entrants, support retail competition and protect consumers from higher charges before they have access to faster, more reliable services.Tristia Harrison, Chief Executive of TalkTalk
Full-fibre is the future of fixed broadband. It’s good to see Ofcom using its powers as a regulator to stimulate competition, drive investment and improve outcomes for consumers.
Many of the broadband complaints we handle from consumers and small businesses are to do with issues around speed and reliability, so we support proposals that will lead to improvements in these areas across the UK.Ed Dodman, director of regulatory affairs at Ombudsman Services
We all agree that rural Britain deserves full fibre broadband. It’s well understood there are a growing number of privately funded infrastructure providers already investing in these network builds and customers are benefiting from brilliant products and services. Ofcom must take account of the work that providers such as Truespeed and others are doing in rural areas and not muddy the playing field by allowing Openreach to waste money on overbuilding projects in these areas.
We urge Ofcom to ensure a fair and level playing field between private and part public-funded infrastructure providers as the industry ramps up to deliver on the promise of full fibre broadband for all, regardless of post code.Evan Wienburg, Truespeed CEO
While we are encouraged by Ofcom’s recognition of the risks of volume discounts and geographic pricing to damage competition before it can scale, but we would like it to be even more proactive in addressing these issues. The Government’s 2025 target for national coverage is ambitious and while possible, it is only achievable with bold and affirmative action.
We look forward to working with the new CEO of Ofcom and the freshly formed Government to present our ideas for a more comprehensive framework that will help more of the UK access full fibre connectivity faster.Greg Mesch, Chief Executive Officer at CityFibre