New Ofcom rules to boost full-fibre broadband

New Ofcom rules to boost full-fibre broadband

United Kingdom communications regulator, Ofcom has published a set of measures that aim to increase investment in full fibre broadband networks and lower the upfront building costs.

However, it is only available to just 3% of United Kingdom homes and offices. Full fibre will also underpin exciting technology like remote healthcare diagnostics, 5G mobile and connected devices, said Jonathan Oxley, Ofcom's competition group director.

Basically the new measures are mostly about reducing the amount of power BT and the BT-owned Openreach have over the greater fibre rollout.

In addition, the proposals state that BT must make its telegraph poles and underground tunnels available to rival providers so that they can more easily build their own full-fibre networks directly to United Kingdom households.

And Ofcom said that the new measures will mean that more United Kingdom homes will benefit from ultrafast internet speeds, and that its draft decisions "will halve the upfront cost of building "full-fibre" broadband networks'".

And Openreach will have to fix faulty infrastructure and clear blocked tunnels where necessary for providers to access them.

The regulator, Ofcom, published a package of measures to further increase investment in what it called the "future-proof" form of broadband, following a range of recent commitments by broadband companies that could see up to six million premises covered by full fibre by 2020. Also, it must ensure there is space on its telegraph poles for extra fibre cables connecting homes to a competitor's network and release a "digital map" of its duct and pole network, so competitors can plan where to lay fibre. In particular its recommendations for supporting investment in full-fibre network build by limiting the lowering prices on the 40Mbps FTTC [fibre-to-the-cabinet] product.

And to prevent BT from stifling new investment by rivals, BT will not be allowed to make targeted wholesale price reductions in areas where rivals are starting to build new networks.

Ofcom seems mindful of this and has proposed a fresh set of regulations, largely aimed at BT's fixed-line wholesale arm Openreach, which are created to both encourage fresh fibre to be laid, but at the same time keep "superfast" broadband affordable for everyone by lowering what Openreach can charge other providers for its 40 Mbps service.

In March 2017, the regulator proposed to set the monthly charge for Openreach's "40/10" Mbit/s broadband package by 2021 at £11.23.

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At the moment just 3 per cent of United Kingdom homes and offices can access full-fibre broadband and the changes outlined by Ofcom aim to increase this to 20 per cent by 2020 - the equivalent of six million households.

These require it to complete 88 percent of fault repairs within two working days of being notified and complete 97 percent of repairs within seven working days.

But Ofcom is also concerned about BT undermining any new fibre investment by selectively dropping its trousers on price to undercut its new competitor, so it's banning that, and then it's knocking 25% off the annual wholesale rental price for the 40 mbps service, as shown in the table below.

The draft decisions follow Ofcom's Wholesale Local Access market review, which aimed to determine the fair price that Openreach can charge for access to its infrastructure.

The new requirements must be met by 2020/21.

In a stock market update BT said: "Today's statement from Ofcom gives us certainty on the pricing of key products for the next three years".

In a statement, it said the changes would have an "adverse financial impact on Openreach's revenue and profit" in the region of £80m to £120m.

We have long argued that Openreach has no incentive to invest in the full fibre broadband that Britain needs when it could make excess profits by overcharging for copper-based services.

For example, it said it was considering the implications for competition from BT being unable to vary its wholesale rental charges between different geographic areas.

Richard Neudegg, head of regulation at Uswitch said: "This focus on future investment alongside strong competition is critical".

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