Ofcom has unveiled new regulations for wholesale telecoms markets used to deliver broadband, mobile, and business connections in the UK, which aim to promote competition and investment in gigabit-capable networks.
This includes regulating the impact of Openreach, which holds the biggest share of the UK's broadband market, by examining the level of current or prospective competition in a given area. The BT subsidiary will be prevented from offering geographic discounts on its full-fibre wholesale services.
However, Ofcom will also freeze the wholesale fees Openreach charges for providing data speeds of up to 40Mbps using technologies such as FTTC (copper links via fibre to the cabinet) or ADSL, which uses copper links only. The regulator has also decided not to place a pricing cap on Openreach’s fastest fibre services, allowing the company to better fund a faster rollout.
Ofcom chief executive Dame Melanie Dawes said that, despite the huge demand for network connectivity due to continuing lockdown restrictions, “millions of homes are still using the copper lines that were first laid over 100 years ago”.
Ofcom is “setting the right conditions for companies to step up and invest in the country’s full-fibre future,” said Dawes, adding that “now it’s time to ramp up the rollout of better broadband across the UK”.
The new regulations will go into effect starting next month and remain in effect until at least March 2026.
Openreach CEO Clive Selley said that Ofcom’s new regulations will allow the provider “to ramp up to 3 million premises per year providing vital next-generation connectivity for homes and business right across the UK”.
The company has by now managed to extend the FTTP rollout to “almost 4.5 million premises”.
Virgin Media CEO Lutz Schüler welcomed Ofcom’s announcement, describing it as a “resounding sign of support and longer-term clarity from Ofcom for those rolling up their sleeves to build the nation’s next-generation digital infrastructure”.
Last month, Virgin Media announced plans to create more than 400 new graduate, intern, and apprenticeship roles over the course of 2021 to assist the company in building and maintaining its gigabit infrastructure, as well as continuing to expand its network to connect new homes and businesses as part of its ‘Project Lightning’ programme.
“Ofcom’s focus is in the right place, and we urge the regulator to maintain this trajectory so that more of the country can benefit from competing gigabit networks that deliver long-lasting economic, societal and environmental benefits,” he added.
CCS Insight’s consumer and connectivity director Kester Mann described the ruling as “a huge boost for the deployment of full-fibre broadband that will benefit millions of UK homes and businesses for years to come”.
“It comes at a time when the value of connectivity has never been more appreciated as the pandemic triggers major change in how people live and work. The UK’s over-reliance on using dated copper lines for 21st-century connectivity has held back its aspirations to become a world-leading digital economy. Today’s news sets fresh conditions to help accelerate full-fibre broadband deployment to help it move out of the slow lane.”
Mann added that “the news caps a great week for BT following a successful outcome in the 5G spectrum auction”.
“Rolling out fibre infrastructure is a costly and time-consuming venture with a pay-back measured in decades. CEO Phillip Jansen recently declared that BT is "ready to build like fury" and while it would have preferred a longer period free from regulated pricing, the announcement still brings much-needed certainty to make a return on investment. The news may not be so appreciated among service providers that rely on Openreach and other infrastructure. But this was always a delicate decision for the regulator which had to tread a fine line between encouraging long-term investment and maintaining fair competition. It may have got it about right.”
DCMS secretary Oliver Dowden said that he welcomes Ofcom’s new regulations, adding that they “strike the right balance between encouraging commercial investment and protecting consumers”.
He also announced that the government will tomorrow publish its “plan to drive the rapid rollout of gigabit broadband across the whole of the UK, including the first places to benefit from our £5bn investment in hard to reach areas”.
