Ofcom decision featherbeds BT's fibre risk

News Analysis

Ofcom decision featherbeds BT's fibre risk

Ian Grant

Ofcom is proposing to let BT set its own return on investment targets for rolling out a fibre-based high-speed broadband network to compensate for a "risky" investment.

"Currently, there appears to be limited interest from communication providers other than BT in investing in fibre-to-the-cabinet infrastructure for super-fast broadband," Ofcom said in its consultation document.

Yet others are prepared to take the risk. Virgin Media CEO Neil Berkett says his company has risked "hundreds of millions" to upgrade its cable-TV-based network to 50mbps. And there is also no shortage of city administrations and regional development agencies prepared to invest in fibre networks.

Malcolm Corbett, CEO of the Community Broadband Network, told the recent Communication Managers Association that he has around 20 local fibre projects at various stages of development, with the first to light fibre a new build development in Glasgow, where tenants moved in last month.

Corbett added: "We are working towards 250 projects and more, but it will take a while."

Corbett says there is "no top-down business case" for a £30bn project to run fibre to every home in the country. "However if you turn the problem on its head, it equates to less than £1500 per house or business. If the financing is spread over 20 years, it becomes a much more do-able proposition.

"This is the basis for the projects we are working on: community engagement to drive take up levels; long-term financing; and an intelligent approach to local architecture to drive down costs. Added together, this equates to projects that can aim for fttp, offering 100mbps symmetric connections, on an open-access basis, with no price premium for consumers."

A BT spokesman says the company will look to recover its investment in three to five years. However, he says the fibre cables that BT will install will have a working life of "at least 20 years".

He adds that BT has already installed around 10 million kilometres of fibre.


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