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Ofcom pledges to halve the cost of full-fibre broadband network builds

Telecoms regulator Ofcom has finalised plans to make full-fibre broadband network builds cheaper, and encourage more private sector investment

Ofcom has published a series of final proposals that it hopes will incentivise further industry investment in ultrafast full-fibre – or fibre-to-the-premise (FTTP) – broadband networks by making infrastructure much cheaper to build.

The telecoms regulator claimed its plans will slash the cost of full-fibre broadband network builds by up to 50% and help the industry hit its own targets of connecting up to 20% of UK premises to FTTP broadband by 2020 – the current figure stands at around 3%.

Over recent weeks and months, various communications services providers (CSPs) have made headline commitments to FTTP – Virgin Media wants to pass two million properties, Gigaclear 150,000, KCOM 200,000, Openreach three million and TalkTalk three million over the next two years. CityFibre and Vodafone, and Hyperoptic have committed to a further 10 million by 2025.

“Full fibre meets the country’s future broadband needs, as demand for data soars,” said Ofcom competition group director Jonathan Oxley

“Ultrafast speeds will allow people to download entire films, or businesses to share huge files, almost instantly. Full fibre will also underpin exciting technology like remote healthcare diagnostics, 5G mobile and connected devices.

“The measures we’ve set out today will support the growing number of companies that have already announced plans to build full-fibre networks, and open the way for even more ambitious investment around the UK.”

The proposals – which were first set out in draft form almost 12 months ago as part of Ofcom’s Wholesale Local Access Market Review – have now been submitted to the European Commission (EC) for review, ahead of a planned implementation in 2018.

The proposals reaffirmed previous demands for Openreach to make its telegraph pole and underground duct infrastructure open to rival providers to make it quicker and easier for them to roll out FTTP.

It claimed this could cut the upfront cost of laying fibre cables from £500 per home to £250 straight off the bat, as well as reducing the time needed for digging works to hours, rather than days, in many cases.

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The regulator said Openreach would have to repair faulty infrastructure and clear blocked tunnels on its own dime, ensure there was space on its poles for extra cables, and make more progress on releasing a digital map of its network – a process it began 12 months ago.

Acknowledging that BT’s rivals would only invest themselves if it was more attractive than buying wholesale services, Ofcom also formalised its plan not to regulate the pricing of Openreach’s fastest wholesale broadband products – including FTTP – to give rivals the confidence that they can recoup some of their roll-out costs through future pricing.

It added that Openreach will not be permitted to make targeted wholesale price reductions in areas where others are building FTTP networks.

For rural areas, it will enforce cuts to the wholesale price Openreach may charge for basic broadband services of between 10Mbps and 40Mbps to protect consumers from high prices in areas that may never benefit from competitive investment, and help rivals compete. It had proposed this charge would be £11.23 from 2021, this has now changed to £11.92.

Finally, the regulator will enforce new conditions on Openreach, requiring it to complete at least 88% of fault repairs within one or two working days of notification, up from 80% now; to complete 97% of repairs within seven working days; to provide appointments for 90% of new line installations within 10 working days, up from 80% within 12 days today; and to install 95% of connections on the date agreed between Openreach and the CSP customer, up from 90% today.

This will have to happen by 2020/21, and the regulator warned Openreach it will be keeping an eye on performance throughout the implementation period.

Communicating benefits to customers

Responding to the final proposals, Hyperoptic CEO Dana Tobak said: “We welcome the news of Ofcom’s draft statement on the Wholesale Local Access market. 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.

“This will allow mixed use for duct and pole access, which will allow infrastructure builders to create stronger business cases for more investment and ensuring equivalence of inputs with respect to BT's own use of DPA.  

“Of course, the details matter – and matter significantly – so final implementation of the statement needs to follow in both spirit and operational processes.

“We look forward to Openreach’s publication of a reference offer, which fully matches or exceeds Ofcom’s statement, given its independence from the BT Group. This will ultimately create a better digital future for the UK, not just serve the interests of BT Retail,” she said.

But Richard Neudegg, head of regulation at comparison service, warned that Ofcom’s decisions would not necessarily translate to a real-time boost to the speeds and service quality that consumers can get if they don’t take advantage of new services.

“A word of warning – the move to lower wholesale entry level pricing, designed to help drive the uptake of superfast services, risks being a wasted effort if the industry doesn’t also urgently make changes that help surface the information that matters most to consumers when considering their broadband package,” he said.

USwitch’s research claims that only 57% of consumers believe they can access so-called superfast services in their area, despite availability hovering around 95%.

“To date, broadband providers have previously been guilty of a ‘build it and they will come mentality’, so while measures to encourage further investment teamed with a reduction in wholesale price for the entry level product is clearly welcomed, more must be done to help bring consumers along on the journey,” said Neudegg.

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