Openreach and rivals want collaborative approach to broadband

The government’s ambitions for FTTP broadband roll-out can only be met through collaboration, and an urgent shake-up of Ofcom regulatory policy is needed to reflect this, say Openreach and CityFibre

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The government’s new-found love for full fibre-to-the-premises (FTTP) broadband infrastructure is most welcome, but its targets for roll-out are ambitious and the industry will struggle to meet them without radical new approaches to working practice and regulatory policy, representatives of rival network builders Openreach and CityFibre agreed during a panel debate.

Speaking at a Westminster eForum event on broadband policy and strategy, Openreach’s director of corporate affairs, Catherine Colloms, and CityFibre’s head of regulatory affairs, Alex Blowers, drew similar conclusions as they looked ahead to the next 10 to 15 years of digital infrastructure policy.

Reflecting on the Ofcom-mandated legal separation of Openreach from its parent, BT – currently a work in progress – Colloms said Openreach’s increasing independence meant it had more freedom to work collaboratively, and said this could clearly be seen in the consultation it is currently running to seek input from the communications services provider (CSP) community on how to better deploy FTTP infrastructure and services.

“From an industry perspective, Openreach couldn’t have launched a consultation on full-fibre one year ago, but our new board and independence allow us to collaborate more and come together to address barriers to investment collectively,” she said. “We are exploring co-investment models and new risk-sharing models.”

CityFibre’s Blowers said that having delved into some of the numbers that the government has cited regarding FTTP, one can reasonably induce that the mission will be to pass something in the order of 10 million homes with FTTP by 2025, on the way to a full FTTP roll-out to the whole of the UK by 2030. This, he said, would be impossible without collaborative approaches to network building.

“The 10 million target is challenging but achievable, but how we get there quickly will require a radical policy rethink – and we will need to slaughter some sacred cows along the way,” said Blowers.

“Openreach’s FTTP economics are fragile – we won’t get to a national roll-out by relying on Openreach alone. We should cherish the change of sentiment in Openreach and its recognition of the need to invest in FTTP, but other sources of investment will need to come about, so I think we need to evolve towards a collaborative model,” said Blowers. “The model that in my mind commends itself is collaboration at passive layer only and active services competition delivered over that passive infrastructure.”

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This collaborative approach also needs to extend into both central government and the regulator, said Blowers, who described a “widening gap” between public policy goals around faster FTTP roll-out and regulatory policy.

The basic problem, he said, was that while the government can very easily turn on a sixpence to back FTTP, Ofcom’s existing regulatory approach to broadband has evolved over a number of years of a “make do and mend” approach to the UK’s passive network infrastructure, and it will take time to adapt that model to the changing environment, where there is now much more return on investment (ROI) potential in building FTTP.

Colloms said that while Openreach welcomed government initiatives to improve funding for FTTP roll-out, securing capital was not the problem her organisation was coming up against.

“What we actually need to build is clarity around policy regulation and the economic environment, and we need to support and incentivise large-scale investment over a much longer timeframe,” she said. “If we want the future Matt Hancock wants, we need a different approach.”

Inconsistency in central government and cross-departmental collaboration

Colloms said she saw “inconsistency in central government and cross-departmental collaboration”, particularly when it came to policy around business rates, which were controversially raised in September 2016 in a much-criticised move that saw BT’s tax bill increase by over £500m.

This point was also made more explicitly by Virgin Media’s head of public affairs and policy, Daniel Butler, who pointed out the irony inherent in releasing £1bn to incentivise digital infrastructure upgrades at the same time as upping business rates across the board.

James Snook, deputy director for the broadband and telecoms market at the Department for Digital, Culture, Media and Sport (DCMS), said that to some extent DCMS was still getting to grips with what it means to be a major governmental department, but said it had clear senior ministerial support for its mission around digital infrastructure, particularly from the prime minister and the chancellor.

“I think we have everything we need to create a more whole-of-government approach to this issue in terms of what the policy agenda needs to be, to determine what additional support government might need to provide, and to ensure consistency of treatment on issues like regulatory and planning barriers,” said Snook.

DCMS is currently in the process of setting up an internal team dedicated to “busting broadband barriers”, and Snook said it may make sense for representatives from – for example – the Department for Communities and Local Government (DCLG) to join this team in the future. He reiterated that the government’s commitment to bringing universal broadband coverage to 100% of the UK by 2020 remained unchanged.

Clive Carter, director of strategy at Ofcom, added: “We are absolutely open to a range of alternative ways of skinning this cat – network sharing, cost reduction, co-investment. We are not wedded to one vision of the future; we need to enable people to try those different commercial models.”

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