BT Pledges ‘Fury’ Build Of FTTP Broadband After Ofcom Pledge

BT has confirmed it will deliver fibre to the premise (FTTP) to 20 million homes or businesses by the mid- to late-2020s.

The commitment comes after UK regulator Ofcom published an agreement on the pricing and other conditions needed for the former UK incumbent to commit £12 billion for the rollout.

That agreement states how Ofcom will regulate telecom fixed access services for the 5 years in the UK, and gives enough certainty for BT (and others) to ramp up their respective FTTP deployments.

FTTP pledge

And BT was clear that this Ofcom agreement was needed to allow it to power ahead with the FTTP deployment.

“Based on our initial assessment, BT believes that the document is broadly in line with the expectations laid out at our Q3 2020/21 financial results and, when taken as a whole, will allow BT to earn a fair return on its c.£12 billion FTTP investment,” said the former UK incumbent. “As a result, BT is today confirming its plan to build FTTP to 20 million premises by the mid- to late-2020s.”

Indeed, the development is welcome news for the UK when during the lock downs triggered by the global Coronavirus pandemic, the necessity of decent connectivity has never been greater.

“This is good news for all fibre providers in the UK,” said Philip Jansen, BT chief executive. “For us, it is the greenlight we’ve been waiting for to get on and build like fury.”

“Full fibre broadband will be the foundation of a strong BT for decades to come and a shot in the arm for the UK as we build back better from this pandemic,” Jansen added. “Connecting the country has never been more vital.”

BT said it would add 3 million premises a year to its FTTP network.

“We’ve now passed almost 4.5 million premises and are building faster, at lower cost and higher quality than anyone else in the UK,” said Openreach CEO Clive Selley.

“Today’s regulation will allow us to ramp up to 3 million premises per year providing vital next generation connectivity for homes and business right across the UK,” Selley added.

ISP reaction?

Analyst reaction welcomed the news, although some noted that not all Internet Service Providers (ISPs) will be happy with the Ofcom agreement.

“This crucial ruling is a huge boost for the deployment of full fibre broadband that will benefit millions of UK homes and businesses for years to come,” noted Kester Mann, director, consumer and connectivity, at CCS Insight. “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,” said Mann. “Today’s news sets fresh conditions to help accelerate full-fibre broadband deployment to help it move out of the slow lane.”

“After a turbulent recent period, the news caps a great week for BT following a successful outcome in the 5G spectrum auction yesterday,” said Mann. “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,” concluded Mann. “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.”

Five year certainty

Another analyst noted the length of certainty provided by the Ofcom agreement, which came amid the government’s scaling back of its initial FTTP promises, due to hurting public finances after the the Covid-19 pandemic ravaged the economy.

“While the market review only covers the next 5 years, the ‘expectation not to introduce cost-based prices for fibre services for at least the next ten years’ will be a huge boost for Openreach and the other fibre builders,” noted Matthew Howett, principal analyst and founder at analyst house Assembly.

“It’s quite something for Ofcom to have gone from regulating for a 3 year period, to offering this level of certainty,” said Howett. “Access seekers may be less thrilled.”

“While they will be sympathetic to Ofcom needing to do something about the UK’s languishing full fibre position, they might feel Ofcom has gone too far in deregulating Openreach,” said Howett. “But with the Government having scaled back on its full fibre target, hesitant to address business rates for fibre, and only drip feeding public funding for the final third, the pressure was on Ofcom to put in place the enablers. It’s fair to say they’ve stepped up.”

“Spread across 7 volumes and 26 annexes, it’s never been truer that the devil is in the detail, but the mood music from Ofcom suggests they have moved to give as much certainty as they could to those hanging future investment decisions on their words,” said Howett.

“While BT would’ve liked 20 years of no regulated prices for faster fibre products, they will take the certainty of 10 and the broad commitment to continue to honour that fair bet principle if there is a need to move to cost-based regulation in the future,” Howett concluded. “They wanted the fair bet baked in, and they got it.”

Right balance

And the government also welcomed Ofcom’s agreement, saying that it struck the right balance of protecting consumers and encouraging investment.

“Our strategy for the rapid rollout of gigabit broadband is working, with coverage increasing from 10 percent in 2019 to nearly 40 percent today,” said Secretary of State for Digital, Culture, Media and Sport Oliver Dowden.

“Stable, long term regulation is crucial to this,” said Dowden. “We welcome the regulations Ofcom have announced today, which strike the right balance between encouraging commercial investment and protecting consumers.”

“Tomorrow we will build on this by publishing Project Gigabit, our 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,” he concluded.