British communications regulator Ofcom is proposing a major shakeup of the UK telecoms sector in order to help increase investment in full fibre deployments.
The proposed changes include retiring the existing copper network in the UK, providing financial aid for Openreach to extend its fibre networks in rural locations, as well as changes to Openreach wholesale charges to encourage competition from new network providers and to protect customers.
Last August, Openreach suggested it could cost £4,000 to provide full fibre for the final 10 percent (or hardest to wire up parts of the UK).
Ofcom said its proposals are designed to supercharge investment in full fibre or fibre to the premise (FTTP).
The government had previously pledged full fibre for the UK by 2033, a target that Prime Minister Boris Johnson last summer called “laughably unambitious”.
He has urged for the technology to be made available to “every home in the land” within five years and pledged a £5bn subsidy to connect the most rural 20 percent of the country to faster fibre lines.
Ahead of last month’s general election, the Labour Party pledged to provide every home and business in the UK with free full fibre broadband, and pledged to nationalise part of BT, which the PM dubbed “a crackpot scheme.”
Into this fevered arena, Ofcom has now set out its five-year plan to encourage the industry to invest in rural areas, and meet the Prime Minister’s plan to connect all homes to “gigabit speed” broadband by 2025.
It should be noted that Ofcom has now combined its proposals for both the residential and business sectors (it used to conduct reviews of these two sectors separately).
So what does Ofcom’s proposals actually cover?
The most noteworthy proposal is to close down the ancient copper network in the UK, a move that will please Openreach, which is dealing with having to maintain (and pay for) two parallel networks at once.
Ofcom has also proposed to ease the regulation of wholesale charges, in order to reduce the costs of building new fibre networks in rural areas. Currently charges are broadly the same for rural and urban provision, but homes in the most rural 10 percent of the UK cost about 10 times more to upgrade to full-fibre internet connections than those in urban areas.
The government’s £5bn pledge aims to solve this costing problem for rural areas.
Ofcom is also proposing to ensure people can still access affordable broadband by capping Openreach’s wholesale charges on its slower copper broadband services.
“These plans will help fuel a full-fibre future for the whole country,” said Jonathan Oxley, Ofcom Interim chief executive. “We’re removing the remaining roadblocks to investment and supporting competition, so companies can build the networks that will drive the UK into the digital fast lane.”
“Full-fibre broadband is much faster and more reliable,” said Oxley “It’s vital that people and businesses everywhere – whether in rural areas, smaller towns or cities – can enjoy these benefits. So we’re making sure companies have the right incentives to accelerate full fibre to every part of the UK.”
Ofcom’s proposals come into effect in April 2021, after a consultation period.
But Openreach seems to be broadly positive about the proposed changes.
“Today’s proposals appear to be a big step in the right direction to give clarity and investment certainty,” an Openreach spokesperson told Silicon UK via email.
“Like the Government and Ofcom, we want to upgrade the UK to faster, more reliable full fibre broadband,” said the spokesperson. “We’re getting on with the job, building to 26,000 premises each week and we remain on track to reach 4m homes and businesses by the end of March 2021.”
“We’ll consider the range of proposals carefully and will continue to work with Ofcom and industry on getting the conditions right to help achieve the Government’s ambition of rolling out gigabit capable broadband across the UK as soon as possible,” the spokesperson added.
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As well as addressing the roll-out of fibre OFCOM need to ensure that they have regulations for switching providers sorted, including any ongoing compensation for the companies installing the fibre to the premises. Where companies other than OpenReach are installing fibre to the premises, especially in blocks of flats, how lock-in or multiple installation of equipment will addressed needs to be thought about.
Easier switching increases competition and drives cost reduction and innovation. However, there needs to be a return on investment in installation of last mile equipment.