Ofcom: We Want Network-Level Broadband Competition

Ofcom is confident the outcomes of its once-in-a-decade review of the UK communications market will boost broadband competition at an infrastructure level and encourage the development of ultrafast networks.

Speaking at a Westminster eForum in London, the regulator’s director of strategy Clive Carter said the Digital Communications Review (DCR) needed to find a balance between healthy competition and a pro-investment environment.

Critics have argued the initial findings merely outlined the problems with the current model and that true reform can only happen if BT is separated from Openreach. Carter said structural separation had not been discounted, but there was no evidence to suggest it would increase investment in the ultrafast networks Ofcom feels the UK needs.

Future of Openreach

“I want to set out clearly what Ofcom’s role is in this,” he told the audience. “We are here to identify and address competition concerns and address these with the least intrusive measures available to us.

“The current model off functional separation has worked in some areas and hasn’t in others. We want to secure more autonomy for Openreach. We think that’s the bit that’s missing. Our goal is not to secure one particular model. It’s to get to that overall goal of more independence.

“Clearly structural separation remains an option. It is a thing that would address concerns … It is much less clear to us that a structurally separated company would be incentivised to invest.”

While Ofcom is encouraged by investments made in G.Fast copper by BT, cable by Virgin Media and fibre to the premise (FTTP) by various providers like Hypeoptic, CityFibre and Gigaclear, it bemoaned the fact that less than two percent of the UK population can receive FTTP compared to the 60 percent coverage of global leaders.

Carter denied that Ofcom was ideologically attached to FTTP, arguing there is a role for other technologies to deliver ultrafast, but said the reality was that more fibre in the network could be necessary.

Network investment

Carter rejected claims that it ideologically favoured FTTP and that it was “technologically neutral”, but said the reality was that delivering ultrafast broadband would require more fibre in the network.

This is one of the reasons why Ofcom wants to simplify the process where BT opens up its ducts and poles to third party providers. This has been possible since 2009, but Ofcom believes making it easier, and providing more detailed information to other companies will encourage the development of alternative network infrastructure – including FTTP.

This is why Ofcom has made third party access to ducts and poles such an integral part of the review. Such access has been possible since 2009, but demand has been negligible. The regulator hopes more simplified processes and a national database will encourage BT’s rivals to take up the offer.

“The real benefit of this will be for third parties to invest and not necessarily rely on Openreach,” said Carter, who suggested CityFibre was one of the parties interested. He also promised Dana Tobak, managing director of Hyperoptic, that Ofcom would do everything in its power to ensure any new measures were implemented quickly.

Carter accepted that the deployment of network was not cheap and not without risk, but suggested that based on the geography of the UK, the characteristics of the British market and examples from abroad, 50 percent coverage within four to seven years might be feasible.

Also present at the eForum were representatives from BT, Virgin Media and TalkTalk, all of whom have contrasting views on Ofcom’s initial findings.

BT called the current model of functional separation a “happy middle ground” that should be strengthened, while Virgin Media said any move to take away Openreach from BT would be a “chilling” signal to other infrastructure operators. TalkTalk reiterated its calls for full separation.

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