Ofcom announces plans to ‘supercharge’ investment in fibre broadband

Attempting to address huge frustration outside metro areas over a lack of reliable, high-speed broadband, UK telecoms regulator Ofcom has revealed new regulations designed to help build a full-fibre network for the whole of the country.

In December 2019, just as the new UK government was outlining plans to accelerate access to full-fibre broadband connections to 96% of the UK’s homes and businesses, mainly by introducing new laws to accelerate the delivery of gigabit-capable broadband, research from Ofcom revealed that the current UK full fibre penetration stood at just 10%.

In October 2019, just weeks before the General Election, and in a UK legal and regulatory first, the UK government constructed priorities for Ofcom, principally regarding the nationwide roll-out of gigabit-speed broadband.

Now, with political uncertainly out of the way, Ofcom is making it clear that the UK’s broadband infrastructure needs to be upgraded and says its proposals will “transform” the business case for fibre investment in towns, cities and villages alike.

Although the regulator regards its focus so far on promoting broadband network competition as helping full-fibre coverage to increase at its fastest-ever rate, it now plans to vary regulation for different parts of the country in 2021.

It says it is confident that this new model, combined with the government’s planned £5bn funding for rural areas, will help ensure nobody gets left behind.

The plan has four key elements designed to attract competitive investment in fibre networks: improving the business case for fibre investment by setting wholesale prices from the UK’s broadband infrastructure provider Openreach in a way that encourages competition from new networks, as well as its own investment; protecting customers and driving competition by making sure people can still access affordable broadband and preventing Openreach from stifling competition; taking rural areas into the fast lane by supporting investment by Openreach in these areas; and closing the copper network as full fibre is built, so Openreach does not have the unnecessary costs of running two parallel networks.

Ofcom is proposing that the wholesale price that Openreach charges retail providers for its entry-level 40Mbps superfast broadband service is capped to inflation. This follows a significant cut that Ofcom made to this product in its 2018 review, and the regulator regards such a price level as still providing for a margin on fibre investment as build costs fall.

To prevent Openreach from harming competition, the new plan will restrict its ability to offer discounts that could stifle investment by rivals.

To support customers during the transition, Ofcom says it will transfer its regulation, including price protections, from copper to new fibre services.

Reacting to the proposals, an Openreach spokesperson said they appeared to be a big step in the right direction to give clarity and investment certainty. “Like the government and Ofcom, we want to upgrade the UK to faster, more reliable full-fibre broadband,” the spokesperson told Computer Weekly. “We are getting on with the job, building to 26,000 premises each week, and we remain on track to reach four million homes and businesses by the end of March 2021.

“We will 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.”

Evan Wienburg, CEO of TrueSpeed, a specialist in expanding full-fibre infrastructure into non-metropolitan areas, most recenty in Wells, Somerset, said: “We all agree that rural Britain deserves full fibre broadband. It is well understood that there are a growing number of privately funded infrastructure providers already investing in these network builds and customers are benefiting from brilliant products and services.

“Ofcom must take account of the work that providers such as Truespeed and others are doing in rural areas and not muddy the playing field by allowing Openreach to waste money on overbuilding projects in these areas. We urge Ofcom to ensure a fair and level playing field between private and part public-funded infrastructure providers as the industry ramps up to deliver on the promise of full-fibre broadband for all, regardless of postcode.”

Richard Neudegg, head of regulation at UK online and telephone price comparison site uSwitch.com, agreed that the new plans were, on the face of it, good news for consumers “suffering” with sub-par broadband, but cautioned that where Ofcom was proposing to allow higher wholesale prices, it was important for the services received by consumers to improve markedly.

“It is encouraging to see that the regulator recognises the need to support and drive investment in rural areas,” said Neudegg. “If speeds are only improving in the major cities that are already enjoying faster connectivity, it will only serve to worsen the country’s widening digital divide. Ultimately, any pledge to supercharge investment in fibre broadband will only be effective if people are given genuine choice, underpinned by functioning competition between providers.”

Greg Mesch, CEO at alternative UK wholesale fibre provider CityFibre, noted that Ofcom’s direction of travel was the right one, but that the regulator could actually move further and faster. “We are encouraged by Ofcom’s recognition of the risks of volume discounts and geographic pricing to damage competition before it can scale, but we would like it to be even more proactive in addressing these issues,” he said.

“The government’s 2025 target for national coverage is ambitious and, while possible, is only achievable with bold and affirmative action.”