Altnet association warns of threat to UK full-fibre roll-out

A leading trade body has warned that new measures designed to spur the roll-out of gigabit broadband across the UK give far too much weight and prominence to BT’s broadband provision division, Openreach, for the good of the market.

The Independent Networks Co-operative Association (INCA) says that what it calls a “BT fixation” by UK regulator Ofcom could actually be a deterrent to the much-needed and much-publicised deployment of gigabit services across all of the UK and not just the traditionally well-served metropolitan areas.

The background to INCA’s call was the 18 March announcement by Ofcom of new guidelines designed to further accelerate gigabit broadband take-up, in particular of fibre services, todrive competitive commercial investment and support the closure of the UK’s copper network, while also protecting consumers from high prices.

The regulations are intended to lead to properties in about 70% of the UK having a choice of networks, with wholesale price regulation designed to encourage investment and promote competition.

After bringing down the price that Openreach charges internet service providers (ISPs) such as BT, Sky and TalkTalk to use its infrastructure to deliver entry-level (40Mbps) superfast copper broadband services, Ofcom is mandating that this price is kept flat in real terms, along with the prices of slower copper broadband packages.

Yet when it comes to ultra-high-speed fibre services, Ofcom confirmed that these would continue to be free from pricing regulation. The rationale for this decision is that people can choose the entry-level service as an alternative.

Ofcom added that Openreach could also “charge a bit more” for regulated products delivered over full-fibre instead of copper, because it regarded full-fibre as consistently faster and much more reliable.

Days later, the UK government relaunched its national gigabit broadband programme under the auspices of Project Gigabit, an infrastructure project into which it has invested £5bn with the aim of delivering next-generation gigabit broadband to more than a million homes and businesses in what are regarded as hard-to-reach places.

Yet INCA insists that the needs of its members, comprising the growing sector of independent digital infrastructure providers, the so-called altnets, have not been wholly considered in framing these new initiatives. The association said altnet investment was desperately needed to hit government connectivity targets, even though it the regulator’s market review statement dismissed the sector’s concerns.

Given that the overall cost of renewing the UK’s digital infrastructure is calculated to be £30bn, INCA says altnet investment is desperately needed alongside BT’s £12bn, up to £10bn from Virgin Media, and government investment of £5bn. INCA said many of its members had already raised significant investment to serve communities throughout the UK, a figure it puts at around £9bn.

“While government recognises the importance of the competitive market, Ofcom seems fixated only on incentivising BT to invest, dismissing the majority of altnets as bit players, recognising few of their concerns in the market review statement,” said INCA CEO Malcolm Corbett. “If operators and their investors believe that the regulator is not willing to listen to their concerns and act on them, it risks delaying deployment and undermining the government targets, particularly in more challenging rural areas.”

INCA added that under plans to cover the hardest-to-reach areas, it appeared that the government fully expected a range of altnets to bid for contracts in the build-out programme, alongside BT Openreach and increasingly substantial independent players such as CityFibre, which has grown substantially over the last 12 months.

“Ofcom, while recognising that smaller altnets play an important role in providing fibre to rural areas serving rural communities at a time when Openreach has not been willing to extend its network, does not view the same altnets as capable of providing significant competition to BT in the same hard-to-reach areas,” said Corbett.