BT, CityFibre to enhance fibre broadband coverage

UK telecom operator BT said it would roll out fibre broadband to 20 million homes and businesses this decade after the regulator Ofcom allowed flexibility on pricing needed to underpin the 12 billion pound or $16.8 billion cost of the plan.
Optical fiber investment
BT believes that the Ofcom document is in line with the expectations laid out at its Q3 2020/21 financial results. The development will allow BT to earn a fair return on its £12 billion FTTP investment.

BT Chief Executive Philip Jansen said on Thursday it was “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,” he said.

Ofcom said on Thursday it would give companies flexibility on the pricing of their fastest services for the long term.

“We aim to allow all companies the opportunity to achieve a fair return over their whole investment period, and do not expect to introduce cost-based prices for fibre services for at least ten years,” it said.

Britain has lagged European rivals in building gold-standard fibre networks to homes and businesses, leaving millions relying on a mix of fibre and old copper connections that struggle to meet soaring demand.

Ofcom Chief Executive Melanie Dawes said companies could now “step up and invest in the country’s full-fibre future”.

“This is a once-in-a-century chance to help make the UK a world-leading digital economy,” she said.

BT, which runs the national Openreach network, is on track to reach 4.5 million premises with full fibre this month. It plans to connect 20 million by the mid to late 2020s.

“We’ve passed almost 4.5 million premises and are building faster, at lower cost and higher quality than anyone else in the UK. Today’s regulation will allow us to ramp up to 3 million premises per year,” Clive Selley, CEO of Openreach said.

Alternative providers like Virgin Media and CityFibre are building competing networks in many cities and towns.

CityFibre’s Chief Executive Greg Mesch said the regulation would “inspire confidence and unleash a decade of innovation and investment” from competitors such as his company.

The new regulations, which apply for five years, allow BT’s Openreach national network to keep the price it charges operators for entry-level 40 Mbit/s broadband and slower copper packages flat and charge more for regulated products delivered over full fibre instead of copper.

“This approach improves the investment case for BT and its rivals by providing them with a margin to build the new networks,” it said.

Once fibre networks are in place, Ofcom said it would progressively remove regulation on copper so Openreach would not have to maintain two networks.