Ofcom today revealed a four-point plan to support investment in fibre networks across the United Kingdom.
The UK Government is planning to invest £5 billion to reach the most challenging 20 percent of the UK.
# 1 Ofcom will set Openreach’s wholesale prices in more urban areas, where there is likely to be a choice of networks, in a way that encourages competition from new networks, as well as investment by Openreach – by giving it the opportunity to make a fair return.
Ofcom is proposing that the wholesale price Openreach charges retail providers for its entry-level (40 Mbit/s) superfast broadband service is capped to inflation. This follows a significant cut Ofcom made to this product in its 2018 review, and still provides for a margin on fibre investment, as build costs fall.
Ofcom is proposing that Openreach can charge a small premium for regulated products if they are delivered over full fibre, to help the business case. Its fastest fibre services would remain free from pricing regulation, to support the investment race between network builders.
# 2 Ofcom aims to ensure that people can access affordable broadband by capping Openreach’s wholesale charges on its slower copper broadband services. Openreach would be restricted from being able to offer discounts that could stifle investment by its rivals.
# 3 Ofcom plans to support investment in rural areas by Openreach – the only operator with a large-scale rural network.
Ofcom would allow Openreach to recover investment costs across the wholesale prices of a range of services, reducing the risk of its investment. If BT provides a firm commitment to build fibre in these parts of the country, Ofcom would include these costs in its prices upfront. If not, Ofcom would only allow it to recover these costs after it lays new fibre.
# 4 Openreach needs to retire its ageing copper wires and can avoid the unnecessary cost of running two networks. Ofcom plans to remove regulation on Openreach’s copper products in areas where full fibre is built. This will support Openreach in switching customers over to the new fibre network.
Jonathan Oxley, Ofcom Interim Chief Executive, said: “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.”
Ofcom has also set out how it intend to regulate Openreach’s leased lines – high-speed connections used by large organisations, which also form the data highways of the UK’s mobile and broadband networks.