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Supporting further investment in full-fibre broadband

25/07/2018

Supporting further investment in full-fibre broadband

24 July 2018

Ofcom sets out plans to increase certainty for long-term investments

Future regulation of business and residential markets to be brought together

Plans to increase access to Openreach's ducts and poles to help operators serve businesses

Ofcom has today outlined a package of proposed measures to support long-term investment in full-fibre networks helping to bring faster, more reliable broadband to people across the UK.

A number of major companies including Openreach, Virgin Media, Vodafone, CityFibre and TalkTalk have committed to laying full-fibre broadband networks. Consistent, predictable regulation over the coming years can help companies build on that progress, and support Ofcom's and the Government's aim to achieve widespread full fibre in the UK.

Proposals to support further investmentOfcom is today setting out its proposed approach over future years to support full-fibre investment, in order to provide certainty for industry and investors. Our plans include:

Regulating business and residential markets together. Companies investing in full fibre are increasingly seeking to offer a range of services over a common underlying network, serving both consumers and businesses. So Ofcom will now consider these markets together.

Plans for unrestricted access to Openreach's ducts and poles. Openreach, which owns and maintains the UK's main broadband network, is required[1] by Ofcom to allow competing providers to use its telegraph poles and underground ducts to lay their own fibre cables. This measure, which can cut the upfront cost of building full-fibre networks by around half, is currently restricted to companies offering mainly residential and small-business services. However, Ofcom will consult on plans to extend access to Openreach's ducts and poles to companies offering high-speed lines for large businesses, as well as networks carrying data for mobile operators giving companies extra flexibility and more opportunities to make a return on their investments.

Different regulatory approaches in different parts of the country. We intend to take a flexible approach to regulation, reflecting how many different competing fibre companies are present in a particular geographic area. This approach can support widespread availability of full-fibre broadband across the UK, even in the most remote areas. Where competing networks emerge, there will be scope for Ofcom to deregulate.

Extending the duration of regulation from three to five years or more. To help provide more longer-term certainty to investors, we will extend the period of our telecoms market reviews from three years to at least five.

These plans follow the direction set by Ofcom in our 2016 Strategic Review of Digital Communications, which focused on boosting investment in full fibre. Today's proposals represent the next step on that path creating the conditions for companies to invest in modern networks.

The plans will help support the Government's ambition for 15 million homes to have access to full-fibre broadband by 2025. We welcome the Government's finding from its Future Telecoms Infrastructure Review that competition is the best way to drive investment, and we continue to work closely on how best to ensure the UK's digital networks are fit for the future.

Ofcom also intends to continue to apply the fair bet' principle for Openreach's investments in full fibre, which recognises that companies need to make a fair return on risky, long-term investments. This is in-line with the approach Ofcom has taken with previous significant network investments, such as the roll-out of superfast broadband.

Next steps

Duct and pole access. We plan to consult in the autumn on unrestricted access to Openreach's duct and poles, with the aim of having any new measures in place from the start of 2020.

Final business market review. Current regulations under Ofcom's Business Connectivity Market Review, which covers the market for high-speed leased lines' high speed and capacity connections used by businesses will expire in April 2019. We therefore plan to put in place some regulation of leased lines to apply for two years from April 2019 the period before our new regulatory approach comes into effect.

New approach to regulation. We plan to consult in the autumn on how we should define geographic areas as either competitive, potentially competitive or non-competitive. By April 2021 we plan to have regulation in place, covering wholesale access to broadband networks, that varies by geographic area. This new regulation will replace Ofcom's Business Connectivity Market Review and our Wholesale Local Access Review, and will be in place for at least five years. We will consult on proposals ahead of this new regulation during 2019 and 2020.

Ofcom is also responsible for implementing the Government's broadband universal service obligation. This will ensure that people particularly those in rural areas - who currently suffer from poor broadband access have a legal right to request a decent connection. We have already published a call for expressions of interest from providers looking to deliver this, and will consult later this year on the process for how we will designate the provider.

Notes to editors1.Regulations to ensure Openreach provides other companies with access to its network of ducts and poles are set out in Ofcom's Wholesale Local Access Market Review.

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