Ofcom redefines broadband markets as government ups rural rollout funds by GBP50 million

6 Dec 2010

Ofcom, the British telecoms regulator, has published its conclusions following a review of the Wholesale Broadband Access (WBA) market, and while it found that there was effective competition in around 80% of the country it has set down new price control proposals in those areas where such competition still does not exist. According to ISPreview, the watchdog has redefined its broadband market definitions in line with proposals made in an August 2010 consultation, after both significant changes in the makeup of the UK’s broadband sector and complaints from the European Commission (EC) that definitions based primarily on the number of ISPs operating in an area were not, in themselves, good enough. Subsequently, the four new broadband market definitions for the UK are: the Hull Area: (0.7% of UK premises); exchanges where only BT is present (11.7% of premises), known as Market 1; exchanges where two ISPs are present or forecast and exchanges where three ISPs are present or forecast, but where BT’s share is greater than or equal to 50% (10% of premises, Market 2); and exchanges where four or more ISPs are present or forecast and exchanges where three principal operators are present or forecast, but where BT’s share is less than 50% (77.6% of premises, Market 3). Ofcom also factored in the development of next generation services, such as fibre-to-the-cabinet (FTTC), into its analysis, while concluding that such higher speed services should be included in the same market, although it pointed out this could change in the future. The proposals will now undergo a consultation period, which is expected to conclude by end-2010.

In separate but related news, the UK government has today announced its plans for the rural rollout of superfast broadband services, with the state saying it aims to provide fibre-based connectivity to every community in the UK by 2015. According to the Guardian, additional funding of GBP50 million (USD78.9 million) for such projects has been approved by the government, while the UK’s culture secretary Jeremy Hunt said that negotiations with fixed line incumbent BT will see the telco matching government funds with its own funds in those areas it wins a bid for government-led projects. Critics have however claimed that the plans fail to address fundamental issues regarding the manner in which BT currently controls existing infrastructure, and while BT is required to publish rates for access to its ducts and poles in January 2011, smaller operators have said that as the market leader will not have to pay those charges the market is skewed in its favour. ‘As a minimum, [the government] should level the playing field between BT and smaller players,’ noted Chris Smedley, CEO of Geo, which offers fibre-optic access over a 3,000km network in the UK, adding: ‘At the moment, it’s distorted by the fact that BT is assessed in a different way from small companies. It doesn’t encourage efficient network rollout, because sometimes you design them in a way that avoids tax, rather than in the best way for customers.’

BT meanwhile has announced that it will trial a 1Gbps broadband service in Kesgrave, Suffolk in 2011, while it aims to introduce superfast broadband to around 40 ‘rural market towns’, although details of the latter will not be confirmed until next year, TechRadar reports. ‘BT will…be including up to 40 rural market towns in the next phase of exchanges for fibre broadband,’ the telco said, adding: ‘These areas will be able to enjoy the benefits of the technology from late 2011/early 2012. BT plans to announce the next list of exchanges in January 2011.’

United Kingdom, BT Group (incl. Openreach), Ofcom