Ofcom launches consultation on wholesale superfast broadband proposals

4 Jul 2013

UK telecoms regulator Ofcom has put forward proposals which it says are aimed at promoting competition among the country’s superfast broadband providers, with the measure forming part of ‘a major review of wholesale telecoms services’. Under the watchdog’s plans it has said that it aims to see the wholesale cost of switching a customer from one superfast broadband supplier to another by up to 80%, while it wants the minimum length of the wholesale contract between BT and the switched customer’s new supplier to be reduced from a year to just one month.

With the UK’s alternative operators able to offer customers superfast services over BT’s network using a process known as ‘virtual unbundled local access’ (VULA), under the existing setup there is a GBP50 (USD76) fee, payable to BT’s infrastructure arm Openreach, if a customer wishes to change provider. With this charge often passed on to the customer, Ofcom is calling for it to be reduced to between GBP10 and GBP15. Ofcom, however, has noted that it is not actually seeking to set controls on the wholesale price of VULA. Instead, arguing that the price of fibre broadband is currently constrained by the availability of standard broadband services and by competition from Virgin Media’s superfast cable network, the regulator has said it does not want to undermine the investment case for rolling out fibre. As such, Ofcom says it is merely proposing ‘to maintain a requirement that BT’s charges for access to its fibre network are fair and reasonable’. Meanwhile, Ofcom is also consulting on ways to ensure that the performance of Openreach is maintained at acceptable levels; its proposals in this area are ‘intended to establish clear targets for fault repairs and the installation of new lines for the millions of telephone and broadband users who rely indirectly on Openreach’.

Ofcom’s ‘Fixed Access Market Reviews’, which it says is ‘a wide-ranging consultation on the wholesale telecoms markets used by a range of companies to offer telephone and broadband services to UK consumers’, will also consider other aspects of ‘wholesale local access’ – the fixed connection that runs between the customer’s premises and their local telephone exchange. Scheduled to close on 25 September 2013, the consultation broadly proposes to maintain the current regulatory framework, including requirements on BT to offer various wholesale communications products to other providers on a fair, reasonable and non-discriminatory basis.

Looking ahead, Ofcom has confirmed that later this month it intends to issue a further consultation on its approach for setting any future charge controls on ‘wholesale line rental’ products – which allow competing providers to offer a telephone service over BT’s network – and ‘local loop unbundling’ products, where providers install their own equipment in an exchange to offer telephony and broadband over BT’s lines. Further, the regulator will also consult on its proposals for wholesale broadband access, including what regulation should apply in different geographic markets, in the near future. It says it expects to publish its conclusions on all these reviews in ‘spring 2014’.

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