Openreach to extend full fibre to 3.2m more rural premises; Ofcom proposes new regulations

30 Jul 2020

Openreach, the network arm of BT Group, has announced it will make full fibre connectivity available to an additional 3.2 million premises in ‘the hardest to reach parts of the UK’ by the mid-2020s. In a press release, the company noted that it has already extended the reach of its full fibre network to more than three million homes and businesses, and has now pledged to invest a total of GBP12 billion (USD15.6 billion) to connect more than 20 million premises to full fibre countrywide ‘over the coming years’.

In response to Openreach’s announcement, meanwhile, British telecoms regulator Ofcom has set out a new proposed approach to regulation related to ‘Geographic Area 3’ (‘Area 3’) – those areas of the country deemed to be less competitive. Previously, in January this year Ofcom set out an approach to pricing wholesale local access (WLA) services in the UK (excluding Hull), in which it proposed having cost-based prices using a regulatory asset base (RAB) approach which would allow BT to recover any fibre network investments that it made in Area 3 locations. Under the proposed RAB approach, the investment costs of deploying a fibre network would have been ‘added to BT’s asset base and recovered over all customers, fibre-based and copper-based, in Area 3’.

However, the regulator had expressed a preference for a ‘forecast RAB approach’ subject to Openreach being prepared to commit to building fibre commercially in Area 3 on sufficient scale. Under this approach, the regulator said it would set a price cap for the duration of the control, which included a contribution to the recovery of fibre investment costs based on a committed level of fibre deployment. Now, with Openreach having committed to build fibre commercially (i.e. without public subsidy) to at least 3.2 million premises in Area 3 cumulatively by the end of 2025/26, Ofcom is consulting on adopting this forecast RAB approach in Area 3, by ‘indexing copper-based services of bandwidths up to 40Mbps/10Mbps and allowing pricing flexibility for higher speed services’.

A consultation on the matter will run until 16 September 2020, and Ofcom has said it expects to publish a final decision related to the Wholesale Fixed Telecoms Market Review by 31 March 2021.

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