Ofcom outlines plans for wholesale regulation designed to bolster UK’s fibre future

18 Mar 2021

UK telecoms regulator Ofcom expects ‘millions of homes’ to be upgraded to faster, more reliable broadband under newly announced regulations which it claims are designed to ‘help shape the UK’s full-fibre future’. In a press release outlining the plans, Ofcom said it was confirming how it will regulate the nation’s wholesale telecoms markets for the next five years ‘and beyond’ following public consultation on the matter, with a particular focus on driving competitive investment in the country’s fibre infrastructure.

Among the strategies outlined to achieve that goal, Ofcom proposes wholesale price regulation which it says will encourage investment and promote competition. With the watchdog noting that in recent years it has reduced the wholesale price that BT’s network unit Openreach charges retail providers for its entry-level ‘superfast’ copper broadband service (offering downlink speeds of 40Mbps), it has confirmed that the price of this service – and the prices of slower copper broadband packages – will be kept flat in real terms. Meanwhile, the regulator has also confirmed that Openreach’s fastest fibre services will continue to be free from pricing regulation, arguing that allowing it to raise wholesale prices significantly for faster, unregulated products ‘is constrained by the fact that people can choose the entry-level service as an alternative’. Further, the network unit will also be permitted to charge more for regulated products that are delivered over full fibre instead of copper; according to Ofcom, allowing the operator to do so ‘reflects the fact that full fibre is consistently faster, and much more reliable, than copper-based broadband’, while it argues such an approach ‘improves the investment case for BT and its rivals by providing them with a margin to build the new networks’. Finally, with regard to full fibre rollouts, the watchdog has said it does not expect to introduce cost-based prices for fibre services for at least ten years.

With regards to the closing of the UK’s copper network, meanwhile, Ofcom has argued that Openreach should not have the ‘unnecessary’ costs of running two parallel networks. As such, it has confirmed that once the network unit has rolled out full fibre in a particular area, it will progressively remove regulation on its copper products over ‘a number of years’. The regulator has, however, stressed that customers will be protected during this transition to ensure they can continue to access their services, particularly those in vulnerable circumstances. Ofcom has also said it aims to prevent Openreach from harming competition, by reviewing all long-term discount agreements it offers its wholesale customers, and restricting them if they could stifle investment by its rivals. In addition, the BT unit will continue to be prohibited from offering geographic discounts on its superfast broadband wholesale services, while a similar ban is to be extended to the wholesale operator’s services based on full fibre technology. The new regulations are expected to apply from April 2021 until March 2026.

Commenting on the matter, Ofcom’s chief executive, Dame Melanie Dawes, said: ‘Over the past year, being connected has never mattered more. But millions of homes are still using the copper lines that were first laid over 100 years ago. Now it’s time to ramp up the rollout of better broadband across the UK. We’re playing our part – setting the right conditions for companies to step up and invest in the country’s full-fibre future. This is a once-in-a-century chance to help make the UK a world-leading digital economy.’

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