UK fibre players welcome Ofcom proposal

17 December 2018 | Natalie Bannerman

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As Ofcom proposes a major change in the way UK approaches regulation, Capacity spoke to a number of UK-based wholesale fibre providers on their thoughts for the new proposal.

Earlier this week Ofcom, the UK communications regulator, published a proposal to change the way the wholesale fixed broadband market is governed by regulating it on a geographical basis.

Starting from 2021 Ofcom will break up the country’s regions based on its competitive environment and implement its legislation accordingly. The three catergories are competitive areas, potentially competitive areas and non-competitive areas.

Competitive areas are regions where there is at least two existing networks in addition to strong Openreach presence. In these areas, Ofcom said it would not need to regulate.

Potentially competitive areas are regions where there isn’t enough competition but there is the potential for a network rollout or one is currently underway. These areas will be assessed individually as to whether or not there is potential for further competition.

As for non-competitive areas, Ofcom defines this as areas that have no alternative networks to Openreach and any large-scale rollout is unlikely. In these regions, the regulator will actively encourage investment by enabling access to Openreach networks.

In November 2017, CityFibre in partnership with Vodafone UK announced that it would deliver Gigabit fibre broadband to up to five million homes and businesses by 2025, by building a £500 million fibre-to-the-premise network. Speaking to Mark Collins, director of strategy and public affairs at CityFibre, he said:

“Ofcom’s latest proposal for geographical regulation is good news from CityFibre’s perspective, and we welcome its acknowledgement of the views and ambitions of the wider industry,” he explained. “In recent years, the dynamics of the telecoms landscape has changed dramatically, and the case for infrastructure investment has become much more optimistic with numerous players now well positioned to compete with the incumbent.”

“By adopting geographically differentiated regulation, Ofcom can support competitive full fibre infrastructure development at scale where it is possible, for instance in the towns and cities where we plan to deploy full fibre, continued Collins. “There, the key remedy will be duct and pole access allowing us to build further, faster. In areas where infrastructure competition is much less likely – for instance remoter rural areas – different remedies like regulated dark fibre may be available. This is a sensible and pragmatic approach that means that regulation designed to protect consumers doesn’t inadvertently choke off investment in new infrastructure.”

The proposal from Ofcom also included the assessment methods it would use to assign regions into the three categories, by assessing the presence of existing, planned and future network networks – using a combination of data provided by network operators and discussions with network operators about planned rollouts.

Alex Yeung, co-founder and COO, Connexin, the UK-based fixed wireless company, echoed Collins sentiment viewing the news from Ofcom as positive, saying: "This is good news for suppliers, as well as consumers in the UK. We welcome Ofcom's strategy to promote investment and competition in the UK’s wholesale fibre markets.”

Ofcom says that it will now get stakeholders’ comments on the initial proposal with a view to publish an initial consultation on any feedback it receives by spring 2019. With plans to consult on a full set of market proposals, including market definitions, market power and remedies by autumn 2019.

Yeung says that Connexin is particularly interested in seeing the consultation document and clearer market definitions on its categories.

“We recognise that investment and competition varies geographically, therefore we also believe that regulation should also vary by geography. We look forward to the outcome of Ofcom’s consultation document on how geographic markets are defined, in particular parts of the UK where there is deemed insufficient competition," he added.

In related news, Connexin recently dropped out of the Ofcom’s 5G spectrum auction days before it due to happen. Though no reason was cited, Connexin was one of only two smaller players involved in the bidding alongside Airspan Spectrum Holdings Limited.

Overall, the attitude towards geography-based governance in the wholesale telecoms space has been a positive one. Moreover, the possibility to create a fairer competitive landscape in areas outside of the densely populated UK hubs is the biggest potential of the new rules, says Neil Wilson, head of marketing for Virtual1.

“It’s a positive step forward that Ofcom is looking to vary policy by region in an attempt to bring high-speed services to all, not just the metropolitan hubs. This will help to deliver a fairer Digital Britain, not just a Digital London or Manchester where demand alone creates competition and stimulates investment.”

Capacity also contacted Openreach but it declined to comment on the Ofcom proposal at this time.