Supporting the UK’s super-fast broadband future

Ofcom today set out decisions designed to promote competition and investment in super-fast broadband services across the UK.

Over the past two years, UK consumers have started to enjoy the benefits of the next generation of broadband, with a number of companies starting to invest in infrastructure. But there is a long way to go to deliver the networks of the future that the UK needs.

Ofcom believes that competition and investment in super-fast broadband can be delivered in both urban and rural areas. Today’s statement is designed to provide a further spur to investment by confirming the regulatory framework for these services. It covers two principal interventions:

1. Providing competing services over BT’s fibre lines

Ofcom’s decisions will allow competitors to have access to a dedicated virtual link over new fibre lines laid by BT (known as virtual unbundling)*. This will give other companies control of the lines to provide super-fast broadband services to their own customers.

BT will be able to set prices for these new wholesale products which should promote investment by enabling them to make a fair rate of return reflecting commercial risk. These prices will be constrained by the highly competitive wider broadband market and will be subject to rules to prevent anti-competitive pricing.

BT has already started offering its “Generic Ethernet Access” product to wholesale customers and will develop it further in line with the requirements Ofcom has confirmed today.

2. Giving access to underground ducts and telegraph poles

Ofcom has concluded that BT should be required to offer access to its underground ducts and to its telegraph poles. This would allow its competitors to roll-out super-fast broadband to areas where BT does not plan to deploy its fibre network and to target specific areas earlier than BT’s roll-out. The economic case for duct and pole access should improve as the market for super-fast broadband develops.**

BT is required to share detailed information with other communications providers about, for example, the available capacity and quality of ducts and poles. Ofcom has confirmed that it will require BT to make available a draft reference offer describing its duct and pole product by mid January 2011.

These measures build upon competition in the UK’s current generation of broadband services which reached a significant milestone last month when the number of unbundled lines passed the 7 million mark. This has enabled rival communications providers such as Sky and TalkTalk to offer services over BT’s copper telephone network, delivering choice and competition for UK consumers.

Ofcom will continue to require BT to provide local loop unbundled services (LLU) to competitors, building on this success to date.

Competition and Investment

Ofcom’s decisions are designed to benefit all UK consumers by recognising that different areas require different solutions. In areas where BT invests in fibre, the remedies will enable other providers to offer competing services, based on BT’s facilities.

Elsewhere, access to BT’s ducts and poles should encourage investment by other providers, enabling the provision of super-fast services and increasing competition.

The decisions are consistent with the Government’s potential role in encouraging super-fast broadband roll-out. For example, duct and pole access could extend the reach of services to more remote areas, potentially in combination with public funding at a UK or EU level. Duct and pole access could also complement Government measures to encourage fibre roll-out by sharing telecoms and other infrastructure.

Ofcom’s Chief Executive, Ed Richards said: “The development of the UK’s super-fast broadband future is well underway with the roll-out of services in large parts of the country. Today Ofcom has finalised a clear regulatory framework to promote investment, competition and innovation to enable as many consumers as possible to benefit from these exciting new services.”

The statement on access to BT’s network (Wholesale Local Access) can be found at: http://stakeholders.ofcom.org.uk/consultations/wla/statement

A glossary is included in the statement.

ENDS

NOTES FOR EDITORS

* VIRTUAL UNBUNDLING: This is a form of active access, where other communications providers use a product based on BT’s electronics and physical infrastructure, to provide a service to customers.

** DUCT AND POLE ACCESS: This is a form of passive access where other communication providers could combine their own electronics with physical infrastructure rented from BT to deliver services.

1. Ofcom proposes that BT continues to provide LLU where other communication providers access BT’s fibre network on a wholesale basis by buying products from Openreach, BT’s operationally separate business unit. LLU has already delivered significant competition for consumers in the telecoms market. There are now 7.14 million unbundled lines in the UK. Ofcom’s “Broadband competition reaches 7 million milestone” press release can be found here: http://media.ofcom.org.uk/2010/09/10/broadband-competition-reaches-7-million-milestone/

2. Ofcom will also continue to require BT to provide sub-loop unbundling (SLU), which allows competitors to share part of BT’s existing copper lines between the cabinet and the customer premises. When combined with fibre connections to the cabinet, this could help support roll-out of super-fast broadband, particularly in rural areas.

3. Super-fast, fibre optic broadband has the potential to deliver speeds of 50 to 100Mb/s (megabits per second) and enhance new consumer services such as broadcast quality video services, High Definition and 3D TV and interactive online gaming.

3. BT has launched its super-fast broadband product and plans to cover 66% of the UK by 2015 and Virgin Media has rolled out 50Mb/s to 49% of households and is due to launch its 100Mb/s service soon. Other smaller companies are also investing in these products including IFNL and H2O.