CMA Criticises Telecoms Regulation

3 min read Networks & Network Services
Members of CMA, the business users of telecoms goods and services, are becoming increasingly critical of the lack of a firm regulatory hand on the telecoms marketplace.

The CMA says broadband roll-out is proceeding almost entirely at a pace dictated by BT and is adopting a fibre-to-the-cabinet architecture that is best suited to the pockets of investors while providing BT with the optimum measure of control over the services carried on the new access network by competing service providers. The outcomes fall a long way short of policy priorities for UK economic growth, the needs of citizens and communities and the localism implicit in the Big Society agenda.

Ofcom appears to be entirely complacent with this state of affairs and seems content to accept the drip feed of announcements from BT about the latest – and always short - list of exchanges to be upgraded. At the same time BT feeds the media with news of its latest trials of speeds that cannot possibly be accommodated on its relatively slow FTTC network, while dragging its feet on its medium speed fibre-to-the-cabinet-to-the-premises programme. There is little or no news from BT about a true point-to-point fibre programme or willingness to address the ‘dark fibre’ market that would offer anything like a future-proof architecture for the nation.

The most promising regulatory proposal since the imposition of functional separation has been the stance taken on access to BT’s ducts and poles. Yet once the decision had been taken (after several years of obfuscation, fuelled by claims by BT that “it cannot be done – the ducts are too full and poles would have to be strengthened”) Ofcom allowed BT to make a reference offer that was rejected as too high by its competitors and then to drag its feet for another year while it laboriously works on a further offer – presumably based on figures it already has at its fingertips. All Ofcom has done is to suggest that if the revised offer is still unacceptable, it will review the situation. A review process is reported, in some quarters, as being likely to take a further year to 18 months.

Ofcom’s strange passivity is in contrast to the dynamic, hands-on approach taken by, for example, its Swedish counterpart, Swedish Post and Telecom Agency (PTS). PTS actively advises competing infrastructure providers how to apply for public funding and is particularly proactive in encouraging and supporting local fibre projects. It has encouraged the Swedish Urban Networks Association in the development of a fully automated ‘dark fibre’ trading platform amongst its (predominantly municipal) FTTH network members. The impact can be measured in enterprise growth, job creation and significantly reduced costs for businesses that are, in network revenue terms, more than made up through growth of the economy.

The UK stage seems set for handing BT a considerable subsidy to provide minimal broadband to the unserved areas of the country, and on BT’s terms. In respect of the limited BDUK funding available to engender fresh approaches to investment the current rules perversely penalise those areas which show initiative. The single biggest issue in attracting new private investors to the infrastructure market is a fear that once planned their investment will be subverted by aggressive BT tactical responses even in areas where they have previously shown no commitment to invest.

Given the national economic growth imperative for universal access to broadband, and the pedestrian progress towards that goal, CMA believes that the best solution now is to follow the New Zealand lead and impose full structural separation on BT and Openreach. While this would pose new regulatory challenges (and further interminable delaying arguments) the prospects facing business users could hardly be worse than they are now.

Business users are also irritated by the creeping delays to the 4G spectrum auction. We see this as a toxic combination of regulatory timidity and the powerful self-interest of licence holders. It is unacceptable that the UK will not see widespread access to 4G services until the middle of this decade and yet there is no evidence that mitigating technology such as national roaming (on 3G) is being actively considered by the regulator. It is significant that part of the success of the mobile sector in Sweden is attributable to the availability of ‘dark fibre’ for the backhaul requirements of larger numbers of 4G cell sites and the operators’ ability to offload traffic via wi-fi onto higher quality fixed networks.

If delay in the 4G auction process is indeed inevitable, Ofcom must at least use the opportunity to ensure that our languid progress towards a “best in Europe” fixed broadband network is not replicated in its approach to mobile. Ofcom must mandate access sharing as a licence obligation. The regulator could thus eliminate once and for all the disease of "roaming" from the mobile communications landscape, whilst reducing notspots, improving customer service and reducing required capital investment for operators collectively.