Industry regulator Ofcom has published a proposed regulatory framework designed to help encourage competition, whilst at the same time supporting investment and innovation.
Providing competing services over BT’s fibre lines
Ofcom proposes to allow competitors to have access to a dedicated virtual link over new fibre lines laid by BT (known as virtual unbundling and is a form of active access, where other communications providers use an Openreach product, based on BT’s electronics and physical infrastructure, to provide a service to customers.)
This would give other companies control of the lines to provide super-fast broadband services to their own customers. But in order to promote investment, Ofcom proposes that BT should be able to set prices for these new wholesale products to enable them to make a fair rate of return. These prices will be constrained by the wider competitive market.
Access to ducts and telegraph poles
The proposals would give physical access to BT’s underground ducts and overhead telegraph poles to other companies and allow them to lay their own fibre. Ofcom describes this process as a form of passive access where other communication providers could combine their own electronics with physical infrastructure rented from BT to deliver services.
Under these proposals, BT would be required to share detailed information with other communications providers about, for example, the available capacity and quality of ducts and poles. For duct, Ofcom proposes that BT makes a draft reference offer available within three months of Ofcom’s concluding statement (expected in the autumn).
From June 2008 and during 2009, Ofcom conducted surveys of BT’s duct network, which indicated that there may be a significant amount of unoccupied space in the network, with up to 40% or 50% having room for new cables in some locations. The second survey published today, of ducts closer to homes and businesses, shows a similar amount of unoccupied space, as well as potential capacity for additional wires to be added to BT’s telegraph poles. However, availability is highly variable across the country and the practicalities of using BT’s ducts and poles have yet to be worked through.
Promoting further competition in current generation broadband
The consultations also consider competition in current generation broadband. Ofcom’s initial conclusion is that broadband competition is effective in large parts of the country and for over 70% of the population there will be no regulation. This follows deregulation by Ofcom in areas with effective competition in the broadband market in May 2008. However, in the least competitive areas, where consumers only have access to copper-based broadband services provided by BT (around 14% of UK premises), Ofcom proposes some locally specific price controls to protect consumers against the potential risk of excessive prices.
Ofcom’s proposed competition remedies relating to next generation, fibre-based broadband are designed to benefit consumers in all geographic areas. In those areas where BT invests in fibre, the proposed remedies will enable other providers to offer competing retail services, based on BT’s facilities. Elsewhere, access to BT’s ducts and poles will encourage investment by other providers, enabling the provision of super-fast services in competition with current generation broadband.
Ofcom’s Chief Executive, Ed Richards said: “Super-fast broadband is starting to be a reality in the UK, with very significant advances in recent months in the speeds some providers are offering. Ofcom’s proposed regulatory framework is intended to support the next phase of development by promoting investment, competition and innovation for consumers across the UK.”
The consultation on access to BT’s network (Wholesale Local Access) can be found at: www.ofcom.org.uk/consult/condocs/wla/