Thoughtfulness & Not Neutrality say Ofcom

Speaking on the subject of Next Generation Broadband at the recent CMA Anniversary Dinner, David Currie, Chairman of industry regulator Ofcom said that some have confused thoughtfulness for neutrality on Ofcom’s part.

“Let me be very clear, we are anything but neutral. Next generation, super-fast broadband is critical to this Nation’s future. Like the railways in the Nineteenth Century and electricity in the Twentieth Century, super-fast broadband networks will transform our infrastructure in this century. They will be crucial to the country’s economy and central to the way we live our lives.

Making the transition successfully involves a collective effort to ensure timely and efficient investment alongside competition and choice for the future. This is an issue first and foremost for the market, for consumers, for operators and for investors. It is an issue for Government too. We warmly welcome their commitment to identify and remove obstacles to the deployment of next generation networks; and we are working closely with Francesco Caio in his Review.

And it is an issue of huge importance to Ofcom. We have a statutory duty to do what we can to make high speed broadband widely available and taken up. We are doing so with a real sense of urgency; but mindful of the need to avoid over-hasty, panicky responses that the UK’s citizens and consumers might regret in years to come. We need to get the right balance of the needs of innovation, investment, competition and the consumer.

We have to build this framework not against a background of mass deployment –yet- but against a background of trials or single site deployments by various operators that are still in progress. So we have to make some planning assumptions.

The first is that, while Regional Development Agencies and other public bodies may invest to create regional hubs or hot spots, we are unlikely to see public funding for mass deployment on the Asia Pacific model.

Secondly that simple-sounding, dirigiste solutions such as ‘put a pound on everyone’s phone line rental bill to pay for the investment’ do not properly form part of the regulator’s armoury. We have done the maths on that one and in fact it would be somewhere around £500 for every household. Decisions on any impost at that level is something for elected governments not unelected regulators. It would also be an avoidable impost: our recent research shows that in some British cities today the proportion of mobile-only homes is reaching towards one in three.

Thirdly, in first generation broadband and digital television it was competition that spurred innovation and roll-out. It is a reasonable planning assumption that it will be the same for deployment of super-fast broadband.

So that leads us to a twin track approach. First a long-term framework that assures BT that they will be able to secure and retain returns on investment in next generation access commensurate with the risks.

Secondly, to press forward with three routes at different layers of competition. Something which replicates the ladder of investment that has been successful for competition in current generation products. At the deepest infrastructure layer, seriously to explore duct access. The survey is underway. We expect the results in August. Elsewhere in Europe other regulators are already implementing duct access for various purposes- France, Spain, Portugal and Germany to name but a few. Duct access may also have a role in next generation backhaul; something we are testing.

At the next layer, sub-loop unbundling or fibre to the street cabinet, work has advanced to the point where meaningful trials are being undertaken, enabling the collective demand for SLU to be assessed and the necessary scale products and processes to support it to be assessed.

But these two routes could be expected to deliver high-speed broadband only to the minority of homes and businesses based in the main metropolitan areas. We understand the need for more widespread access for business, as companies increasingly have dispersed workforces and employees working from home. So at the top layer, we need with some urgency to develop a fit-for-purpose Ethernet active line access product; one that allows much greater scope for innovation and competitive differentiation than the current generation of wholesale bitstream access products and one which allows a greater geographic spread of high-speed broadband. With the operators, we are now agreed on what good would look like and the gap between that and the current offerings from Openreach and others. This is not just an Openreach or even just a United Kingdom issue. Absent a clear lead at European level, there is the real risk of balkanisation of the market with a whole range of separate proprietary electronics and wholesale products.”

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