- Ofcom creates conditions for networks to ramp up the rollout of full-fibre broadband nationwide
- Pricing flexibility for Openreach’s fastest services; entry-level superfast prices kept flat in real terms
- More support to upgrade the UK’s decades-old copper connections to faster fibre networks
- Ofcom’s regulations build business case for long-term investment and ensure consumers have affordable options
Millions of homes across the country are set to be upgraded to faster, more reliable broadband, under new regulations announced today by Ofcom that will help shape the UK’s full-fibre future.
The coronavirus pandemic has underlined the importance of a reliable internet connection. The UK’s copper telephone network – some of which was laid over 100 years ago – has helped deliver superfast broadband to 96% of homes. And people have generally been getting better services in recent years, without spending more in real terms.[1]
But as demand for data continues to accelerate, the UK’s infrastructure urgently needs an upgrade. This will require significant private investment in full-fibre broadband, which is much faster and more reliable than the networks most people use today.
A full fibre future for the whole of the UK
Following public consultation, Ofcom has today confirmed how it will regulate the wholesale telecoms markets used to deliver broadband, mobile and business connections in the UK, for the next five years and beyond.
Network competition has helped full fibre coverage increase at its fastest ever rate over the last year – and that momentum has continued throughout the pandemic.[2] Our regulations build on this momentum – driving competitive commercial investment and supporting the closure of the country’s 100-year-old copper network; while ensuring consumers are protected from high prices.
We believe this approach will lead to properties in around 70% of the UK having a choice of networks from competitive commercial rollout. Openreach has committed to deploy full fibre to a further 3.2 million properties (10%) in more rural areas. And the Government plans to cover the remaining 20% of the country through public funding, to help ensure nobody gets left behind.
Driving competitive investment
How we are doing this:
Wholesale price regulation that encourages investment and promotes competition
Over the last few years, we have brought down the wholesale price Openreach charges retail providers for its entry-level (40 Mbit/s) superfast copper broadband service, in line with its falling costs. We are now keeping this price – and the prices of slower copper broadband packages – flat in real terms.
Openreach’s fastest fibre services will continue to be free from pricing regulation. The ability of networks to raise wholesale prices significantly for the faster, unregulated products is constrained by the fact that people can choose the entry-level service as an alternative.
Openreach can also charge a bit more for regulated products that are delivered over full fibre instead of copper. This reflects the fact that full fibre is consistently faster, and much more reliable, than copper-based broadband.
This approach improves the investment case for BT and its rivals by providing them with a margin to build the new networks. It also helps make sure people can still access affordable broadband.
We recognise that full fibre is a long-term investment, taking more than a decade – if not two – to pay back. So, we aim to allow all companies the opportunity to achieve a fair return over their whole investment period, and do not expect to introduce cost-based prices for fibre services for at least ten years.
Closing the copper network
As it lays new fibre to replace ageing copper lines, Openreach should not have the unnecessary costs of running two parallel networks. So when Openreach has rolled out full fibre in a particular area, we will progressively remove regulation on its copper products over a number of years.
This will improve the business case for Openreach to invest, by removing the need for it to maintain two networks, while promoting the take-up of faster fibre services.
Customers will be protected during this transition to ensure they can continue to access their services – particularly those in vulnerable circumstances.
Duct and pole access
We have already levelled the playing field by making it significantly cheaper, quicker and easier for BT’s rivals to build their networks, by giving them better access to Openreach’s underground ducts and telegraph poles. This can halve the upfront costs of connecting a home.
Order volumes last year to use this infrastructure covered over 23,000km of duct and over 140,000 poles, up from 2,500km and 12,000 respectively the previous year.
Preventing anti-competitive behaviour
We will prevent Openreach from harming competition, by reviewing all long-term discount agreements it offers its wholesale customers, and restricting them if they could stifle investment by its rivals.
Openreach will continue to be prohibited from offering geographic discounts on its superfast broadband wholesale services and we have decided to extend this to full fibre.
Dame Melanie Dawes, Ofcom Chief Executive, said: “Over the past year, being connected has never mattered more. But millions of homes are still using the copper lines that were first laid over 100 years ago. Now it’s time to ramp up the rollout of better broadband across the UK. We’re playing our part – setting the right conditions for companies to step up and invest in the country’s full-fibre future. This is a once-in-a-century chance to help make the UK a world-leading digital economy.”
Today’s new regulations will apply to BT from April 2021 until March 2026.
NOTES TO EDITORS
1. Average internet speeds and data usage have risen significantly, while average household spend on telecoms has been broadly flat in real terms in recent years:
2. In March 2017, we published our proposals for pro-investment regulation between 2018 and 2021. Subsequently, several broadband companies announced plans to invest in full-fibre broadband. Full fibre coverage then grew from 3% to 10% between 2017 and 2019. Full-fibre broadband is now available to over 5 million UK homes (18% of the country) – a rise of 80% in a year, the largest increase to date:
3. Other decisions we have made today as part of our review include:
- To ensure that Openreach provides the quality of service customers need, we are maintaining existing strict rules for how quickly it must carry out repairs and installations.
- We have set out how we will regulate Openreach’s ‘leased lines’ – high-speed connections used by large organisations, which also form the data highways of the UK’s mobile and broadband networks.
- Openreach will have to provide companies with access to its ‘dark fibre’ – cables that are ‘lit’ by competitors – in non-competitive areas, at a price that reflects its costs. This would significantly reduce the cost for mobile operators to roll out their new 5G networks.