Ofcom publishes regulation of UK’s wholesale telecoms markets
Ofcom has published its findings from the Wholesale Fixed Telecoms Market Review 2021-26, setting out its plans to regulate the fixed telecoms markets that underpin broadband, mobile and business connections.
Spanning seven volumes and 26 annexes, with further supporting documents, there is much to consider in the WFTMR. However, the key decisions Ofcom has made include:
Access to Openreach’s telegraph poles and underground ducts
Openreach will continue to be required to allow all network operators to lay their own fibre networks using Openreach’s infrastructure through its Physical Infrastructure Access (PIA) product, facilitating competition by reducing costs for other builders. Product orders have ramped up with over 100 customers.
Different approaches to regulating Openreach’s residential broadband products in different parts of the UK
Ofcom has stated that it will vary how it regulates Openreach’s broadband products, depending on the level of competition in different areas. Where there is established competition, such as cities, and designated Area 1, wholesale prices will not be regulated. This aims to boost competitive network build.
Area 2, which Ofcom deems as having “potential for material competition” and comprises 70% of the UK, Openreach will again have no regulation on its wholesale fibre prices, but will be subject to a flat, inflation-adjusted, regulated price for its entry-level superfast broadband service (download speed of up to 40 Mbit/s).
Where Openreach is the only scale operator, in Area 3, regulation is designed to allow Openreach to recover its costs of both its existing copper network and its investment in a new full-fibre network.
Allowing Openreach to charge more for full-fibre broadband
To further help the investment case, Openreach will be able to charge more (£1.70 per month extra) for the 40 Mbit/s service if it is delivered over full fibre. This reflects the additional customer benefits, such as speed and reliability, that fibre offers over copper. Geographic discounts for fibre are ruled out as well.
Long-term view
Although the WFTMR will apply until March 2026, Ofcom has recognised the longer term business case for fibre, and the time needed to recover the build expense. The regulator does not expect to introduce cost-based price controls until at least 2031, with the expectation that the same wholesale access prices to apply throughout the UK, as it expects ongoing investment, commercial and state funded, in both Area 2 and Area 3 throughout the period to 2031. Beyond that, Ofcom would continue to regulate in a way that supports the continued development of competition and investment.
Finally, if there is a need to move to cost-based regulation in the future, Ofcom will honour the fair bet principle.
Closing the copper network
As it lays new fibre to replace copper lines, Ofcom states that Openreach should not have the unnecessary costs of running two parallel networks. So when Openreach has rolled out full fibre in a particular area, Ofcom will progressively remove regulation on its copper products over a number of years.
Crucially, customers will be protected during this transition to ensure they can continue to access their services – particularly those in vulnerable circumstances.
Why next-generation gigabit capable networks matter
Ofcom noted how the pandemic has underlined the importance of a reliable internet connection for UK homes and businesses. While the copper telephone network has helped deliver superfast broadband to 96% of homes, the rollout of fibre and gigabit infrastructure will ensure the speeds and reliability consumers need today and in the future. The telecoms industry has provided better services in recent years, without spending more in real terms as this graphic shows.
techUK members who are interested in our work on communications infrastructure deployment, and reducing the barriers to fibre rollout in the UK, are very welcome to join our Fibre Driving and Infrastructure Sharing Working Group. Our next meeting is Tuesday 23 March, 10:00-11:30.
Sophie Greaves
Sophie Greaves
Sophie Greaves is Head of Programme for Communications Infrastructure and Services at techUK, and oversees the UK Spectrum Policy Forum.
Sophie was promoted to Head having been Programme Manager for Communications Infrastructure and Services, leading techUK's telecoms activities, engagement and policy development. Previously, Sophie was Programme Assistant across a variety of areas including the Broadband Stakeholder Group, Central Government, Financial Services and Communications Infrastructure programmes.
Prior to joining techUK, Sophie completed a masters in Film Studies at University College London; her dissertation examined US telecoms policy relating to net neutrality and content distribution.
- Email:
- [email protected]
- Phone:
- 020 7331 2038
- Twitter:
- @SJMJames1
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- https://www.linkedin.com/in/sophiegreaves/
Tales Gaspar
Tales Gaspar
Tales has a background in law and economics, with previous experience in the regulation of new technologies and infrastructure.
In the UK and Europe, he offered consultancy on intellectual property rights of cellular and IoT technologies and on the regulatory procedures at the ITU as a Global Fellow at the European Space Policy Institute (ESPI).
Tales has an LL.M in Law and Business by the Getulio Vargas Foundation (FGV) and an MSc in Regulation at the London School of Economics, with a specialization in Government and Law.
- Email:
- [email protected]
- Phone:
- +44 (0) 0207 331 2000
- Website:
- www.techUK.org
- LinkedIn:
- www.linkedin.com/in/talesngaspar
