March 3, 2009
British regulator Ofcom gave BT Group plc (NYSE: BT; London: BTA) the "green light" to push ahead with its broadband rollout plans today via a document outlining BT's approach to fiber-based broadband access rollouts. (See Ofcom Reports on FTTH.)
It's a significant document –- a 91-page PDF for those with the time, patience, a decent espresso machine, and the best beans Brazil has to offer.
The highlight is that, according to Ofcom CEO Ed Richards, "there are no regulatory barriers in the way of investment in super-fast broadband; we want to promote investment but also ensure that there is fair and effective competition for the future."
For BT, this means it will have greater freedom to set the prices for competitive access to ensure a return on its investment.
The regulator says it will "allow wholesale pricing flexibility to enable returns appropriate to the considerable risks of building new networks," and "ensure that any regulatory pricing allows investors the opportunity to earn a rate of return that genuinely reflects the cost of deployment and the associated level of risk."
Ofcom now intends to update its access network regulation to cover fiber-based rollouts, and has initiated a Consultation process to take that process to the next stage. The overall aim is to ensure that competitive operators get the chance to build their own networks "by facilitating fair opportunities for companies to synchronise their investments with BT’s deployments," and to enable wholesale access to BT's services should that be the preferred strategy.
The return on investment assurance is key to BT, which, while boasting last year about its "super-fast broadband" plans, made it clear that any investment was conditional on a number of factors. (See BT Unveils $3B FTTx Plan, BT's Fiber Diet Fallout, and BT's FTTH Conceit.)
In a statement emailed to Light Reading, BT's CEO Ian Livingston said he is "encouraged by the clarity that Ofcom's NGA policy framework brings to our investment case and current rollout plans. Today’s announcement gives us the green light to push ahead with our £1.5 billion [US$2.1 billion] superfast broadband investment plans to reach at least 40 percent of U.K. households by 2012."
But while BT talks of a £1.5 billion investment, only a fraction of that will be sunk into FTTH. The majority of its rollout will be FTTC (fiber to the curb) with a copper tail for DSL access, an approach it is currently trialing in two locations. (See Europeans Advance FTTx Plans and BT Preps FTTC Trial.)
According to a study published in September 2008, it would cost up to $50 billion to turn the U.K. into a true FTTH economy. (See Report: UK FTTH Would Cost $50B.)
While today's move suits BT and its plans, Ofcom notes that facilitating such private investments might not be enough to ensure widespread high-speed broadband availability.
The regulator says it needs to "understand the likely scope of private sector investment and consider whether there is a need for further action to bring the benefits of super-fast broadband to a wider group of UK consumers, citizens and businesses."
Ofcom also notes that it needs to take into account developments at the European Commission and European Regulators Group (ERG) concerning next-generation access networks. (See FTTH Concerns for Europe.)
In the meantime, the current extent of the U.K.'s ambitions for universal broadband stretches to a 2 Mbit/s downlink connection. (See Britain Botches Broadband.)
— Ray Le Maistre, International News Editor, Light Reading
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