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Ofcom: Promoting competition and investment in fibre networks

Ofcom have published a consultation on the approach to remedies in the broadband market to promote competition and investment in fibre networks. This follows consultations on defining geographic markets at the end of 2018. The consultation reasserts Ofcom’s commitment that “Competition is the best means to ensure continued investment in building and maintaining high quality, future-proofed telecoms networks.”

The consultation needs full discussion by INCA members since there are important elements that may affect competitive investment.

For example the consultation considers different regulatory approaches to potentially competitive and non-competitive areas including a different form of charge control - using a Regulatory Asset-Based (RAB) approach in ’non-competitive’ areas. In relation to the danger of predatory overbuild (or even simple announcements as opposed to spades in the ground), aimed at undermining competitive investment, Ofcom seems to give a bit of a shrug. Whilst recognising the concern exists, the consultation says, 'we expect BT to upgrade its network in response to competitive entry, and we see this as one of the benefits to consumers of such entry occurring… We would expect the risk of fibre deployment by BT to be factored into the investment cases of alternative providers.’ Will this really encourage competitive investment?

Copper switch-off is discussed but Ofcom only seems to envisage a context for supporting ’the smooth transition from Openreach’s copper network to its fibre network’. Important independent players are building passive full fibre infrastructure or otherwise offering wholesale access to their networks. Shouldn’t we be thinking harder about how to encourage switching between old and new wholesale infrastructures - whoever builds the new networks - enabling different scenarios for copper switch-off.

Whilst the stated ambition is to support competitive investment, if poorly implemented some measures may perversely have the opposite effect.

The Consultation closes on the 7th June and Ofcom expect to set out full details of their regulatory proposals in the fixed telecoms market, alongside their market analysis and SMP findings, in December 2019.

The consultation will be discussed at INCA’s Policy & Regulatory workshop on 1st May (please contact Malcolm Corbett if you wish to be involved).