Millions of homes across the UK 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 installed over 100 years ago – has helped deliver superfast broadband to 96% of homes, with services improving in recent years, without customers needing to spend more.
But as our 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 they 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 past year – and that momentum has continued throughout the pandemic. The regulations build on this – driving competitive commercial investment and supporting the closure of the country’s 100-year-old copper network; while protecting consumers from high prices.
Ofcom believe this will lead to properties in around 70% of the UK having a choice of networks. Openreach has committed to rolling out 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 make sure nobody gets left behind.
Driving competitive investment
How Ofcom are doing this:
Wholesale price regulation that encourages investment and promotes competition
Over the last few years, Ofcom has brought down the price that Openreach charges telecoms providers such as BT, Sky and TalkTalk for its entry-level (40 Mbit/s) superfast copper broadband service. They are now keeping this price flat in real terms, along with the prices of slower copper broadband packages.
Openreach’s fastest fibre services will continue to be free from pricing regulation, since 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, because full fibre is consistently faster, and much more reliable.
This approach encourages investment by providing BT and its rivals with a margin to build the new networks. It also helps make sure people can still access affordable broadband.
Ofcom aim to allow all companies the opportunity to achieve a fair return over their whole investment period.So we don’t 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 shouldn’t have the unnecessary costs of running two parallel networks. So, when Openreach has rolled out full fibre in a particular area, they will progressively remove regulation on its copper products over a number of years.
Customers, particularly vulnerable ones, will be protected during this transition so they can continue to access their services.
Duct and pole access
Ofcom already made 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.
Preventing anti-competitive behaviour
Ofcom will prevent Openreach from harming competition, by reviewing the discounts 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.
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.
Dame Melanie Dawes, Ofcom Chief Executive
Today’s new regulations will apply to BT from April 2021 until March 2026.