Ofcom clears the way for super fast broadband

UK communications regulator Ofcom cleared the way for investment in super fast broadband on Tuesday.

The main thrust of Ofcom’s latest initiative is the support of plans to upgrade the UK’s ageing copper access network to fibre, giving incumbent telco BT something of a boost.

With BT upgrading its nationwide network to fibre as part of its 21CN project, communication providers would get access to the network on a wholesale basis by buying products from Openreach, or by combining their own kit with infrastructure rented from BT to deliver services.

By way of promoting investment in this next generation infrastructure, Ofcom plans to give communication providers such as BT the freedom to price wholesale broadband products themselves without any regulatory intervention. The regulator believes this approach will allow investors to make an appropriate return on their investment, based on the risk they are taking but pricing at a level that the market will bear, given the ready availability of alternative broadband services.

Ofcom will also promote wholesale access for all, requiring Openreach to offer fibre-based broadband services to other providers – including BT Retail – on equal terms and without favour.

The watchdog said it will also work to understand how far private sector investment will take the UK and 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.

Michael Kovacocy, European telecoms analyst and sector strategist at Daiwa Securities, said that the news is “a long-term fundamental game-changer, with investor concerns about fibre spend being greatly diminished by the fact that pricing will now be set in order to allow an adequate return on investment.”