UK considers plan to speed up rollout of FTTH networks

As France’s President Nicolas Sarkozy is expected to launch a long awaited Digital Plan within a couple of weeks, the UK is now looking into playing a more active role in shaping broadband policies. “This does not translate into subsidies or structural changes in regulation, but rather a set of initiatives that could support and inform the activity of regulators,” says a detailed report made by Francesco Caio, at the request of Shriti Vadera Parliamentary Undersecretary of State for Business and Competitiveness and Angela Eagle Exchequer Secretary to the Treasury.

After the report was published, Ofcom (the UK regulator) launched a consultation for a plan to promote choice, competition and investment in high-speed broadband (Next Generation Access Networks or NGA networks) to UK homes and businesses. Ofcom’s Chief Executive, Ed Richards said: “I am delighted that investment in fiber is already underway and other plans are taking shape. Fibre networks are one of the most exciting developments in communications that the UK has ever seen. Ofcom’s plan of action will encourage further investment while promoting and sustaining competition so we can all benefit.”

UK is one the most developed Internet economies in the world

The development of a competitive market in broadband has been the cornerstone of the Government’s strategy. Its landmark initiatives were the Communication Act and the creation of Ofcom in 2003, the Strategic Review of Telecoms in 2005 and the functional separation of BT’s access network.

Today broadband penetration in UK is  approximately 60% (placing the UK at 5th place in the OECD rankings), DSL coverage has reached 99.6% of the population, and average headline speed has gone from 3.6Mbps to 5.9Mbps. The regulatory environment has led to the creation of one of the most developed Internet economies in the world. In the UK, online advertising has now reached 18.9% of total advertising spending, and online retail is the largest in Europe accounting for 15% of total retail.

Ofcom is seeking comments from consumers and industry

Ofcom is seeking to build on existing networks that already deliver broadband services. It will provide certainty on the future regulatory environment especially tailored to the high speed broadband access networks and services. The consultation, which will close on 2 December 2008, is looking for advice, reactions and propositions of the industry in five main areas.

  • developing clear standards for wholesale products, thereby allowing communications providers to compete and innovate in the high-speed broadband market;
  • allowing pricing freedom where there is effective competition, giving companies the flexibility to price services that reflect investment risk and generate a return on investment;
  • understanding the scope for competition based on access to existing telecoms infrastructure, building on the success of local loop unbundling;
  • facilitating transition by ensuring the smooth and timely move from traditional copper to fibre networks for both industry and consumers as services take off; and
  • communicating the next steps for Ofcom, i.e. how it will work with other interested parties including industry, the UK Government and the European Commission.

Operators are heavily investing in fibre networks

Fiber developments are already taking place in the UK in new developments such as Wembley in London, Belfast, Manchester etc. Last July, BT announced a £1.5 billion investment program to bring fibre access to 10 million homes by 2012. It plans to deliver a range of services with top speeds of up to 100 Mbps with the potential for speeds of more than 1 Gigabit per second in the future. Through Open Reach, a separate and completely independent business of BT which is responsible for the local loop network (the first mile) in the UK, the incumbent began a pilot in August to bring next generation broadband access to 10,000 homes in Ebbsfleet Valley in Kent. This would allow multiple HDTV channels to be watched simultaneously, HDTV gaming, and near instant music downloads.  OpenReach will offer all of its products on a wholesale basis to UK communication providers allowing for competition at a retail level.

Virgin Media, the UK’s first quadruple play media company offering mobile, broadband, digital TV and landline telephony is the second biggest broadband provider in the UK.  It  uses the networks of two major cable operators, Telewest and NTL. Virgin’s offer of high speed broadband (50 Mbps) to some of its customers makes it a high profile contender in the high-speed broadband market.