The meeting began with a presentation from a policy director at Ofcom, who explained the approach of the UK regulator to investment and competition in telecoms following the Wholesale Fixed Telecoms Market Review of 2021. The previous strategy had depended on retail competition based on BT Openreach. But Ofcom had little ability to regulate the quality of the Openreach network, which had problems with delays to installations and fault repair. Openreach had superfast broadband available through fibre to the cabinet to 97 per cent of the population. While there was some competition, it was not sufficient to encourage investment in fibre to the home. The new strategy was to encourage competition between networks, rather than relying just on Openreach. The idea was to improve services and pricing and enable switching at the wholesale as well as the retail level. Openreach was legally separated from BT and given an obligation to provide the same service to all networks, including access to ducts and poles. This lowered the barriers to fibre roll-out since competitors no longer had to dig their own trenches. Ofcom also put in place a ban on geographical discounts to prevent price gouging in areas of low competition. Openreach was allowed some pricing flexibility in order to provide an incentive to invest in the unserved 30 per cent of the country.
The result has been significant increases in investment in gigabit capable coverage and in FTTH. Current plans anticipate reaching 85 per cent coverage by 2026.
Challenges and opportunities for small nations
The opportunities created by fibre to the home are clear. It offers higher speeds, long term reliability and resilience and, for operators, lower operating costs. There are wider economic benefits in enabling small businesses to operate from home and in promoting the jurisdiction as a good working environment.
In the discussion, the main challenges for small nations emerged as:
- Encouraging investment in small markets is a very difficult business case and may require government financial support due to tougher economic conditions.
- Regulators or government need to decide on a policy for network or retail competition – this will determine the regulatory requirements.
- If network competition is encouraged, then gaining access to ducts and poles will require regulatory or government intervention to allow fair competition.
- If wholesale competition is chosen, then regulators will have to determine wholesale charges for the incumbent operator.
- Consumers who have a choice between copper and fibre may not wish to move to fibre if the cost is much higher. Low take-up may impact on business cases.
- There will be numerous technical challenges to change from copper to a complete fibre network. These may affect consumers and businesses and necessitate regulatory involvement.
- Dealing with an ageing population who want a voice-only service will present a particular challenge and may require regulatory involvement such as a universal service obligation (USO).
- The lack of power on fibre means that fixed services will fail in the event of a power outage.
- New licence conditions will be needed.
Key considerations for regulators
- A clear policy for network or retail competition will enable jurisdictions to regulate operators more effectively.
- Any change to current technology poses a major challenge for the care community. This will require close engagement by the regulator with operators and the community.
- Protection of vulnerable consumers will require telecoms operators to provide battery backup or a prepaid mobile device and possibly a government subsidy. Regulators could require operators to provide this through a USO or via a licence condition, or make it clear to consumers that services will not work if power fails.
- Ensuring operators have a clear engagement plan with businesses is essential to providing sufficient notice for the termination of copper services that don’t operate with fibre.
Future topics for forum debates are:
- Subsea cables and their resilience
- Environmental, social and governance issues – regulation versus soft power
- Sharing resources and information.
