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Next generation broadband for new-build homes

Next Generation Access - Higher-speed broadband for new-build homes

The next few years will be a busy time for the house-building industry: the Government announced a target in 2006 for two million new homes to be built by 2016. In 2007, this was then revised upwards to three million by 2020.

These ‘new-build’ projects will vary from a handful of new units in a street, to new villages and even whole new towns. In fact, just eight years from now, up to 8% of all homes in the UK will be new-build.

In towns and other built-up areas, many people are likely to connect to the communications services already in place there via existing copper networks which can currently deliver data download speeds of up to 8 Mbps (mega bits per second) to most homes. However, many will be in areas where there are no existing systems to tap into, and in these cases it’s a natural opportunity to introduce the very latest communications technology – new fibre-based networks which could deliver up to 100 Mbps (mega bits per second) and more.

Although this will demand a lot of digging, and many miles of trenches and ducts, this is no different from putting in place older technologies – they too need a lot of digging, trenches and ducting. In addition, these tasks are similar to those facing all the other services a new-build needs – electricity, water, gas and so on. This means that the costs can be shared between them making it cheaper for everyone.

Broadband: where we are now

The UK’s love affair with broadband has been swift and intense.

Six years ago, just 7 per cent of the UK’s households had broadband. Today, that’s risen to over 50 per cent, and the rate continues to climb. This has been partly driven by Ofcom making sure that the broadband market has been opened up to as many competitors as possible, each offering attractive prices and new services.

However, as many customers already know from experience, the speed of broadband can vary even on today’s networks. Many of today’s customers are looking for even higher speeds and greater capacity than conventional broadband – they want faster access to today’s services like YouTube and online picture sharing services. There could also be new services offered in the future that need higher speeds – for example high definition video. Operators are already upgrading networks to deliver better services to customers, but it’s likely that a time will come when today’s communications services cannot keep pace with customer demands and expectations.

The new broadband: Next Generation Access

As its name suggests, Next Generation Access (NGA) will take broadband to the next level. Thanks to cutting-edge fibre technologies, including fibre optics, the broadband speeds customers will get access to can be expected to increase substantially. These higher speeds could support a wide range of new services to be possible, touching everything from games and other home entertainment to education and healthcare.

With higher bandwith (essentially, a wider digital ‘pipe’ to bring you broadband services) next generation access is an exciting step forward. Already, the leading communications providers are beginning to invest in a next generation access future. For example, Virgin Media is upgrading its cable network, and BT is installing fibre technology into a major new housing development in Ebbsfleet, Kent.

Not surprisingly, housebuilders regard NGA as an important selling feature, and are keen to have it as part of their developments.

Making sure everyone can benefit, fairly

Ofcom is the independent regulator for the UK communications industries. Our role is to look after television, radio, telecommunications (telecoms) and wireless communication services.

Next generation access is an exciting development which we want to encourage. New-build homes are an excellent opportunity for companies to trial new services, get feedback from customers and generally improve what they offer us. This consultation is setting out our proposals how next generation access in new-build developments would be regulated, with the aim of:

creating an investment-friendly climate, open to different providers;
setting clear standards that help providers deliver services successfully;
promoting competition and protecting the public; and
treating all providers equally under the same set of rules.

Multiple investors welcome

We believe the best route to a thriving next generation access in the UK is to make it ‘contestable’ – that is, open to many different investors. This way, any operator who believes there is a business case for next generation access can invest as soon as they wish.

This is easier to achieve before a housing development is finished. The cost of including, say, two networks into a development may cost little more than just one: when you dig a trench to lay fibre, it does not cost much more to put in a second fibre at the same time. Doing this could encourage new networks to participate after the building is completed.

This will help create a competitive market, although our rules will also need to make sure other factors don’t stand in the way of healthy competition.

If, for example, a development is served by just one network, we might need to open it up to different providers to create competition and choice for its residents. So although we would prefer not to force rules on new-build providers with relatively small developments, if we find too much power in the hands of one party, we can take steps to dilute it for the benefit of consumers.

Making it worthwhile to compete

In today’s broadband market, your internet service provider (ISP) has ready access to a range of products to sell to you. This is why there is healthy competition, and why the ISPs can justify their investment in systems and processes; after all, there’s a national market of 26 million homes out there.

NGA is a different proposition: new-build developments vary in size from a few homes to, perhaps, 20,000 dwellings. This may make it harder for Internet Service Providers to make money in delivering services to a smaller number of customers.

We see two solutions to this. One is to reduce the cost ISPs are expected to pay, or minimise the difference between the old products and the new NGA offerings. The second is to make the cake bigger: to increase the size of potential business beyond just the number of houses in any one development. This would work if multiple developments were served by the same basic product.

Both solutions would be helped considerably by common technical standards, which would make it simpler to roll out the same services across different developments. Standard equipment would also cut the costs of getting the networks up and running.

Ofcom would therefore like a suitable industry body to take on this challenge of finding that single standard. We believe the industry is much better placed than we are to tackle this task. However, we would also like your views on how to move forward if these common standards don’t materialise.

Protection in an emergency

It is an Ofcom rule that customers should be able to reach 999 services in an emergency. Even in a power cut, your phone line at home will work because the traditional copper networks are powered from the exchange.

One potential drawback of fibre networks is that if the power goes down, so does the network. However, propose that in case, a simple battery back-up should be sufficient to meet our rule.

Another right of customers – to be able to have a basic voice service – is protected by a condition called the Universal Service Obligation, and this will be continued for NGA customers.

Safeguarding competition

BT and, in Hull, KCOM have what’s known as ‘significant market power’ in a number of markets. As a result, Ofcom has instructed them to open up their assets to allow competitors to participate as well. This is why there are many different internet providers you can choose from, and why you have a choice of over 300 companies when it comes to voice calls.

These arrangements will also apply to NGA, although if we find that a healthy competitive market emerges we will ease back on regulation in the future.

Promoting competition

A significant barrier to rolling out fibre is the cost of digging up the roads to lay telecoms infrastructure such as duct. Regulators in other countries are already focusing on the key to making NGA work: access to existing ducts – the pipes that a fibre optic cable can be put into. Although we can see the challenges involved in finding a secure way to share duct networks, we also believe that these issues are easier to solve in new-build situations.

We are interested to hear your views on whether it’s realistic, and practical, to share ducts in new-build developments.

Our full consultation document

This brief guide to the consultation outlines the background to NGA, the possibilities and potential issues. However, the full consultation document is available on the Ofcom website, at http://www.ofcom.org.uk/consult/condocs/newbuild/

When to respond

Please send us your comments no later than 5pm on 25 June 2008. Once we’ve weighed up everyone’s views, we plan to make a statement with our decisions in the summer.

How to respond

We prefer to receive responses by email (in Microsoft Word format) as this helps us to process them quickly and effectively. Please also fill in a response cover sheet (see the full consultation document), to tell us whether your comments are confidential. You can also download the cover sheet from the ‘Consultations’ section of our website.

Please send your response to: chinyelu.onwurah@ofcom.org.uk Or, send it to the address below, marked with the title of the consultation.

Chinyelu Onwurah
Ofcom
Riverside House
2A Southwark Bridge Road
London SE1 9HA
Fax: 020 7981 3333

To simplify our administration, we do not normally tell you we have received your comments. Also, don’t worry about a paper copy if you’ve sent us your response by email.

Confidentiality

We believe it is important for everyone interested in an issue to see the comments people have sent us. This means we will usually publish your response on our website (www.ofcom.org.uk), as long as you have given us permission to do so on your response cover sheet.

We only treat comments as confidential if you ask us to, and if you separate them from any non-confidential material that we can publish under your name.

We may have to publish some information if this is necessary to carry out our legal duties. However, we will carefully consider the confidentiality of any information you provide.

If your response includes any information protected by copyright, we will assume that you license us to use that information to meet our legal duties. You can find more on our website at: www.ofcom.org.uk/about_ofcom/gov_accountability/disclaimer.

Next steps

You can register to get automatic notices of when our documents are published at www.ofcom.org.uk/static/subscribe/select_list.htm.

Our consultation process

If you have any comments or suggestions on how we carry out our consultations, please call our consultation helpdesk on 020 7981 3003 or email us at consult@ofcom.org.uk. We would particularly welcome your views on how we could encourage contributions from people who are less likely to respond to formal consultations (such as small businesses and residential customers).

If you would like to discuss these issues, or our consultation processes more generally, please contact Vicki Nash, Director for Scotland.

Vicki Nash
Ofcom Scotland
Sutherland House
149 St Vincent Street
Glasgow
G2 5NW
Phone: 0141 229 7401
Fax: 0141 229 7433
E-mail: vicki.nash@ofcom.org.uk