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Executive summary

New build fibre networks are the first step in next generation access

1.1 The move to next generation access networks is one of the most fundamental changes in telecommunications infrastructure since the introduction of competition. Consumers continue to benefit from the broadband services available across the current generation of copper and cable networks. Next generation access networks, discussed in our September 2007 consultation on Future Broadband^(-1-), offer further opportunities for new services and business models.

1.2 Since our September consultation we have seen several announcements of investment in next generation access: Virgin Media, upgrading its cable network; H20, using sewers to deploy fibre links in small cities; and BT in Ebbsfleet, a new build property development. Ebbsfleet may be the first deployment of fibre in new build but we know there are others planned. Government targets indicate there should be 3 million new properties by 2020 at a rate of approximately 240,000 per year^(-2-) and Openreach has suggested it may deploy fibre to developments greater than 1,000 homes.

1.3 New build fibre deployments are an opportunity for providers to trial new services, understand consumer needs and improve their service offer accordingly. We want to encourage these deployments and one important way in which we can do so is by clarifying the regulatory environment. Our Future Broadband consultation set out our strategic approach to next generation access in general. This consultation sets out our proposals for next generation access in new build developments, in order to:

• ensure efficient and timely investment is open to different providers;
• help providers successfully deliver services, particularly through clear standards;
• promote competition and protect consumers; and
• ensure equitable regulatory treatment of providers.

Ofcom’s approach to next generation access in new build housing

1.4 Ofcom’s approach focuses on enabling providers to invest and compete because we believe competition is the best way of ensuring that the benefits of next generation access are passed on to customers. This view is supported by the UK’s experience in current generation broadband: in 2002 UK broadband penetration stood at 7%, and six years later penetration has reached 57%^(-3-), driven in part by fierce competition from local loop unbundling operators (LLUOs).

1.5 This competition is due to investments by a number of market players within the regulatory environment put in place by Ofcom following our Telecommunications Strategic Review (TSR)^(-4-) in 2005. The review came to two main conclusions: firstly that today’s wireline access networks are not replicable or open to multiple investors (contestable); and secondly that the deepest point where it is possible to promote effective and sustainable competition is the local loop.

1.6 New build networks are different. There are opportunities for investment to be contestable at the point of deployment. However, once new build developments are complete, wireline communication networks may display the same characteristics of an enduring economic bottleneck as does the existing copper access network. There are therefore two ways in which competition can be promoted:

1. contestable investment at the point of deployment;
2. in areas where market power develops, the application of appropriate regulatory obligations including wholesale access remedies.

1.7 As well as promoting competition we want to give providers the regulatory clarity they need. These two aims are interlinked: the regulatory environment in new build will be determined by the competitive conditions in place.

Footnotes:

1.- http://www.ofcom.org.uk/consult/condocs/nga/

2.- From a base of 165,000 per annum in 2006

3.- The percentage of UK households with a broadband connection according to Ofcom’s Communications Tracking Survey, Q4 ’07.

4.- http://www.ofcom.org.uk/consult/condocs/statement_tsr/

The full executive summary and document is available below

• Next Generation New Build [pdf]
  Full Executive Summary
• Next Generation New Build [pdf]
  Full Print Version

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