Ofcom launches fibre-access consultation

Ofcom has issued a consultation paper to identify how and when the UK should upgrade its broadband access.

Next-generation networks (NGNs) are already being installed across the UK. BT's 21CN is the best-known and largest example, but Colt's NGN is due to go live next year, Carphone Warehouse's TalkTalk NGN is a year old on Wednesday, and Cable & Wireless, Thus and BSkyB's Easynet are also joining in. That takes care of the so-called "backbone" of the UK's broadband infrastructure, but next-generation access (NGA, or the local loop) is another matter entirely.

While the NGNs are all fibre-based, the local loop almost entirely consists of copper. This creates a huge potential for bottlenecks, as bandwidth-intensive applications like IP television become more prevalent.

The Broadband Stakeholder Group, an industry lobbying association, recently stated that it wants to see an NGA rollout begin within the next two years, and government minister Stephen Timms also weighed into the debate a week ago with a hint that the public sector might get involved to speed things up.

"Next-generation access offers tremendous new opportunities for UK business and consumers and its potential impact on the economy is very significant," said Ofcom's chief executive, Ed Richards, on Wednesday. He said that NGA will be "one of the most fundamental changes to the country's infrastructure in the next 20 years" and added that "investment in next-generation access will represent a substantial commercial risk and the market should decide where and when it will be made".

BT is reluctant to spend billions of pounds installing fibre to the home (FTTH) or fibre to the cabinet (FTTC) while regulations state it would have to give rival providers equivalent access to those connections. Although estimates vary, a full FTTH rollout would probably cost in the region of £15bn. FTTC would be significantly cheaper, but still cost well into the billions.

"We want to ensure there are no barriers to investment and provide a clear regulatory environment which will help encourage investment," said Richards. "But we also want to ensure that the benefits of competition which consumers have enjoyed with current-generation broadband can also be achieved as we move to higher-speed, next-generation access."

Richards said that the current regulatory regime, which forced BT to spin off its Openreach division in order to allow rivals access to its exchanges, was "the right starting point for future regulation". However, he suggested that NGA networks have "different characteristics", and claimed that the demand for such access remained uncertain for now.

Dougal Scott, Ofcom's director of policy development, suggested that NGA was "likely to be provided by a whole range of technologies and networks", including not only NGNs and cable but also wireless and satellite (although the latter two connections would probably sit alongside wired access). He also pointed out that cable companies like Virgin Media, which is currently trialling speeds of up to 50Mbps, already provide FTTC.

Ofcom staying neutral
Ofcom is determined to remain neutral in the debate. It does not even view it as a certainty that the UK needs an NGA rollout as soon as possible.

Scott suggested that other countries which are already rolling out NGA are doing so partly for reasons that do not apply in the UK. For example, US telcos are rolling out NGA because of the length of the local loops they are faced with; Japan has more tower blocks than the UK, making it cheaper to roll out fibre there; and France has a more uniform and suitable sewer system, which can be easily cabled.

"We do have competition in broadband [cable companies], but none of the other factors are in place," said Scott. "The efficient time for investment in the UK might be a bit later than in other countries." Richards also claimed that there would be a "second mover" advantage in waiting for other countries to take the NGA leap.

In a statement released on Wednesday, the Broadband Stakeholder Group welcomed Ofcom's consultation but it warned that "there may be a need in the future for Ofcom to take more interventionist measures if evidence emerges that the UK economy could suffer from delayed deployment of next-generation access".

Ofcom's NGA consultation closes on 5 December. However, a separate consultation will shortly be announced by the regulator that will examine areas where the local loop consists purely of fibre, such as Ebbsfleet in Kent.

Because no copper is involved there, it is currently impossible for BT to "unbundle" the connections to rival providers — the company has a trial agreement with Ofcom to let this happen — although future technological advances may make unbundling possible. As BT intends to roll out more fibre-only deployments at new builds, the regulatory aspects of this issue need to be addressed alongside the more general NGA debate, the regulator believes.