Fibre access essential says industry group

Broadband Stakeholder Group claims the UK will quickly fall behind its rivals unless next-generation access rollout begins within two years

High-speed fibre access must be rolled out across the UK if the country is to avoid falling behind the rest of the world in the broadband stakes, a key industry body has warned.

A report by the Broadband Stakeholder Group (BSG) — which includes representation from organisations as diverse as Ofcom, the government, BT, the BBC and Time Warner — suggests that such a rollout must begin within the next two years, despite a current lack of evidence that "fibre to the premises" (FTTx) will be necessary. The report also claims that the investment required for this rollout could be recouped by telcos such as BT selling wholesale access to their networks and making deals with content providers.

Many of the UK's Tier 1 networks are already being upgraded, most notably including BT's 21st Century Network (21CN). These next-generation networks (NGNs) have a much greater capacity for carrying high-bandwidth services, but critics argue that users' access will be limited by the capacity in the local loop.

The local loop is predominantly copper-based, and BT currently has no plans to upgrade the copper to high-speed fibre because it says regulation would force it to open those connections up to rival providers, thus making it not worth the expense. The operator is, however, rolling out FTTx to some greenfield sites, due in part to the rising price of copper.

The BSG claims it is "likely that a significant minority of users will see no real improvement in their broadband access speeds" despite the rollout of 21CN, and it warns that "if the UK was to lag significantly behind its international competitors in bandwidths available to citizens and consumers, the pace of innovation in the economy could slip behind that of those competitors".

"Although wireless technologies will play a part," the report continues, "the move to next-generation broadband will require the deployment of optical fibre deeper into the local access network, either to the street cabinet or directly to the customer premises". The BSG refers to figures from Enders Analysis... put a price of €14bn on such a deployment.

The solution to the investment conundrum, according to the report, lies in "alternative commercial models" which "align the interests of operators with upstream content and service providers and end consumers".

"If wholesale products are available, then retail markets should not need regulation, especially where innovation in new products and applications, which exploit increased bandwidth, is to be encouraged from multiple parties," the report states.

The BSG also acknowledges worries from businesses over operators blocking or degrading third-party applications and services in favour of their own — part of the wider so-called "net neutrality" debate — and says such concerns must be "mitigated".

The report also calls on the telecoms regulator to impose a certain amount of regulation. The report warns that: "Ofcom must ensure that potential efficient investment is not undermined by regulatory uncertainty" and urges the regulator to avoid assuming that any NGN operator will quickly achieve a position of significant market power (SMP). However, it goes on to say that, even if an operator is found to be enjoying SMP in certain geographical areas, it might be better to adopt "behavioural remedies based on functional separation" rather than regulating an operator on the basis of how successful it is. The report encourages Ofcom to work out a new regulatory framework within a year, in order to encourage investment in FTTx.

Interestingly, the report suggests that some level of public sector intervention will be necessary in order to roll out fibre in rural areas. However, the authors also warn that, because the market for next-generation broadband is "at a very embryonic stage", it is difficult to predict where market failure may emerge and the public sector should therefore "forbear from making large-scale interventions to promote [next generation access] deployment at this stage".

Ofcom's chief executive, Ed Richards, last week insisted that no public money would be necessary to ensure a sufficient level of next-generation access across the UK.

The BSG report also urges the Department of Trade and Industry to "work together with relevant departments and public-sector bodies and the industry to develop streamlined approaches to [next-generation access]-related street works and planning issues to minimise both the disruption caused, and the cost to operators of these works".

BT responded to the report by defending the capacity of 21CN. "This is a fast-moving market and our intention is always to stay ahead of what our customers demand," a statement from the telco said. "We believe our present and planned products will do just that."