O2 may roll out fibre if Ofcom changes rules

The provider may follow BT's lead and invest in a fibre-to-the-home rollout, but only if Ofcom ensures the investment would see a healthy return

O2 is considering investing in its own fibre-to-the-home network, but wants to wait until Ofcom changes telecommunications regulation before it makes an investment.

Following BT's Tuesday announcement that it was to plough £1.5bn into a fibre-access rollout to 10 million homes, an O2 spokesperson told ZDNet.co.uk that O2 was "not going to move" until Ofcom changed the rules to ensure a healthy return on investment. "We need clear and unambiguous regulation in place before we start shelling out huge sums of money," the spokesperson said on Wednesday.

Ofcom's current regulatory regime was set up for copper-based infrastructure, and was largely a response to BT's former monopoly in this market. The rules, therefore, currently state that market-dominating networks need to be opened up to competitors; many see this as a poor incentive for fresh investment.

BT has been explicit that it also wants to see these rules changed, and has hinted that it would be prepared to invest more in rolling out fibre to the home if the issue was clarified.

Virgin Media also threw its support behind the campaign for regulatory change. "We strongly support BT's call for a stable regulatory environment that rewards both current and future investment," it said in a statement. "We will continue working closely with Ofcom and the government to achieve this." Virgin Media did, however, claim that it, rather than BT, was "spearheading" the "super-fast broadband movement", as it had already rolled out a fibre network that would be offering a 50Mbps service to 12 million UK homes by the middle of 2009.

Some analysts have argued that BT's announcement was bad news for those providers who had invested large amounts in local-loop unbundling (LLU) — the process by which providers can get equivalent access to BT's infrastructure — because their technology would now be superseded. However, a spokesperson for Carphone Warehouse, one such provider, said on Wednesday that BT's announcement was welcome as long as Ofcom guaranteed "a level playing field with other ISPs… in the same way that, initially, before LLU came along, [BT] would offer equal access [in the wholesale market]."

Carphone Warehouse's spokesperson also claimed that fibre and copper could "exist in parallel", as fibre access would remain "a premium product at a premium price" for a long time yet. The spokesperson also pointed out that BT's fibre rollout would not reach all UK homes, but added that Carphone Warehouse itself had "no plans at this moment to invest in fibre optics".

ZDNet.co.uk also contacted BSkyB to gauge its reaction to BT's announcement, but had not heard back at the time of writing.