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BT Openreach unsure of fibre demand

Openreach's regulation chief wants to see a fibre network remain as open to competitors as current broadband networks, but wants to gauge public demand before investing
Written by David Meyer, Contributor

BT Openreach is more concerned about the level of demand for next-generation broadband access than the regulation surrounding it, a senior executive has told ZDNet.co.uk.

Amy Chalfen, who was recently appointed as Openreach's director of equivalence and regulatory and public affairs, said on Friday that return on investment was the company's primary concern. "The issue is less the regulatory regime and more the business case to create the fibre in the first place," she said.

Next-generation access (NGA) refers to the last mile of the PSTN between telephone exchanges and homes or businesses. Although the backbone of the nation's broadband infrastructure is based on fibre (in the form of next-generation networks like BT's 21CN), the local loop remains based on copper. It therefore represents a potential bottleneck in connectivity — especially if high-definition video (HDTV) takes off.

In April, Matt Beal, the chief technical officer of BT Wholesale, suggested that BT would not be inclined to make a big investment in fibre access because, under the current regulatory regime, other companies would then be able to access the new infrastructure without having to pay for building it. BT estimates that a nationwide rollout of fibre to the home (FTTH) would cost between £10bn and £15bn.

"It is not a question of 'we don't want to do that because we'd spend a lot of money and everyone else would get the benefit'," Chalfen said on Friday. "The regulatory regime would enable everyone to access the network and that's what would be necessary in order to make a return on the investment. That is the part of the regulatory regime we believe must be consistent — it must drive everyone's access towards the same results once the investment is made."

"The big difference [made by the creation] of Openreach is that a product launch is launched to every communications provider at the same time, and we completely would expect that the effect of that kind of investment would not override the principle of Openreach being equivalent," Chalfen added.

Chalfen said she was content with the pace of the NGA debate, which was spurred this week by the launch of an Ofcom consultation. "We are happy that this debate is happening now," she said. "Everyone is talking about fibre but, in fact, this is about what services need to be enabled, and the jury is still out on what exactly those need to be."

"The technological community is well aware of the benefits fibre can bring," Chalfen said, while pointing out that Openreach and the wider BT Group were also aware of those benefits. "The question is at what point those benefits become an investable opportunity. HDTV may be a driver, but there is still a lack of clarity around that."

Chalfen played down the idea of public funding going into an NGA rollout — a scenario hinted at recently by the competition minister Stephen Timms, who believes the issue affects the UK's international competitiveness.

"I don't think anyone feels this is about a huge public-sector investment," Chalfen said. "If the services are there, the business case will be there, but it's around the right debate and the right vision."

Chalfen also said that Openreach was not waiting for bandwidth usage to grow before implementing a fibre rollout. "I don't think this is about waiting until demand has crystallised," she said. "The issue is that the view of what those services will be needs to be clearer. It is a question of timing the investment correctly."

While Timms and lobbyists at the Broadband Stakeholder Group have pushed for a fibre rollout to begin as soon as possible, even Ofcom has hinted that the time for NGA may not yet have come. At the launch of the regulator's consultation on Tuesday, Ofcom's chief executive, Ed Richards, even argued that there could be an advantage to letting other countries take the leap into fibre or wireless-based NGA first, then learning from their mistakes and successes.

BT is installing FTTH in some cases, but only on a trial basis in new property developments, such as that at Ebbsfleet in Kent.

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