Ofcom confirms BT must offer virtual fibre unbundling and open up its ducts and poles...
Regulator Ofcom has confirmed BT must offer rival ISPs access to any fibre lines it lays and let them use its underground ducts and telegraph poles for their own fibre. The measures are designed to encourage investment and competition in superfast broadband.
The telecoms regulator proposed the measures earlier this year, and today confirmed virtual unbundling and duct access as the core of its regulatory framework for superfast broadband.
Under the plans announced today, BT will have to share information with other communications providers about its ducts and poles, detailing factors such as quality of the infrastructure and available capacity, from mid-January 2011, with a view to launching access by early June.
"BT has got to make its own judgement about how far they roll out [fibre broadband] and where... [duct and pole access] allows other people to make that choice as well. If BT chooses not to roll out somewhere, then other companies are able to say 'can we make a business from that?'," Ofcom CEO Ed Richards told an event in London today.
Earlier this year, cable broadband ISP Virgin Media began a trial of fibre over telegraph poles in the Berkshire village of Woolhampton, offering residents a 50Mbps broadband service via overhead fibre.
Ofcom is also enabling ISPs to gain access to BT's ducts and poles so they can lay their own fibre more cheaply than digging up roads - the usual route for fibre-laying. The regulator believes this will help bring superfast coverage to areas where BT chooses not to lay fibre - providing "other avenues for CPs [communications providers] to provide their own network and enter the market if they wish".
Ofcom backs Vula
TalkTalk, the UK's second-largest ISP, today announced plans for a commercial superfast broadband service by buying fibre access from BT, making it the first large ISP to do so.
Under Ofcom's framework, access to BT's fibre lines will be regulated via a wholesale access product called virtual loop unbundling, or Vula, which BT will be obliged to make available to other ISPs so they can provide superfast broadband services to their own customers.
BT currently offers wholesale fibre access via a product called GEA (generic Ethernet access). According to Ofcom, GEA is "pretty close" to the characteristics it's looking for in Vula, adding that GEA will be...
...developed further to bring it more in line with the Ofcom framework.
"BT earlier in the year announced what they called Generic Ethernet Access which is their version of Vula," McIntosh said. "It was a very early stage of development at that point and they with industry have been looking at how this should be developed."
Ofcom's aim is to ensure ISPs using BT's superfast network gain adequate control over any services they offer. "[Vula] is intended to provide companies like TalkTalk and others who are competing in this market with the sort of control over the services they provide that they have currently in the LLU [local loop unbundling] environment," said Stuart McIntosh, competition partner at Ofcom.
"We think the GEA product which BT is providing... is pretty close to the sort of characteristics that we're looking for in a virtually unbundled wholesale local access product.
"There are some things that probably still have to be developed - and we need also to recognise that these things do not stand still. This product will get out into the market and it will evolve."
According to McIntosh, Vula specifies a number of provisions the regulator believes are important for ISPs to ensure they have adequate control and flexibility over their services - such as ensuring ISPs buying Vula get dedicated capacity that is not shared with others, and that there is no contention on the lines.
Over the longer term, the regulator also believes a form of unbundling for fibre will emerge as a viable option - via a technology such as wavelength sharing, once the UK's fibre footprint proportion shifts in favour of fibre to the home (FTTH), rather than the current focus on fibre to the cabinet (FTTC) for most exchanges. BT's "current thinking" is for up to 25 per cent of its rollout footprint to be FTTH, said Ofcom, with the lion's share being FTTC.
The regulator noted that proportion may well vary - depending on consumer take-up of superfast broadband services, with high demand for fibre perhaps fuelling more FTTH rollouts.
"We don't have a lot of fibre in the local access network [at present] and the way it's been deployed - which is using the PON [passive optical network] - you can't physically unbundle that," said McIntosh. "However as we begin to see fibre to the premises roll out it's quite possible that you may be able to have wave division such that it would be quite possible then physically to separate light waves within the fibre which you make available to others."
"The standards are not there to allow that today but it's perfectly possible that we migrate towards that in the longer term," he added. "We will look at it again in three, four years' time."
"Strategically you can see that's where, over time, one wants to get to," added Richards.
Ofcom said it is not regulating the price BT can charge ISPs for access to its fibre network, saying it expects the current generation of broadband prices to help "constrain and discipline" superfast broadband prices.
"We have... maintained the ability for BT to have flexibility in terms of how they price these products and services," said McIntosh.
"We're under no illusions as to the fact there are risks associated with these investments and in light of that and, given that the market is in a relatively immature stage in terms of the deployment and take-up of these higher speed propositions, we thought it appropriate to stand back from being very interventionist and regulating the prices and let the market decide."