The policy will mean that more than two-thirds of UK properties will have a choice of fibre networks, said Ofcom
This appears to be radically different from the strategy in Italy, for example, where the country is moving towards a single wholesale fibre operator.
Ofcom said it will not introduce price controls for fibre-to-the-premises (FTTP) until the expiry of the new policy, which comes into force in April 2021 and will last five years.
It will also encourage BT’s last-mile subsidiary, Openreach, to retire its copper network. Openreach said it plans to build FTTP to 20 million premises by the mid- to late-2020s — though it was vague about the exact target.
Virgin Media, the Liberty Global operation which is in the process of merging with Telefónica’s O2 mobile business in the UK, also welcomed the decision.
Lutz Schüler, CEO of Virgin Media, said: “This is a resounding sign of support and longer-term clarity from Ofcom for those rolling up their sleeves to build the nation’s next-generation digital infrastructure.”
According to Ofcom, Virgin Media plans to expand the coverage of its broadband network — mainly hybrid fibre-coax — from 14.9 million households now to 17 million by 2026.
The third competitor in the UK market, CityFibre, said it will expand its FTTP network from 0.4 million now to 8 million by 2026.
“As the nation’s largest independent full fibre platform, CityFibre is already committed to bringing our networks to a third of the UK market,” said CEO Greg Mesch.
“With Ofcom setting out a comprehensive framework for at least the next five years, we can now go both further and faster, playing our part to deliver the full fibre networks that will underpin the UK’s economy and society for generations to come.”
A spokesman for Community Fibre did not respond to Capacity’s request for a comment, saying any statement would need approval. Community Fibre, headed by executive chairman Olaf Swantee, is building fibre-to-the-home (FTTH) infrastructure in London with funding from private equity investor Warburg Pincus.
Virgin Media said it was the biggest competitor to Openreach, which is a wholesale-only company that provides copper and fibre connections to all UK retail telecoms operators, including Sky, TalkTalk and Vodafone.
It has expanded its historic cable-TV footprint via a scheme called Project Lightning which has added 2.5 million additional homes to its reach and has an ambition to build to 7-10 million more homes — taking its total footprint to about 80% of the UK.
The company said it is also upgrading its existing network to deliver faster speeds. Today, more than 7 million homes can receive speeds of 1.1Gbps, and the whole network will get the faster by the end of 2021, the company told Capacity this morning.
It added: “This makes Virgin Media the UK’s largest gigabit broadband provider today and will see it contribute almost two-thirds of the Government’s broadband ambition by the end of 2021.”
Openreach CEO Clive Selley said: “We’ve now passed almost 4.5 million premises and are building faster, at lower cost and higher quality than anyone else in the UK. Today’s regulation will allow us to ramp up to 3 million premises per year providing vital next generation connectivity for homes and business right across the UK.”
His boss, BT group CEO Philip Jansen, said of the Ofcom decision: “This is good news for all fibre providers in the UK. For us, it is the greenlight we’ve been waiting for to get on and build like fury. Full fibre broadband will be the foundation of a strong BT for decades to come and a shot in the arm for the UK as we build back better from this pandemic. Connecting the country has never been more vital.”
Ofcom said this morning that, as part of the review of the wholesale market, it wants to see the copper network closed down.
“As it lays new fibre to replace ageing copper lines, Openreach should not have the unnecessary costs of running two parallel networks,” said the regulator. “So when Openreach has rolled out full fibre in a particular area, we will progressively remove regulation on its copper products over a number of years.”
Ofcom chief executive Melanie Dawes (pictured) said: “Millions of homes are still using the copper lines that were first laid over 100 years ago. Now it’s time to ramp up the rollout of better broadband across the UK. We’re playing our part — setting the right conditions for companies to step up and invest in the country’s full-fibre future. This is a once-in-a-century chance to help make the UK a world-leading digital economy.”
BT said it believes that the document was broadly in line with the expectations. “When taken as a whole, will allow BT to earn a fair return on its c.£12 billion FTTP investment. As a result, BT is today confirming its plan to build FTTP to 20 million premises by the mid- to late-2020s.”
Ofcom said that its approach “will lead to properties in around 70% of the UK having a choice of networks from competitive commercial rollout”. The UK has 27.8 million households, according to the Office for National Statistics, though the match between households and premises — which include commercial premises — is not precise.
Ofcom said that Openreach “has committed to deploy full fibre to a further 3.2 million properties (10%) in more rural areas”.
It added: “The Government plans to cover the remaining 20% of the country through public funding, to help ensure nobody gets left behind.”
The Ofcom report does not take into account the impact of low Earth orbit (LEO) satellites on the rural broadband market. SpaceX’s Starlink is already selling its self-install services in the UK, and OneWeb, owned by Airtel of India and the UK government, has told Capacity that it plans to start commercial services in the UK in October 2021.
