I am delighted to publish nexfibre’s latest regulatory report, ‘UK Fibre: A Fork in the Road.’ It comes at a critical time for the UK fibre market, ahead of Ofcom’s Telecoms Access Review (TAR). The decisions made in this review will have far-reaching consequences for the future of the UK’s digital infrastructure, economy and society.
In recent years, the UK has made significant strides in expanding its full-fibre broadband coverage – albeit from a low base. Progress has been driven by altnets expanding their networks and injecting much-needed competition into the market, prompting the incumbent to also invest. Decisions in the WFTMR 2021 played a key role in this. For example, Physical Infrastructure Access (PIA) has been a success story that has facilitated fibre investment over the past few years by dramatically reducing the cost of building and increasing build speed.
But the number of operators that we currently see in the marketplace is not sustainable in the longer term. The economics of fixed infrastructure mean that only a small number of operators are sustainable. Sub-scale altnets are facing the combined pressure of low customer penetration and significant financial headwinds. Given this dynamic, consolidation in the market is both inevitable and necessary.
To create a bright digital future for the UK, and drive the upgrade of the UK’s digital infrastructure, the market needs sustainable, national scale competition. To achieve this, Ofcom must address the following issues:
- Maintain regulation on the dominant operator: BT Openreach’s significant market power requires continued regulation to support the development of sustainable, long-term competition.
- Address anti-competitive behaviour by BT Openreach: Introduce a new margin squeeze test (Economic Replicability Test) to prevent harmful pricing schemes and ensure fair competition.
- Improve PIA regulation: Address transparency and pricing issues in the regulation of BT Openreach’s PIA infrastructure charges to support investment.
- Assess copper switch-off impact: Ensure appropriate regulation for BT Openreach’s copper to fibre network migration to promote competition.
- Take a pragmatic view of network numbers and consolidation: Focus on supporting long term sustainable competition at a national level through consolidation.
Full fibre infrastructure is the backbone of the UK’s digital ambitions, driving growth and innovation across every sector and region — and in turn an important enabler of the Labour government’s central mission to deliver a stronger, more inclusive economy.
Industry, policymakers and regulators all have a role to play in creating the best environment for the UK’s digital infrastructure economy to flourish, and we stand ready to work together. Without decisive action by Ofcom in the upcoming TAR, the UK risks losing the momentum it has worked so hard to build.
Please find the full report here.