Ofcom’s Wholesale Line Access (WLA) market review and Wholesale Broadband Access (WBA) Review were published on November 9th, with a call for information by December 20th. This is to inform decisions from 2014 to 2017 on the costs of BT regulated access products and any developments in SLU and PIA.
The impact of any decisions on NGA investment and upgrades in urban areas should not be under estimated.
The 2010 WLA review found little reason to intervene to really go after and establish Passive Infrastructure Access (PIA) and it was difficult to disagree with the quality of the analysis or the conclusions reached at that time. Any prospective NGA investor needed to show sufficient intent for Ofcom to put the required resources in place for PIA to have the same impact as Local loop unbundling.
Ofcom’s simple question in the November 9th document is what has changed since late 2010 which would justify a change to the current approach to NGA. The current tack assumes Virtual Unbundling (VULA) to a BT Openreach cabinet with no particular push for FTTP. There is certainly nothing to suggest any appetite for the beginnings of a Fibre Switchover activity, or any indication that PIA or sub loop unbundling (SLU) is to be developed further.
Those of us brought up within the industry had a general acceptance that a Fibre only network having fewer active elements (e.g. 1 handover point to replace eventually 12-14 exchanges) and lower maintenance and repair costs, so it was expected some migration would occur in our lifetime. The rules of thumb was once in Fibre network would be 1/6 sixth of the costs of running a copper network. The problem was and is the transition costs.
While Ofcom research on things like coverage can make them look like propagandists, the documentation supporting market reviews are world class and a spin free view of their thinking and challenges. Although the whole document provides an opportunity to express your views on NGA investment, chapter 6 really spells out Ofcom’s current thinking inviting you to disagree and provide evidence in support of your views.
It points to a BT Openreach controlled world and the authors in places are asking to be proved wrong. For instance
· All Modelling costs will be based on PSTN costs only, (begins in Clause 6.23 and develops through to Clause 6.30) which means NGA is always treated as an overlay to the copper network.
· Anchor pricing based on copper access costs which assumes there is no long term cost benefit in fibre access, one assumes because savings only occur once you can replace what exists.
There is no plan to transition to an all fibre network, so why should Ofcom waste time modelling the cost of it? Given the potential lower costs cannot be realised in the review period why bother modelling it? I infer, why create incentives or encourage FTTP investment? There are none proposed. You would expect to see some proposals.
There is more.
· Ofcom admit to challenges (Clauses 6.34- 6.35) in reconciling BT cost data (internal management accounts) with BT’s regulated Financial Statements to the point where they suggest they stop devoting time and cost in attempting to do so.
Is this just resignation or a cry for help or a bit of both?
What has changed since 2010 for Ofcom to alter its approach for 2014-2017? Ofcom’s intended plan is to selectively contain BT’s prices where they can. Ofcom are not expecting any additional investment in NGA from anyone else other than BT expect perhaps some micro projects. Thus Ofcom are not proposing to invest time and energy on SLU, PIA, wavelength unbundling or dark fibre or other infrastructure sharing initiatives to foster FTTH/P uptake.
So what has changed since 2010?
It is not so much what has changed but what is the UK missing?
There is nothing in the WLA review to suggest there is;
a) Any consumer benefit or competitive advantage to an all fibre access network.
b) The costs of BT’s 20th century telephone access network will be internationally competitive when used as a high throughput data transport network in the 21st century!
c) No policy or plan to nudge convergence between fixed and mobile services.
d) No consumer benefit to pursue a pro-competitive approach to fibre provision in urban areas as favoured by the EU, even to multi-tenanted buildings.
e) No mention of the Secretary Of State desire to progress super-connected cities or how such an aspiration can be accommodated.
Most folk cannot see the need for 100Mbps or 1Gbps, but the denial of its future potential and what it represents creates a real problem. The volume of connected devices is increasing not falling. Our computing devices are improving. Our appetite and expectations for ubiquitous connectivity are also rising. It is not a time to call time on enabling NGA, but at least ask the question as to where the extra £10bn-£15bn comes from to upgrade the access network even if it takes 25 years. The Fibre to the Home Council have sponsored a 60+ page guide on a variety of options for a Fibre Switchover Plan. One option missing from that paper is the need for building owners, particularly in the public sector to make clear their plans to make their buildings blown fibre ready (be it Docsis3/GPON/P2P or all three). In so doing they could establish new network termination points and possibly create a new market definition for NGA access. They must also use this consultation to inform Ofcom of the need to support pro-competitive measures to ensure more than one network provider can reach their buildings using existing passive infrastructure.
The work on SLU, PIA, wavelength unbundling and dark fibre has only just begun. Ofcom should not be proposing to stop where the process has only just started.