Can Openreach build Full Fibre faster than anyone else?
Full Fibre – a glimmer of hope
Just as Ofcom released details of their plans for the UK’s Full Fibre future, speculation of a bid for Openreach flourishes.
After the battering Ofcom’s Dark fibre plans took in the last two years, it’s good to see they’ve had a comprehensive rethink – and 5G has finally got the prominence it deserves.
It’s also satisfying Ofcom has eagerly accepted Mentor’s proposal – by adopting Duct and Pole as a Universal Remedy for Openreach’s infrastructure market power.
This is fantastic news.
Duct and Pole remedy
The proposal allows Alt.nets to use Openreach’s physical infrastructure, irrespective of whether they plan to provide mass market broadband or pursue opportunities in business connectivity – or our favourite, base station backhaul.
Ofcom has also dealt with the issue of investment horizons. The Duct and Pole remedy will remain for 5 years to give Alt.net investors more certainty. But this is not really adequate.
Five years isn’t long enough for infrastructure investments to pay back.
Ofcom are positioning Universal Duct and Pole as the main route for Alt.nets to build fibre in our towns and cities.
There is a circularity here, of course. If Duct and Pole enables competition – and competition enables Openreach deregulation – and deregulation enables the withdrawal of Duct and Pole, we may have shot ourselves in the foot.
But our sense is the new Duct and Pole remedy will only be applied in areas where Openreach has market power today.
What’s not clear is if this is an “in perpetuity” offer – or an offer that could be withdrawn and cut off after 5 years?
That simply won’t fly.
We also need more detail about duct capacity, location and quality from Openreach – and transparency about who is responsible for adding capacity and restoring proper function, where it has failed.
What it means for UK’s Full Fibre infrastructure
What does seem practical is the separate approach to regulating Openreach Services – and Openreach infrastructure.
Ofcom say, we may well see services ‘deregulated’ in one town whilst infrastructure remains ‘regulated’ to guarantee the supply of Ducts and Poles for services competition. Ofcom predict 60% of the population will be served by Full Fibre infrastructure passed through Openreach’s Ducts and Poles.
This is no longer a fringe solution, it’s the main event. And it’s destined to be the foundation for the UK’s Full Fibre infrastructure.
There is also discussion about rural broadband and the proposal that government intervention funding should be applied ‘from the outside-in.’
In other words, starting in the most remote areas – and then moving in, little by little, to the edge of the ‘commercially viable’ districts.
But surely real politics will drive the Government to influence as many voters as it can, as fast as possible. A pure ‘outside-in’ approach must mean the lowest number of voters will get connected in the early years of the program.
Should Alt.nets be worried?
Our ‘old friend’ Dark Fibre Access (DFA) makes its only appearance in the rural solution section of the document. It’s an option for potential Openreach regulated services, where no other ‘itinerant fibre provider’ either already has or will build fibre – even with access to Openreach’s ducts.
But it won’t be available till 2021 at the earliest.
Ofcom are also patting themselves on the back for the long list of companies, including Openreach, who are planning to rollout Full Fibre. Hats off to Ofcom! The debate has shifted a lot.
We are now discussing when and how to Fully Fibre the UK and not if.
Looking at the list of players – and their planned investments – there is a real fear these may overlap in money-spinning urban areas – leaving many homes passed 4 times – instead of most homes passed, just once.
We may have to live with that. But Alt.nets are worried about this and would prefer Openreach to stick to its existing copper platform.
When and how, but not if, brings us to the really interesting prospect of mass migration. This was discussed at length at Connected Britain.
The Alt.nets are rather ‘narked’ that Openreach is waking up to the threat of a largely independent Full Fibre market in the UK. Alt.nets would prefer Openreach to remain stranded on their Copper Island.
Openreach say they intend to build Full Fibre – and faster and further than anyone else. This is essential to any new investment or ownership of Openreach – but it will worry the Alt.net investors. Full Fibre and Copper offer very different investment prospects.
UK Telecoms transformation
We are on the precipice of a monumental program for the UK.
It’s at least as big as TV digitisation – or even the introduction of Natural Gas – if you are old enough to remember that one. Bigger too than network digitisation and larger than fibre to the cabinet.
Openreach will have to shut down the copper network that’s served us for well over a century – and replace it with a new Full Fibre network to reach every home, office, factory, farm and shop in the country.
That means removing copper lines – not just for customers who want ultra-fast broadband – but for other customers who may only use their line for phone service.
This is a massive undertaking, full of complex issues, not just for Openreach and BT but also for the entire wholesale market. The likes of Sky and TalkTalk rely on the copper network for their telecoms business today.
Ofcom are alive to the competitive risk to the independent Full Fibre players of an Openreach operating at full-tilt – both migrating customers and building fibre end points at the same time.
So, expect to see lot of action in this space over the next few years.
Dark Fibre – our sentiments
Drawing all these threads together, Ofcom’s proposals are timely. They take a major step towards unscrambling the ‘almost impossible knot’, created by years of changing priorities for regulating of BT.
What is worrying is the timescales.
Unrestricted Duct and Pole is slated for Christmas 2019 – and Dark Fibre will only be offered in rural areas from 2021.
Having proposed the Universal Remedy in the first place, we will remain vocal about the detail, the timescales, and any delay in date or scope.
Let’s face it, Ofcom’s current pitch is only a ‘consultation’ – and we have all been here before, haven’t we?
Universal Duct and Pole needs to be truly fit for purpose – operationally and commercially. It’s now at the absolute centre of the UK Full Fibre story.
We know Duct and Pole can play an important role in Mobile Centric Fibre, not only to exploit scope economies – but also to enable Fibre ring deployment – beyond the Hyper-Dense Mobile areas.
As we execute the Mobile-Centric Fibre programs we are well placed to keep you in the picture on the practical day to day realities of Duct and Pole.
We have a long and gruelling road to travel – but travel it we must.
What do you think? Get in touch and let us know at +44 118 900 1252, or email us at enquiries@mentoreurope.com
