British Regulators Prescribe More Fiber for ISPs

6 Comments

While we laggards in the U.S. are still celebrating the FCC decision to (finally!) up the classification of broadband speeds to a lazy 768 kilobytes per second (but, hey, that’s up from 200 kilobytes per second) and lamenting our coming bandwidth caps, the Brits are prepping for a broadband boom.

The UK regulatory agency Ofcom is planning to release a regulatory framework in September to guarantee a financial rate of return on fiber rollouts in the UK. According to a story in PCAdvisor, Ofcom Chief Executive Ed Richards said at a conference that there had been a “step change” toward the idea of investing in fiber.

“Ofcom favours a regulatory environment for the next generation of networks and access that both allows and encourages operators to make risky investments, to innovate for the benefit of consumers and, if the risks pay off, for the benefit of their shareholders too.”

The goal is to help ISPs compete against the coming threat of wireless broadband from 4G cellular networks. Such LTE networks can reach speeds of up to 150 Mbps down and 30 Mbps up, although those in the telecommunications industry think it will likely start out at 20 Mbps down and 5 Mbps up. Either way, it looks like a competitor to a fat pipe into the home, and apparently many in Europe are eager to ditch their existing fixed-line service provider, be it for voice or DSL.

The framework might help the UK better compete with its neighbors; France, Germany and Sweden all have much faster broadband speeds and lower pricing, according to data from the Information Technology and Innovation Foundation. Given the demand for data, anything that helps get the fiber buildout rolling is good news for web publishers and consumers.

6 Comments

Stacey Higginbotham

Paul, thanks for the insight. I admit I am eager to see what they come up with, but if it’s what you’re saying, then yes, we’ve been there in the U.S. and that’s not exciting.

Paul

Stacey, I think you’ve misunderstood was the regulator was saying.

The likes of BT have had to offer wholesale connectivity services to ISPs because the infrastructure they inherited from public must be opened up on an equal access basis.

There has been much discussion about next-generation networks in the UK with the big providers saying that (i) there isn’t a particularly good FTTx business case except for green field sites (ii) there’s no way they’ll do it if they are forced to open it up to third parties as the return will not be as great.

So all the regulator has done is made a concession on point (ii). There is no guaranteed return for telcos deploying fibre, only that any fibre that is deployed will not forceably be opened up to competitors.

Allen

It really comes down to how they “guarantee a financial rate of return on fiber rollouts”. I can only think of a few ways to do that: government subsidies and/or price controls that favour the telco.

You can get that in the US too.

Stacey Higginbotham

Vinnie, excellent post. Sad situation. Sigh…

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