Ofcom

Ofcom the best regulator in Europe?

While we wait for the publication of the government’s interim Digital Britain Report, the annual ECTA (European Competitive Telecommunications Association) Regulatory Scorecard was released yesterday, and as last year Ofcom scored the highest of all European NRAs.

Ofcom generally scored strongly in most areas. However, for economic market conditions for broadband, Ofcom ranked as ‘neutral’, rather than ‘strong’. Only Portugal and France achieved a strong rating.

The scores are based on responses to surveys that review: the overall institutional environment; key enablers for market entry and network roll out; the NRA’s regulatory processes; application of regulation by the NRA; and regulatory and market outcomes.

BSG responds to Ofcom 'Delivering superfast broadband in the UK' consultation

The BSG has submitted its response to Ofcom’s superfast broadband consultation. The response re-iterated the BSG’s findings from its three reports published in 2008, and offered broad support for Ofcom’s categorisation of the key issues.

The current economic environment and financial crisis makes investments increasingly challenging for operators, and so it will be important for Ofcom to allow operators to experiment in the short term whilst providing sufficient certainty in the long-term to support investment decisions.

BSG response to Ofcom NGA consultation

Ofcom publishes broadband speeds report

Ofcom yesterday published a report on broadband speeds in the UK.

The report is a first for Ofcom in that it is based on actual line testing, rather than consumer perception surveys, and builds on the work of the SamKnows team, who produced an earlier report last year.

Alongside the headline numbers, the report identifies the lack of understanding many consumers have about broadband, and particularly the factors that can impact the speeds they receive – an issue we have raised previously on this blog.

It will not be news to many that you are unlikely to receive the headline speed that you sign up for. However, speed can be impacted by a variety of factors, such as in-home wiring or your choice of router, which ISPs have little or no control over (and can be remedied by the consumer themselves).

This isn’t necessarily the fault of the consumer – they should not need to understand to a technical level the service they are buying. It can partly be attributed to the marketing focus on speed by ISPs, and we are beginning to see ISPs market their services on other attributes such as bit caps, which may help.

However, the crux of the issue is that broadband is a difficult service to accurately buy and sell. The actual service received is partly out of the control of the service provider, which creates difficulties and confusion for consumers.

If we are to have a proper public debate about the future of broadband (and now would be the time, given the interest being shown by our senior politicians) a more informed consumer is an important requirement.

The Caio Review recognised this, which is why one of its recommendations was for ISPs to make public their traffic management policies – consumers would then be given more information about their service, particularly how it is likely to operate at peak times.

This Ofcom report also seems to recognise this, laying bare as it does the capabilities and limitations of the network. We need to continue along the path of an increasingly informed public debate.

Peter Shearman, Policy Manager, BSG

The role for public sector intervention in next generation broadband

Ofcom’s Super-fast broadband blog recently raised the issue of ‘when and where?’ public sector intervention in next generation broadband would be required. This is a key issue, and something that the BSG has examined.

The BSG’s position has been, and continues to be, that next generation broadband deployment in the UK should be market-led. The market is most likely to achieve efficient and timely investment. This said, there will likely be a role for public sector intervention in the future, such as there has been to date, for example in South Yorkshire.

What is important to remember is that next generation broadband is very different to first generation broadband, in this instance for two key reasons: the length of time required for deployment; and the magnitude of the costs involved.

Deployment could take many years, particularly if FTTH was deployed, and so it could be 5 or 10 years, or more, before the market has finished its deployment. This is significantly longer than first generation broadband.

Therefore, the question we need to ask is this: can we afford to wait this long before addressing areas the market doesn’t reach? Given how quickly the digital divide has developed since the deployment of broadband (not yet 10 years old), it would be difficult to see how this would be acceptable.

The costs involved also change this debate. We can be more certain about where the market is likely to deploy to – we recently published a report showing how the costs breakdown across the UK, and how the deployment costs increase as you reach more rural areas. We also have experience from first generation broadband, and know where those places are that were the last to receive broadband, or still cannot access it.

Given what we know, we need to have the debate about how we bring superfast broadband to those areas unlikely to be covered by commercial deployment. This is not to say that the government should write a cheque – this is not necessarily the way forward at this time. But thought needs to be given to finding creative solutions to address the looming digital divide on the superfast-broadband horizon.

Peter Shearman, Policy Manager, BSG

A busy month for next generation broadband

September has been a busy month in the world of next generation broadband. Government reviews, UK and EU regulatory consultations, not to mention our report on the cost of fibre-based next generation broadband, have certainly moved the debate on in the UK.

The month started with the BSG publishing its report ‘The costs of deploying fibre-based next generation broadband‘. This report used geographic and cost data specific to the UK, allowing us to model the cost of deployment across a variety of geotypes. The long and the short of this is that the report suggests that fibre to the cabinet will cost up to £5.1bn, and fibre to the home up to £28.8bn.

The total costs are interesting, but the purpose of the report was to breakdown the various cost components, to examine where the real costs lie. Unsurprisingly, this was in the civil infrastructure elements of the network – 42% of total costs for FTTC, and up to 80% of total costs for FTTH. Any steps that could be taken to reduce these costs would obviously help reduce this barrier to investment, and the report modelled how various actions, such as if higher duct re-use was possible, would impact the overall costs.

The report also clearly set out that there is a definite difference in the cost of deployment between urban, rural and remote areas of the UK. For fibre to the cabinet, for example, the cheapest 58% of households would cost £1.9bn to deploy to; the next 26% would cost £1.4bn, and the most expensive 16% would cost a further £1.8bn. Clearly, deploying beyond the first 60% of UK households will be a more challenging case for investors to make, which has a number of implications for government and the regulator.

This was closely followed by the launch of the final report of the Caio Review – ‘The Next Phase of Broadband UK: Action now for long term competitiveness‘. The Review suggested that, while we shouldn’t be panicking about a lack of NGA in the UK, the government could take actions to reduce the barriers to investment, and set out the need for leadership from the government and the regulator. A range of initiatives were recommended, including providing certainty for investors and reducing the costs of deployment, while increasing the competitive pressure on copper-based services, and benchmarking our performance against other countries while considering the ‘batstop’ remedies should the market fail to deliver NGA.

We welcomed these recommendations at the time, and look forward to hearing the government’s response to the Review. Certainly, our reports over the last 18 months have supported the conclusions and recommendations of the Review.

What followed was then followed by a flurry of regulatory activity. First, the European Commission set out its long-awaited draft Recommendation on the regulation of NGA. The Recommendation sets out how the Commission would like regulation to support investment and competition in next generation broadband, and makes for interesting reading for Ofcom and the operators, who will no doubt be submitting their views to the Commission before the 14 November deadline.

This was swiftly followed by Ofcom themselves publishing their latest consultation on the regulatory environment for NGA, ‘Delivering superfast broadband in the UK‘. The consultation discusses a range of issues and, although differing in depth of detail across the issues, certainly moves the debate on from its previous consultation last September. Positioning itself as a ‘framework for action’, the regulator will further progress these issues through a range of activities with stakeholders.

And, just to add to the fun, the Commission has also now begun its second periodic review of the Universal Service Directive, as well as launching an EU-wide broadband performance index.

Quite a lot to absorb for those of us who spend their days working on next generation broadband. So where has it left us? Well, the Caio Review has set out a number of options for government if it is serious about trying to reduce the costs of deployment. The government response will be interesting, and whether they are actually able to implement some of the suggested changes (such as to the way fibre is treated in the rating system) is up for debate. Caio’s recommendation that government and the regulator take a strong lead on NGA is one that we support, and are keen to see.

Our report has added further to the evidence base for policy making that we are committed to creating, to ensure appropriate policy is developed. It adds numbers to views that were likely already held, but also raises interesting questions, and the granularity of our figures should be of real use to those interested in local or regional broadband projects.

The Commission’s Recommendation, and Ofcom’s consultation, take us closer towards regulatory certainty than we were before, although a number of questions remain unanswered and this is unlikely to be the end of Ofcom’s process for creating the right regulatory framework. Certainly there could be a sense that every time you delve deeper into an issue, the list of questions a regulator needs to answer gets longer.

One issue worth noting is the change of view towards public sector projects. Sympathies certainly appear to have shifted within Ofcom, and possibly within BERR given the Review’s recommendations, since the DTI/Ofcom Best Practice Guide for Public Broadband Schemes was put out in 2007, and this is a welcome development.

This is one of many issues raised this month, however, and stakeholders will be watching with interest to see how these are played out in the coming months.

Ofcom publishes latest consultation on superfast broadband

The BSG welcomes the publication today of Ofcom’s consultation on delivering super-fast broadband in the UK.

“The regulatory framework is key to next generation broadband”, said Antony Walker, CEO of the BSG. “The consultation asks some important questions and we will be working closely with stakeholders to respond in detail.”

The deadline for comments to this public consultation is 02 December 2008.

Ofcom Consultation – “Delivering super-fast broadband in the UK”

Ofcom Consultation Executive Summary

Through the looking glass? What lies within Ofcom’s Comms Market Report?

Last week saw the publication of what has become a bit of a bible in the TMT sector – Ofcom’s Communications Market Report for 2008.

Perhaps some of you who are more diligent than me and have worked through the 2inch thick report by now, may have more detailed views, which I would certainly be interested in hearing.

However, even the headline themes and stats make for initial interesting reading.

Working for the Broadband Stakeholder Group, it is no surprise that my attention immediately went to observations about the development of the broadband market.

There are no great surprises in here. However, the findings set out by Ofcom do confirm some of the trends various pundits have observed over the last 12 months or so.

Firstly, the number of consumers buying bundles of three of more services is on the rise. Whilst the number of households taking a bundled communications service in 2007 remained the same as the 2006 figure – 4 in 10, the nature of these bundles has changed.

Triple-play bundles now account for 32% of bundles taken in 2007. This increase perhaps reflects both the efforts providers such as Virgin Media and BSkyB to market these packages, and the value consumers now put on certain services. Have we reached the stage where multichannel on-demand TV is now seen as a core service people will pay for, alongside their phone and broadband?

Mobile broadband is another key development identified in the Ofcom study. Much has been said about the success of the dongle in recent months, and here are some stats to back up that assumption. Ofcom’s research shows that between February and June this year, monthly sales of these devices rose from 69,000 to 133,000 a month. Furthermore, 1.5 million people state that they use them at home as well as outside, giving credence to the perception that mobile broadband is beginning to put a real competitive pressure on fixed-line providers.

This trend is particularly important in the context of the UK’s move to next generation broadband (discussed briefly at page 303). Mobile broadband could prove to be popular as we move to faster, fixed-line broadband speeds. However, the role that it could play in a next generation environment is harder to predict.

We, like many others, look forward to Ofcom’s regulatory statement on NGA, for clarity on the regulatory framework that will underpin and support this important transition.

Pamela Learmonth, Policy Manager, BSG

Ofcom to survey duct infrastructure use for delivery of next generation broadband

In a speech to the IET yesterday, Ofcom CEO Ed Richards announced that Ofcom would undertake a sample survey of underground ducting infrastructure to understand its potential use for the rollout of next generation broadband in the UK.

Speaking at the reception, Mr Richards said,

“Super-fast broadband – next generation access and networks – are crucial to the UK’s future. These networks form part of the critical infrastructure of the country’s economy and will be central to the way we live our lives in the future.

I believe that super-fast next generation broadband will come to change our perception of communications radically; alongside mobile broadband, it will in time have a similar impact upon our society and economy as we have seen with first generation broadband. So we must prepare now.

Given the remarkable results from recent French surveys, we need to establish what the position is here and whether or not duct access has a role to play in the development of competitive next-generation access. So, in cooperation with operators we intend to undertake a sample survey of the existing duct network.

We are well aware that there are significant issues related to this in the broader telecoms market and that careful consideration will need to be given to these, alongside the results of the survey.

And, working with the Caio Review, we will also be asking whether there is scope to secure commercially viable access for fibre deployment through the primary infrastructure networks of other utilities such as water and energy. We must be sure we are not missing a big trick here. We know that a lot of the costs are in the civil engineering and this is civil engineering of a very similar kind.”

Full speech transcript – Ofcom CEO Ed Richards