On 8 January, the national communications regulator Ofcom published its first combined review of the residential and business connectivity markets; the Wholesale Fixed Telecoms Market Review (FTMR). Previously, the Business Connectivity Market Review was published separately from the residential Wholesale Local Access Market Review. The FTMR now covers a longer, 5 year period.

The Review sets out major proposals to encourage investment in full-fibre networks and improve competition with Openreach with new, flexible regulation for competitive, potentially competitive and non-competitive areas, including a different form of charge control, using a regulatory asset-based approach in non-competitive areas. The proposals are designed to help achieve the Government’s target for every home to have access to ‘gigabit-capable’ broadband by the end of 2025, a target which PM Boris Johnson has committed £5bn to.

Some of the key proposals include:

  1. No price regulation where there is established, sufficient competition (i.e. at least 2 existing networks + Openreach), to encourage investment and innovation.
  2. In potentially competitive areas (i.e. 1 or more existing alternative ultrafast networks are present, and areas where 1 or more operators plan to deploy and Ofcom considers the future rollout could be economic), Openreach will be subject to wholesale access obligations and price regulation for its entry-level 40 Mbit/s superfast broadband product. Openreach would be able to charge slightly more for this product if it is delivered over full fibre. There would be no price regulation of Openreach’s higher-speed packages. To provide protection for new entrants, Openreach would be banned from offering geographically-targeted discounts, and would have to give 90 days’ notice of any offers to allow Ofcom sufficient time to assess their impact on the market.
  3. An arrangement to allow BT to fund future fibre investment in places where it faces no competition (i.e. no rivals or plans by rivals). The cost of that investment would effectively be underwritten by potentially higher wholesale pricing in these areas, meaning potential disparity in pricing for full fibre broadband between rural and urban customers. In these areas, communications providers will also have access to Openreach’s dark fibre for the supply of leased lines.
  4. Openreach would not be required to sell copper-wire-based services in areas where it had reached 75% fibre coverage.

In addition, Ofcom proposes a revised series of quality of service standards for Openreach to help maintain improvements in the speed with which repairs and installations are carried out.

Separately, and to further promote competition and investment in full fibre networks, Ofcom will also require Openreach to introduce unrestricted access for rivals to their existing cable ducts and telegraph poles on equivalent terms.

The FTMR consultation closes on 1 April 2020, and Ofcom will publish its final decisions in early 2021.