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Ofcom ruling brings much-needed competition to fibre roll out

Ofcom’s latest market review outlines extensive changes to regulation designed to spur the rapid rollout of full-fibre broadband across the UK.

The ruling is focused on supporting competition between networks to create the long-term conditions for expansion. This includes introducing tougher minimum quality of service levels on Openreach, retiring legacy copper networks, and tailoring regulations in response to local conditions.

In competitive dense urban locations, regulations will be eased to promote competition. But in rural locations where Openreach operates without any rivals, Ofcom will introduce regulation designed to support investment, along with requirements that Openreach provide Dark Fibre to support the growth of 5G and other networks. To avoid the costs of running parallel infrastructure, Openreach will be allowed to turn off copper connections in areas with full-fibre connections to properties.

The changes have been broadly welcomed by the industry. Cityfibre stated the “regulation will promote and protect the infrastructure competition that is enabling Britain to go full speed ahead for full-fibre”, and BT chief executive Philip Jansen said BT will now “build like fury” to roll out the improved infrastructure.

Acuity Partner Marcus Allchurch expresses a similar sentiment, suggesting the ruling could , at a time where all of us are looking forward to a shot in the arm (of Coronavirus vaccine) provide a shot in the arm too for UK fibre.

The rules will come into force from April 2021 and last until March 2026, but Ofcom doesn’t expect to introduce cost-based prices for at least ten years in an effort to help make the 2020s the decade of full-fibre. In the short-term, telecoms civil contractors are likely to be the immediate beneficiaries as network providers move to ramp up the rollout of the new infrastructure.

“It is encouraging that Ofcom recognises that financial returns need to be available to companies building out fibre networks, and the changes should ultimately support the investment cases for everyone, making it easier for consumers to switch providers, and creating enough long-term stability for all network providers to make a commercial return.”

Marcus Allchurch | Partner

Marcus joined Acuity in 2014, before which he held senior leadership and corporate finance positions with some of the UK’s most successful advisory and telecoms businesses. Roles with EE, KPMG Corporate Finance and BDO Corporate Finance have seen Marcus work in the UK and across the globe with successful entrepreneurs seeking exit, and at board level with multi-national corporates looking for growth through organic and inorganic investment.

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