UK’s telecom regulator Ofcom suggests the incumbent operator BT (British Telecom) invest in a multibillion-pound network upgrade programme, including laying ultrafast fibre-optic broadband lines to around two million homes and businesses. Leading national newspapers have reported that BT is fighting its battle to keep its network division, Openreach.
The chief executive of BT, Gavin Patterson is expected to announce a major boost to the telecom giant’s investment plans at a meeting with investors. The focus of the plan would be the rollout of fibre optics to two million premises, replacing the legacy copper cable that delivers current broadband services to the homes and businesses. The telecom operators in the past have raised objection for large-scale investment in upgrading the last-mile network, projecting its preference to focus on relatively low-cost upgrades further upstream utilizing copper+fiber based technologies.
BT is now changing its mind in response to pressure from Ofcom, which is still holding the threat of a forced split with Openreach over the operator. The unit owns and runs the national telecoms network, which is also used by Sky and TalkTalk to serve their broadband subscribers and is BT’s biggest source of cash flow.
Media reports that the Openreach has been fiercely criticized by BT’s rivals, who accuse it of underinvestment in its infrastructure and making excessive profits that boost the dominance of Britain’s former state monopoly. Also, Ofcom officials had highlighted how rival economies such as Sweden and South Korea have invested in widespread all-fibre networks, which typically offer speeds more than 10 times BT’s fastest commercially available packages.
Recently Virgin Media had announced its plans to connect 1 million homes and houses to its FTTH network by 2019. Now BT is planning to build two million fiber-optic lines. By doing so, BT will leapfrog Virgin Media. Though BT will boost capital expenditure and commit to large scale fibre to the premises for the first time, most of its investment is still expected to be focused on upgrading copper using G.fast to 10 million homes and businesses by 2020.
BT will unveil the following main proposals and its investment plans to investors alongside its annual financial results;
-Make Openreach financially independent
-Open BT’s network infrastructure to competitors
-Structural separation remains a possibility
-All mobile and broadband operators will be forced to automatically pay compensation to customers who suffer mobile blackouts or reduced broadband service.
-Ofcom will impose new obligations on telecoms companies that bid for “spectrum”, the wireless airwaves that transmit mobile signals.
-Ofcom will name and shame the worst telecom companies in an annual service quality report from early 2017.
-Ofcom said it will intervene in the mobile market if it can see that mergers and takeovers are causing consumer harm.
-Ofcom has also promised to auction off spectrum needed to roll-out next-generation “5G” services, saying that licenses would be issued by 2025.
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