An important publication today from Ofcom on the fibre network front on promoting competition and investment in fibre networks.
The issue of the building of the fibre network, who should do it and its costs has been a hot debate for a few years now. This was also the hot topic at the TMT M&A conference which I attended on Tuesday.
At the heart of it is whether there should be parallel networks or whether there should be one neutral shared network with the competition focusing on services.
The issue is both one of over-build risk, especially in the more attractive densely populated areas, and under-build/ no build risk in less populated or rural areas.
In this respect, what we have seen recently is a number of companies building the network but being careful to avoid overlap. Yet only 6% of the UK territory is covered and mainly this is in urban areas.
What should be the role of the regulator in relation to this when there are seemingly conflicting principles between ensuring healthy competition so consumers are not overly financially burdened and at the same time ensuring that fibre is actually made accessible to all.
Aside from large amounts being deployed to finance the actual build of the digital infrastructure networks more broadly, we see also at the moment operators divesting of their own physical infrastructure assets and/or splitting their operations and group structure between netcos and servcos.
There is a commercial logic here in that actually each activity requires their own specialism and has different business imperatives and challenges. So this trends is likely to continue.
Infrastructure investors are also saying that digital infrastructure is very interesting as an asset class but network sharing and partnerhsip would make it even more attractive.
The draft statement seems to follow these lines (i.e. we need to look at the physical network and the service separately) and Ofcom also states that it has decided that ducts and poled owned by BT Openreach should also be shares.
It will be interesting to see what happens next...
Draft statement: Promoting competition and investment in fibre networks – review of the physical infrastructure and business connectivity markets
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