Tuesday, March 23, 2010

Ofcom: encouraging investment in NGA

Hot on the heels of Gordon Brown's announcements yesterday come two consultations from Ofcom, on mechanisms to "promote competition and investment in current and super-fast broadband services".

One consultation focuses on the wholesale local access (WLA) market (which relates to fixed telecommunications infrastructure - the physical connection between a consumer's premises and the local telephone exchange), and the other on the wholesale broadband access (WBA) market (which relates to the wholesale broadband products communications providers (CPs) provide for themselves and sell to each other).

The WLA consultation describes a new mechanism called virtual unbundled local access (VULA). This would have to be provided by BT wherever it has deployed its NGA network. The intention is that VULA would provide access to the NGA network in a way similar to how LLU operates in current broadband provision. But rather than providing a physical line, VULA would provide a virtual connection that gives other communications providers a dedicated link to their customers and substantial control. Clearly this is cheaper (and more sensible) than requiring operators to invest in parallel, duplicate networks. This is close as we're likely to get to the open access model in the UK?

So BT does the heavy lifting in terms of provisioning fibre, and is also obliged to offer access to other operators to deliver services over it. The WLA consultation also includes physical infrastructure access (PIA) proposals, intended to allow other operators "to deploy fibre in the access network using BT's ducts and poles - either to support deployment of FTTP technology, or to support deployment of FTTC technology (by enabling a backhaul connection between street cabinets and the OCP's network" (where OCP is "other communications provider").

The WBA consultation relates to promoting further competition in the provision of current generation retail broadband services. Essentially, the proposals involve the imposition of general access and non-discrimination obligations on BT to address the fact that it has significant market power (SMP) in exchange areas where it's the only operator (16.4% of UK premises), or in areas where there are only 2 or 3 operators (13.7% of UK premises). Charge controls are also proposed, strict ones where BT is the only show in town and "a degree of pricing freedom" in areas served by 2 or 3 operators.

Commentary from the usual suspects: the FT (Push to open up BT ducts to broadband rivals), TeleGeography and the BBC.

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