Network Operators Call for Fairer Pricing to Access Openreach’s UK Infrastructure UPDATE4
A new “PIA Coalition” of alternative UK broadband networks, including nexfibre, AllPoints Fibre, CommunityFibre, Gigaclear, Netomnia and Brsk, has been setup and is calling on market regulator Ofcom to “ensure a level playing field for access” to Openreach’s passive infrastructure (existing cable ducts and poles) in its upcoming Telecoms Access Review 2026 (TAR).
At present Openreach is already required to provide access to their existing cable ducts and poles via the regulated Physical Infrastructure Access (PIA) product, which has been extremely successful. This enables rival networks (Altnets) to run their own fibre optic cables via the incumbent’s existing infrastructure – cutting down on build costs, disruption and speeding up rollouts of gigabit-capable full fibre (FTTP) broadband ISP networks.
However, the PIA Coalition has conducted its own “detailed economic analysis of Openreach PIA regulation” (carried out by SPC Network), which they say has revealed an “imbalance” between Openreach and alternative network operators, particularly in pricing, where altnets “pay significantly more to access ducts and poles than Openreach charges itself.”
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The Coalition is thus calling for Ofcom – in its upcoming TAR (summary) – to act and “ensure all users of PIA have a level playing field for access to infrastructure“. The group claims that failure to act will “harm competition and investment in the long-term“, as well as “damage the UK’s ability to compete internationally” (we suspect that last statement relates more to broader indirect business impacts).
Under Ofcom regulations, PIA access must be offered by Openreach in a way that does not discriminate against third party users. The PIA Coalition suggests that its evidence shows that this is “not happening under the [current] pricing structure“.
Giles Rowbotham, Spokesperson for the PIA Coalition (inc. CDO at nexfibre), said:
“At the moment there is not a level playing field between Openreach and alternative network operators on PIA. Alternative network operators pay significantly more to access infrastructure compared to Openreach. If left unremedied, this disparity risks choking investment, slowing down the rollout of high-speed broadband across the UK, and therefore limiting consumer choice.
We’re calling on Ofcom to act in its upcoming market review to ensure a level playing field for all providers and fair and equal access to critical infrastructure. The Coalition has presented a detailed analysis to the regulator and to Openreach and we look forward to engaging collaboratively and constructively on this issue.”
On the one hand there’s a perhaps natural element of vested interests above and the fact is that PIA, despite a few rough edges with some of its processes and requirements, has clearly been fairly sucessful – even if it did take a lot of regulator changes, across many years, and a few failed starts before it reached that point.
On the other hand, if legitimate concerns over pricing have been identified then the best time to assess such things is during a major market review period. Such reviews only happen every five years and the next one will cover the period from 2026-31, which makes it important to ensure that the rules are delivering what was promised.
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As usual, Ofcom will have the incredibly difficult job of trying to balance the many competing (vested) interests between different operators, and inevitably this will always result in some winners and losers. Sadly, today’s announcement doesn’t provide any actual evidence to support the claims, which would have been useful. Admittedly, such data can often carry issues of commercial sensitivity, although we hope to unearth a bit more detail in the near future.
UPDATE 10:51am
Digging deeper into this and after talking to some sources, it seems like one of the bones of contention may concern how BT/OR calculate the profit (7%) they are allowed to make as a neutral entity. Ofcom builds a model based on an “efficient operator“, which then uses that to calculate whether or not Openreach have a commercial advantage (i.e. if Openreach are over charging themselves then they might be considered to be making too much profit).
Put another way, the altnets may wish Ofcom to review how they define what is an “efficient operator“, since there’s a huge amount of variety in build approaches and they don’t all build networks as if they were completely staffed by former Openreach engineers with all the same resources. This is a technically tedious area for the regulator, but there is merit in examining the base assumptions and model, although no model will be perfect.
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However, this may not be the only issue that Altnets want to raise, so we’re continuing to dig.
UPDATE 1:01pm
We’ve had a comment from Openreach.
An Openreach spokesperson told ISPreview:
“We think this report is based on flawed analysis. The prices we charge for other operators to use our duct and poles (PIA) are set by the regulator Ofcom and, contrary to the report’s conclusions, we believe PIA operators actually underpay based on a fair allocation of costs.
We also note that PIA is a hugely successful product, underpinning the intense competition that has developed in the sector as a result of Ofcom’s regulatory approach. PIA supports over 900k customer connections by over 100 alternative network operators and achieves very strong customer satisfaction scores.”
UPDATE 3:01pm
Openreach has issued an updated comment above.
UPDATE 6th August 2024
Broadband ISP LightSpeed has voiced their support for the new coalition.
Brett Shepherd, CEO at LightSpeed, says:
“We at LightSpeed Broadband welcome the Physical Infrastructure Access (PIA) Coalition and the recent study by SPC Network.
As users of the Openreach network that helps facilitate our UK roll-out, we are all too aware that significant remedial and rectification work is needed to bring the network’s infrastructure up to a standard that can be accessed by all altnets. The UK is making good progress towards a full rollout, but there must not be undue excessive cost to the altnets themselves, which could ultimately result in slowing down the roll-out and incur needless cost in terms of excessive investment.
In addition to the very pertinent points made by the PIA Coalition, LightSpeed and others are contributing similar views through our industry body INCA’s submission to Ofcom’s Telecoms Access Review process. Ultimately, Ofcom must ensure equal opportunity for altnets – alongside larger providers – for economical access to Openreach’s infrastructure. Without it there’s the potential to harm the long-term investment required for an open, successful and competitive landscape for broadband in the UK.”
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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If this coalition thinks that duct access can be done cheaper then let them build a network. PIA is already resulting in chambers looking like bombsites, why should these operators be allowed to do that for an even lower price? I presume the altnets are more than happy with Ofcom enforcing minimum FTTP pricing on Openreach and now they want the thumb on the scale pressing down even harder.
have they tried digging their own ducts instead of leeching off of the company they claim to be out-competing?
If their business plan is predicated on hoping that Openreach can charge as little as possible for access to their assets, that doesn’t sound particularly positive.
Knobbling BT has not worked before, except for those who live in cherry picked LLU or now alt-net areas – let’s hope they don’t get their way now.
You could say if the altnets don’t like the price Openreach charges them for PIA then they should feel free to build to build their own. The amount Openreach charges itself is largely irrelevant as it ends up the same pot anyway, Ofcom set the price at a rate it considered fair at the time. Can Nexfibre really be considered an altnet? It seems to me that it has only been setup as a seperate entity from VMO2 to avoid the scrutiny from Ofcom that Openreach gets, seeing as VM are currently its only customer the lines are blurred to say the least.
Surprised they haven’t called for OpenreCh to be split into OpenNetCo and OpenPhysInfra… or hot about a further split between a competing OpenPoleCo and an OpenDuctCo…
We understand why these companies are concerned about the future cost of the PIA however, like most reports if it doesn’t have all the internal trading detail it’s conclusions may be misleading and they may end up with something worse.
Some thoughts:
Any service to a third party involves additional account and administration overhead above their common record keeping, management and maintenance. If OR are forced to account at a more detailed level then that itself adds cost.
Current PIA is probably based on the majority of the current civils costs being met by the copper network.
If there is a 2 or 4 bore duct going out to a location (including manholes, boxes, poles etc) then going forward when the copper is redundant the civils costs will need to be shared equally between the those using it. More overbuild the cost can be shared further.
I also take the view that the OR “we will build everywhere” will not be 100%. Especially if market share is high with a particular Alnet and BT/EE go mobile broadband within that Postcode. 100% of cost to the Altnet?
The Altnets need to understand that poles rot, duct sinks, other utilities break through it, vehicles break box lids and all infrastructure ages with ongoing liabilities. To keep things simple Openreach currently maintains a common generic PIA cost table. They could quite easily go for actuals or regional pricing.
So my conclusion is that PIA costs may justifiably increase as FTTP continues and copper use ceases.
OR will continue to cut costs and seek to rid itself of historic overheads but at the base network level they also will want and insist on a level playing field.
So Altnets be careful what you wish for.
I assume Openreach will also be asking for access other operators Ducts and Poles at the same rates? Would be especially useful in rural locations. Might be a cause for concern for the rural Altnets and those claiming subsidies.
Well I am not saying that this should be below the costs or for free but you all missing one thing. OR before it became BT/OR was a public company called Electric Telegraph Company General Post Office Post Office Telecommunications building their network for tax payer money and had monopoly.
Exactly this. As a free market absolutist, this is good for competition to fix bad government intervention
The charges Openreach make for PIA will be based around what it actually costs to maintain the infrastructure (i.e. replacing rotten poles and broken ducts), not who paid to install it. I would suggest the presence of third party equipment makes Openreaches job more complex than it would have otherwise been.
The taxpayer got his/her money back when the company was sold and all of that income went to the Treasury.So not much of an argument there.
Agree with it or not and argue about the price if you want, but BT was purchased from the government by shareholders. The state has no claim over the assets once they sold them, and I’m not very receptive to the argument of “this section of duct was state owned 40 years ago so now it should be rented to an ISP owned by a middle-eastern royal wealth fund at a price that makes it difficult to maintain the asset”.
and if it’s about former state ownership, then why aren’t the electricity or water sectors required to contribute their infrastructure where appropriate
or indeed Virgin Media, who only exist because of government granted regional monopolies and freedoms that BT were explicitly not granted to attempt to make the business seem more viable (aka “competition”, UK telecoms style)
“…building their network for tax payer money and had monopoly“ That’s the same argument as me selling my house to you and you now owning it completely but then years later I demand the right to grow vegetables in the garden or bring my family and friends to your house every summer in order to use your patio which I built when I owned it! The very last state-owned percentage of BT was sold by Gordon “I’ve some gold going cheap” Brown so the fact that any of its assets have to be available to third parties is quite astonishing.
Perhaps the PIA Coalition would also like to open up their infrastructure so any other network operator can use it? So in areas where you have been first mover and did the hard yards with ducts and maybe some of those unpopular poles, others can come in behind you and share your infra, including OR.
In many scenarios, AltNets are required to gift Poles, chambers etc. that they build back to the BT Group, due to the terms that PIA is provided by the BT Group.
They also have to pay to resolve duct blockages with BT’s PIA infrastructure and are only provide with a token payment from BT. And believe me, PIA infrastructure has not been well maintained by BT. Neglected would be a more appropriate term.
They gift back chambers that have been dropped on Openreach ducts as is only fair otherwise how could another altnet or OR use that route again . I don’t know of a single time a pole has been gifted back ever .
They also get the same rate card payback for blockages that Openreach pay themselves , it is not a token payment and not ORs fault if an altnet had to pay their subbie more than what Openreach has negotiated with their partners .
Who will pay for the removal and disposal of the redundant fibre when the AltNet goes bust, or they merge with one of the other overbuilt altnets using the same ducts.
Will BT be allowed to use all the new NIMBY poles alt nets have put up, or will they have to put up their own if they want to serve a particular area?
Our poles have multiple cables to some houses because the previous ISP line is not removed when the new one is added. OR will have to upgrade some of the thinner poles to cope with the extra weight.
Or remove the cabling when an altnet abandons the build half way through for that matter.
An Altnet is not allowed to touch Openreach infrastructure, which is why homes that have changed to altnet still have openreach cables. I am on an altnet and Openreach cables still run from the pole to my hose as well as my fibre from Zzoomm. Even Openreach don’t remove their old cables, my next door neighbour who seems to think BT is the best and prepared to spend stupid money on it, went to fibre and the old copper cables are still there and their fibre cable has copper included, so she now has two copper cables going to the house,
As for who is going to remove fibre, it will stay, no doubt someone will use it at some point.
Openreach need to sort their own infrastructure out, A cabinet down the road have had the doors open for weeks now, a pole down the road have had a lean on it for months. The mess they made when they dug a road a couple of roads from me is disgusting, even the altnet did a better job.
Openreach, just seems to be bothered about profit and that is it, but then that seems to be the same for all companies these days, I know they need profit, that is why they are in business., but they want crazy profit, and they cut, cut and more cuts.
Reading these comments has been really entertaining.
The UK lags well behind other countries for broadband availability and speeds.
The UK Government put in £5 Billion a few years ago to fund BDUK and try to rollout gigabit broadband to those missing out but the German Government triples its original 12 Billion Euro investment in gigabit broadband to 38 Billion Euros.
The UK is “the poor cousin” relying on private venture capital investment to make any headway on delivering gigabit broadband and that bubble has long since burst.
So how are AltNets supposed to provide gigabit broadband without using the, what, >£400 Billion pounds (to build in today’s money) of PIA infrastructure that the BT Group was effectively “gifted” when it was sold off?
last time I checked, it was a publicly traded FTSE100 company that is making the largest headway on FTTP availability. You might have heard of them, they’re called BT Group. Their infrastructure division operates the largest FTTP network in the country with ever increasing rollout targets and strong financials. The altnets don’t compare in any way, even with Openreach doing the hard work for them.
“So how are AltNets supposed to provide gigabit broadband without using the, what, >£400 Billion pounds (to build in today’s money) of PIA infrastructure that the BT Group was effectively “gifted” when it was sold off?”
Gifted? It was sold to BT’s new shareholders at a price the government of the day considered reasonable. Subsequent governments then stopped BT using it to its fullest, first through bans on cable TV services and later on blocking a fibre rollout.
But to answer your question – either paying a fair price for PIA or doing it themselves. Not this endless moaning and demands for lower pricing just because the cash-grab hasn’t materialised in the way they thought it would.
As has been pointed out, it was in no way “gifted” but facts aren’t going to change your mind.
Germany are well behind the UK in terms of broadband, in fact it’s one of the worst in Europe. If the German government are throwing money at it now it’s because they have fallen so far behind.
Look at Virgin Medi… I mean nexfibre acting all high and mighty about the costs of PIA. Wonder how much Nexfibre pays Virgin Media to rent their duct space and hubsite equipment.
Errr. You might want to take a look who owns nexfibre.
See my comments about Nexfibre above.
@ex-techie
Exactly my point… Liberty Global owns parts of both. Why are nexfibre acting like an altnet when they clearly aren’t?
Wasn’t exactly hard to detect sarcasm in my comment
Since all the new infrastructure is FTTP, why overbuild? Once FTTP is provisioned in an area, all ISPs should be able to use that infrastructure to connect their customers, for a fair price (hello regulator).
After all when you switch from one electricity supplier to another nobody has to connect you to different cables.
You create an incentive for everyone to sit on their hands. Why build and incur debt when you can just wait for someone else to build it and you just lease with no risk?
If capital gets no return, capital goes and plays elsewhere.
“You create an incentive for everyone to sit on their hands. Why build and incur debt when you can just wait for someone else to build it and you just lease with no risk?”
That depends on how much the ISPs get charged to use the infrastructure.
Some networks are more advanced than others, the one I use is better than Openreach stuff, same speed up and down for a start. i149Mb/s download on the Openreach network will get you 30Mb/s upload. On mine 150 down is 150 up and cheaper.
Not that it bothers me too much at the moment, but having a faster upload can be useful and to a lot of people, but on Openreach network, they would have to go for a faster download to get it.
In the next week it will be more useful to me
The Anti altnet people, on here, would soon complain with others if altnets started digging up the roads more than they do now and starting putting extra poles up next to Openreach ones. People complained enough here when zzoomm started digging, myself included, but only because they blocked off a cycle path fully, which they did not need to block off fully. That was down to contractors being idiots.
Openreach got the infrastructure for a pittance years ago, so they should not complain.
Around here, Zzoomm did dig a lot of their own ducts, they had no choice in a lot of places, as Openreach ones either did not exist, or they were collapsing.
“ Openreach got the infrastructure for a pittance years ago, so they should not complain.”
Say what?
How much did they pay?
Providers should be grateful that Openreach allow PIA! I wouldn’t be surprised if it would be more costly and time consuming for AltNet’s to build if they didn’t and this would likely be passed onto consumers…
They have no choice. They are certainly not doing it out of the goodness of their heart, that is for sure.
There appears to be a lot of OpenReach shareholders on here today.
Yep, normally is.