{"id":38930,"date":"2024-08-02T08:39:04","date_gmt":"2024-08-02T07:39:04","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=38930"},"modified":"2024-08-06T11:59:15","modified_gmt":"2024-08-06T10:59:15","slug":"network-operators-call-for-fairer-pricing-to-access-openreachs-uk-infrastructure","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2024\/08\/network-operators-call-for-fairer-pricing-to-access-openreachs-uk-infrastructure.html","title":{"rendered":"Network Operators Call for Fairer Pricing to Access Openreach’s UK Infrastructure UPDATE4"},"content":{"rendered":"

A new “PIA Coalition<\/em>” of alternative UK broadband networks, including nexfibre<\/a>, AllPoints Fibre, CommunityFibre<\/a>, Gigaclear<\/a>, Netomnia<\/a> and Brsk, has been setup and is calling on market regulator Ofcom<\/a> to “ensure a level playing field for access<\/em>” to Openreach<\/a>’s passive infrastructure (existing cable ducts and poles) in its upcoming Telecoms Access Review 2026 (TAR).<\/p>\n

At present Openreach<\/a> is already required to provide access to their existing cable ducts and poles via the regulated Physical Infrastructure Access<\/strong> (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<\/a>) broadband ISP networks.<\/p>\n

NOTE:<\/strong> The initial coalition members represent UK fibre coverage of over 5 million premises (RFS), making them one of the largest users of the PIA network.<\/div>\n

However, the PIA Coalition has conducted its own “detailed economic analysis of Openreach<\/a> PIA regulation<\/em>” (carried out by SPC Network<\/strong>), which they say has revealed an “imbalance<\/em>” between Openreach and alternative network operators, particularly in pricing, where altnets “pay significantly more to access ducts and poles than Openreach charges itself<\/em>.”<\/p>\n

The Coalition is thus calling for Ofcom<\/a> \u2013 in its upcoming TAR (summary<\/a>) \u2013 to act and “ensure all users of PIA have a level playing field for access to infrastructure<\/em>“. The group claims that failure to act will “harm competition and investment in the long-term<\/em>“, as well as “damage the UK\u2019s ability to compete internationally<\/em>” (we suspect that last statement relates more to broader indirect business impacts).<\/p>\n

Under Ofcom<\/a> 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<\/em>“.<\/p>\n

Giles Rowbotham, Spokesperson for the PIA Coalition (inc. CDO at nexfibre<\/a>), said:<\/strong><\/p>\n

\u201cAt 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.<\/p>\n

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.\u201d<\/p><\/blockquote>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

UPDATE 10:51am<\/strong><\/p>\n

Digging deeper into this and after talking to some sources, it seems like one of the bones of contention may concern how BT<\/a>\/OR calculate the profit (7%) they are allowed to make as a neutral entity. Ofcom builds a model based on an “efficient operator<\/em>“, 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).<\/p>\n

Put another way, the altnets may wish Ofcom to review how they define what is an “efficient operator<\/em>“, 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.<\/p>\n

However, this may not be the only issue that Altnets want to raise, so we\u2019re continuing to dig.<\/p>\n

UPDATE 1:01pm<\/strong><\/p>\n

We’ve had a comment from Openreach.<\/p>\n

An Openreach spokesperson told ISPreview:<\/strong><\/p>\n

\u201cWe 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\u2019s conclusions, we believe PIA operators actually underpay based on a fair allocation of costs.<\/p>\n

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\u2019s regulatory approach. PIA supports over 900k customer connections by over 100 alternative network operators and achieves very strong customer satisfaction scores.”<\/p><\/blockquote>\n

UPDATE 3:01pm<\/strong><\/p>\n

Openreach has issued an updated comment above.<\/p>\n

UPDATE 6th August 2024<\/strong><\/p>\n

Broadband ISP LightSpeed has voiced their support for the new coalition.<\/p>\n

Brett Shepherd, CEO at LightSpeed, says:<\/strong><\/p>\n

\u201cWe at LightSpeed Broadband<\/a> welcome the Physical Infrastructure Access (PIA) Coalition and the recent study by SPC Network.<\/p>\n

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\u2019s 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.<\/p>\n

In addition to the very pertinent points made by the PIA Coalition, LightSpeed and others are contributing similar views through our industry body INCA\u2019s submission to Ofcom\u2019s Telecoms Access Review process. Ultimately, Ofcom must ensure equal opportunity for altnets \u2013 alongside larger providers \u2013 for economical access to Openreach\u2019s infrastructure. Without it there\u2019s the potential to harm the long-term investment required for an open, successful and competitive landscape for broadband in the UK.\u201d<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

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).<\/p>\n","protected":false},"author":1,"featured_media":30254,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[52,56,36,69],"class_list":["post-38930","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-fibre-optic","tag-fttp","tag-ofcom-regulation","tag-bt-openreach"],"share_on_mastodon":{"url":"https:\/\/mastodon.social\/@ispreview\/112891294208816526","error":""},"yoast_head":"\nNetwork Operators Call for Fairer Pricing to Access Openreach's UK Infrastructure UPDATE4 - 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