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Ofcom Details New UK Superfast Broadband Regulation as Gov Moots Fibre Tax

Posted: 07th Oct, 2010 By: MarkJ
ofcom fibre optic broadband uk cable duct sharingMarket regulator Ofcom has today revealed the results of its earlier consultation (here) on measures that seek to encourage the rollout of "super-fast" Next Generation Access (NGA) broadband services across the UK. The move will require BT to open up its cable ducts and improve access to their fibre optic lines for rival ISPs.
The new regulatory model (core elements):

1. Virtual Unbundled Local Access (VULA), which will allow competitors to deliver services over BT's new NGA network [ e.g. 40Mbps FTTC ], with a degree of control that is similar to that achieved when taking over the physical line to the customer [ i.e. LLU ];

2. Physical Infrastructure Access (PIA), which will allow competitors to deploy their own NGA infrastructure between the customer and the local exchange, using BT's duct and pole infrastructure, to provide broadband and telephony; and

3. Local Loop Unbundling ( LLU ) which we expect will continue to provide a basis for competition in current generation services [i.e. Current Generation Access (CGA)], allowing competitors to physically take over (or share) BT's copper lines between the customer and the local exchange.
PIA should help to make deploying superfast broadband into rural areas, assuming the price is right, considerably more viable. However the real meat for ISPs, specifically those that have no immediate plans to dig their own fibre optic lines, will be VULA.

The VULA solution, which has been designed to last a good 5 years before a fully unbundled fibre solution becomes viable, allows rival ISPs (e.g. TalkTalk and Sky Broadband etc.) to have greater control over BT's new generation of 'up to' 40Mbps fibre optic FTTC based broadband services. This should allow them more flexibility to better differentiate their products from the standard BT Wholesale options.

These remedies will be complemented by other measures, such as Sub-loop Unbundling (SLU), charge controls for LLU but greater freedom for BT in the pricing of VULA services. Ofcom has tasked the Office of the Telecommunications Adjudicator (OTA) with reporting on VULA and PIA progress, which we will also cover.

Ofcom's Chief Executive, Ed Richards, said:

"The development of the UK’s super-fast broadband future is well underway with the roll-out of services in large parts of the country. Today Ofcom has finalised a clear regulatory framework to promote investment, competition and innovation to enable as many consumers as possible to benefit from these exciting new services."

BT now has until mid-January 2011 to present a draft Reference Offer (RO) for its cable duct and (telegraph) pole access. In addition Ofcom plans to look more broadly at the scope for extending infrastructure access to other networks (e.g. Virgin Media and Utility Operators [Water etc.]), albeit not until the new EU Communications Framework has been implemented in the UK by May 2011.

In addition it was reported yesterday by ComputerWeekly that the UK governments Communications Minister, Ed Vaizey, is likely to hold an industry roundtable meeting to discuss the controversial new Valuation Office Agency (VOA) guidance on fibre optic broadband line taxation (Fibre Tax).

At present the tax remains grossly unfair because it penalises smaller operators with higher costs, while larger providers (i.e. BT and Virgin Media UK) are taxed differently and thus escape many of the same pitfalls. Related ISPs are also being advised to submit their cases to the VOA as evidence to show where the tax is failing them.
Ofcom's Review of the Wholesale Local Access Market (PDF)
http://stakeholders.ofcom.org.uk/binaries/consultations/wla/statement/WLA_statement.pdf
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