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Ofcom to change BT Openreach regulations to fuel full-fiber rollout

The United Kingdom's telecoms regulator plans to change regulation of British Telecom's national Openreach network to accelerate the rollout of full-fiber broadband.

Starting in April 2021, Ofcom is proposing varied rules for different parts of the country to ensure that rural areas benefit from the same connectivity as urban locations. The new regulations cover a five-year period until March 2026.

In cities, it plans to cap to inflation the wholesale prices BT's Openreach Ltd. charges internet providers for access to its entry-level superfast broadband service, which offers speeds of 40 Mbps.

Ofcom will not impose the same caps on BT's fastest fiber speeds to enable it to invest "profitably" in full-fiber and to boost competition.

An Openreach spokesperson said it will carefully consider the proposals but that they help provide "investment certainty."

More than 80 firms are seeking to use Openreach's network of telegraph poles and underground ducts to lay new optical fiber cables to deliver broadband.

The regulator is also proposing pricing caps on the incumbent's legacy copper services to prevent it from offering steep discounts that undercut its rivals. To support BT's transition to the next-gen network, Ofcom aims to remove regulation on copper connections where full-fiber is available. This will help BT avoid the unnecessary costs of running two parallel networks, it said.

The regulator intends to protect customers by transferring its price protections from copper to new fiber services.

In rural areas, where Openreach is likely to be the only provider, Ofcom would allow it to recoup its investment costs across wholesale prices to help reduce the risk of its investment.

However, BT must first commit to build fiber in these parts of the U.K. in order to include the costs in its upfront prices, Ofcom said. If not, it will be restricted to recouping the costs once the new network is constructed.

The U.K. government has pledged £5 billion of public funding to help connect rural parts of the country.

Full-fiber coverage in the U.K. trebled from 3% in 2017 to 10% by the end of 2019 and is available to roughly 3 million premises. British Telecom and Liberty Global PLC's Virgin Media plan to connect 15 million homes by 2025 and the end of 2021, respectively.

Ofcom will now begin consulting on the proposals until April 1 and then publish its results in early 2021 ahead of the expiration of the current rules.