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OFCOM (de)regulation of NGN



Ofcom published yesterday a statement on super fast broadband. OFCOM decides not to regulate BT's wholesale prices to allow returns on invetsements in NGN. This is based on existing investments by competitors and the existence of Openreach. In my view, it is questionnable whether such approach could be adopted in countries where no functional separation is imposed.


Below is the summary of the main elements of the statement:



Promoting investment

Pricing freedom. Communication providers such as BT will have the freedom to price wholesale super-fast broadband products themselves without any regulatory intervention. This will allow investors to make an appropriate return on their investment, based on the risk they are taking but pricing at a level that the market will bear, given the ready availability of alternative broadband services.

Risk reflective rate of return. In the event of further competition emerging upstream – by companies offering super-fast broadband through passive access – investors will have the opportunity to earn a rate of return that genuinely reflects their costs and the associated level of risk.

Efficient networks. Ensuring that inefficiencies are not built into the deployment of super-fast broadband that could result in a barrier to investment. For example, ensuring that two sets of engineers are not required to service the same request and avoiding excessive complexity of business systems needed to support the network.

Securing competition

Wholesale access for all. Ofcom will support new active fibre-based wholesale products offered by BT. This will require Openreach to offer fibre-based broadband services to other providers – including BT Retail – on equal terms and without favour.

Encouraging future competition. Allowing companies to invest alongside BT when networks are built, or ensuring that new infrastructure will support further future competitive investment should demand arise.

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