Regulation quarrels could hamper BT's super-fast broadband plans

Businesses are set to benefit from a £1.5bn network improvement programme by BT that will deliver super-fast broadband services to up to 10 million UK homes by 2012. But market watchers warned that quarrels over regulation could hamper the rollout.

BT’s next-generation access programme will involve a massive rollout of fibre networks across the UK. But the telecoms giant is reluctant to fully commit to the deployment until it receives guarantees from Ofcom, the communications regulator.

Market watchers believe the carrier is pressuring Ofcom to allow it to make substantial profit margins when it charges ISPs to use its super-fast network although BT refused to confirm this.

Currently, BT is limited to making a 10 per cent return on its wholesale prices for access to its network.

Commenting on the ongoing talks between BT and Ofcom, BT Openreach head of public affairs Emma Gilthorpe said, “There are general areas from a regulatory point of view that we’d like to see firmed up.”

This raises the possibility that BT will also try to persuade Ofcom to compel other providers to open up their fibre networks to third parties. Currently, only Virgin Media has a significant fibre-to-home presence.

Ofcom is in an unenviable position, said Rob Bamforth, principal analyst at Quocirca. The government is eager for UK businesses to reap the benefits of the widespread availability of ultra-high speed internet services, but it cannot allow BT to gain a stranglehold on the market, he said.

“The government and Ofcom need to understand what’s up for grabs and start suitable negotiations to get the best for the UK,” he said.

Matt Yardley of consultancy Analysys Mason agreed that a nationwide rollout of high-speed fibre would be a boon for business. “Higher upstream speeds will aid file transfers and distributed working,” he said.

Mike Cansfield, principal analyst with Forrester Research, believes that UK business leaders have cause for optimism. He expects agreement on access to next-generation broadband networks to be reached soon.

“What you’re seeing is a gradual realisation that the way to resolve the perceived lack of a UK fibre rollout is through partnership across industry and not pointing fingers. It’s an outbreak of common sense,” Cansfield said.

Regulator Ofcom has promised to publish more details regarding its approach to regulating super-fast broadband services in September.

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