New rules announced by Ofcom have spurred BT to declare that it will “build like fury” to roll out full-fibre broadband connections.
The UK’s telecoms regulator has opted not to impose price caps on the full-fibre broadband packages supplied by BT’s Openreach subsidiary.
The move gives BT the certainty it needed to go ahead with a £12bn investment.
However, Ofcom is now open to the criticism that it has allowed a near-monopoly operator too much freedom, possibly leading to the public having to pay more for their internet connections.
Ofcom also froze the price caps on Openreach’s slower copper-based connections.
Openreach creates and maintains the infrastructure involved in full-fibre broadband, and then charges individual internet services providers to use their connections. The internet service providers then sell access to the public.
BT announced that it will build 20 million fibre-to-the-premises (FTTP) connections to homes and offices by the mid- to late-2020s.
Clive Selley, Openreach's chief executive, said: "Today's regulation will allow us to ramp up to three million premises per year providing vital next generation connectivity for homes and business right across the UK.”
Ofcome’s chief executive, Dame Melanie Dawes, denied that its decision would have a negative impact on consumers.
Speaking to BBC Radio Four's Today programme, Dawes said: "It's true we certainly want to make sure that BT can have a fair bet on this investment, but at the core of our approach is that we are trying to get competition into the wholesale network layer, of broadband for the future, really for the first time in quite a new way.
"And the reason we believe in competition is we actually think that's best for the consumer. It gives us all more options to choose from, not just on pricing but also on service quality and reliability."
Ofcom has effectively frozen the wholesale prices that Openreach charges for “superfast” connections which utilise older copper-based technology, whilst simultaneously leaving newer and faster connections unregulated.
However, Openreach will not be permitted to offer location-based discounts on its full-fibre wholesale services.
Analyst at the tech consultancy CCS Insight, Kester Mann, said: "Rolling out infrastructure is a costly and time-consuming venture, that comes with a long pay-back on investment.
"This is particularly true in less-densely populated areas where the economics may be considerably less appealing.
"As such, Openreach needed certainty that it would be able to make a sufficient return on investment before embarking on the next stages of roll-out."
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