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NextGen 11 Conference, Bristol, 15-16 November. UK Broadband Regulatory Framework. David Clarkson 16 th November 2011. Contents. Current generation broadband NGA/super-fast broadband deployment plans NGA investment challenge Regulatory framework - promoting investment and competition

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Presentation Transcript
  • Current generation broadband
  • NGA/super-fast broadband deployment plans
  • NGA investment challenge
  • Regulatory framework - promoting investment and competition
  • Current situation
current generation broadband
Current generation broadband
  • LLU and cable both provide strong competition to BT in the UK – but only in certain areas
    • Cable coverage c.50%
    • LLU coverage c.89%
  • This has resulted in the development of sub-national markets and geographic regulation
    • Market 1 (11.7%), BT only - access regulation, cost orientation and proposed charge control (still to be finalised)
    • Market 2 (10%), 2/3 operators - access regulation and cost orientation
    • Market 3 (77.6%), 4 or more operators – no regulation
  • Current generation broadband will continue to have a significant role over the next few years
    • Regulatory framework has to continue to support current generation broadband whilst allowing a transition to NGA

Market 1

Market 2

Market 3

Hull Area

nga super fast broadband public deployment plans
NGA/Super-fast broadband public deployment plans


  • Plans to deploy NGA to 66% of UK by 2014
  • Mix of FTTC and FTTH planned, 75% FTTC / 25% FTTH expected
  • Areas covered expected to largely overlap existing cable and LLU deployments

Virgin Media

  • Completed upgrade to DOCSIS 3.0 in mid 2009 across entire network (c.50% of UK)
  • Started offering 50Mbit/s services in Dec 2008
  • Started offering 100Mbit/s services in Oct 2010
  • Has been trailing 200Mbit/s and testing network up to 1.5 Gbit/s
  • Has been incrementally extending footprint of its cable network


  • Majority of new builds now install FTTH
  • Increasing number of local initiatives, both private and public
nga investment challenge
NGA investment challenge
  • High capital costs and limited incremental revenue make the investment case for FTTC look marginal
  • Despite the longer investment horizon for FTTH costs, annual costs per line for FTTH are still approx 3-4 times higher than FTTC, and the revenue premium is uncertain

FTTC and FTTH revenues and costs per subscriber per year

Notes and assumptions

Source of data: Analysys Mason for BSG, 2008

FTTH GPON topology

Cost of capital 12%

Only access included



regulatory framework promoting investment and competition
Regulatory framework - promoting investment and competition

Promoting investment – SLU and PIA

  • We primarily see Sub-Loop Unbundling (SLU) and Passive Infrastructure Access (PIA) as a means to promote investment in NGA. The intention is to make such investment contestable by operators other than BT
  • But the investment case is challenging. It is unlikely that we will see the deployment of multiple NGA networks based on SLU/PIA in the same area in the next few years. These remedies are therefore unlikely to be the basis for competition in the next few years

Promoting competition – LLU and VULA

  • In areas where BT has deployed NGA, we expect competition to be based on access to BT’s network using Virtual Unbundled Local Access (VULA)
    • BT is required to provide wholesale access to its NGA network (FTTC and FTTH) on an equivalent basis, however we have not required cost orientation or set a charge control
  • We believe that Local Loop Unbundling will continue to be the primary basis for competition in current generation services over the next few years

PIA = duct and pole access

the implications and use of our remedies are likely to vary in different locations
The implications and use of our remedies are likely to vary in different locations

Current & planned networks

Likely longer term focus

Nearer term remedies focus



“1st Half”

(urban, c.50%)

Wavelength or fibre unbundling?

“Middle bit”

(sub-urban, c.16%)

Future focus likely to be driven by shift from FTTC to FTTH and emergence of viable NGA unbundling options








Local / regional initiatives

Duct and pole access

“Final third”

(rural, c.33%)

current situation
Current situation

Competition (areas where BT has deployed NGA)

  • Many providers have now signed up to use VULA (aka Generic Ethernet Access)
  • Take-up of BT’s NGA products stood at c.300k at end September 2011 (coverage at that time was about 6m homes – all FTTC)
  • BT Retail is by far the biggest user of VULA/GEA

Investment (areas where no NGA exists)

  • At the current time, apart from a couple of very small schemes, there is little interest in the commercial deployment of NGA based on SLU and/or PIA

State funding (the ‘Final Third’)

  • The UK government has set aside £530m to support the deployment of NGA in the Final Third in the period to 2015 – four pilot trials are currently under way
  • Several separate state-funded schemes also in development – South Yorkshire, Cornwall
  • Currently, the only real interest in SLU and PIA is to enable competitive providers to bid for state funded schemes (potentially makes state funds more contestable) - e.g. Fujitsu