Markham Sivak, Ofcom

1. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM
Telecoms infrastructure competition
regulation
Markham Sivak
Principal Competition Policy, Competition Group

2. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 2
Our strategy is to support fibre investment and maximum coverage
• We want to support investment in more fibre rich networks
• We want to make these investments as contestable as possible
• Resulting in the establishment of competing networks, in some areas
by promoting competition where possible and supporting investment everywhere

3. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 3
The story, so far…
February 2016 Strategic Review of Digital Communications. Commitment to ultrafast networks and more fibre, supporting
investment and promoting competition
March 2017 Legal separation of Openreach agreed. Giving Openreach greater independence to serve all customers equally
and to take investment decisions on behalf of the whole industry
March 2018 WLA Statement. Pricing freedom for higher speed products to support commercial investment (superfast anchor
introduced) and an improved duct and pole access product to promote competitive investment
July 2018 Regulatory Certainty to Support Investment in Fibre. Network based approach to regulation. Supporting
unrestricted duct and pole access. Having different regulatory approach in different areas. Longer term certainty.
Assisting a smooth transition from copper to fibre. Preserving incentives to invest (for both Openreach and other
providers)
November 2018 Physical Infrastructure Review, unrestricted duct and pole access
December 2018
March 2019
Consultation on potential geographic market structure (ie different regulation in different parts of the country)
Consultation on how remedies might vary by geographic markets

4. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 4
…and what’s coming next
End of 2019 Proposals for integrated market review
March 2021 Integrated market review implemented (runs until 2026)

5. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 5
Our regulatory approach is to put DPA first
• Duct and pole access (DPA) lowers the barriers for new entrant investment
• However, we are conscious that:
– today there is not a lot of network competition; and
– there will be some areas where competitive investment is unlikely
• The regulatory framework needs to reflect this
and de-regulate where there is effective network competition

6. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 6
Access to Physical Infrastructure Market (Upstream)
Competitive
Area
Potentially
Competitive
Area
Non-
Competitive
Area
No Remedy
Selective
Remedies
Full suite of
Remedies
Duct Access Remedy in all markets
Provides support for
investment and
deregulation
downstream
Current market review programme outline
Local access (broadband) and business connectivity (high
capacity line) markets considered at the same time
Aim to have new structure
in place by April 2021

7. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 7
Geographically targeted regulation
• Prospects for network competition will vary across UK due to population density and
build costs
• Intend to vary regulation on Openreach in three broad geographic areas:
• Public intervention likely to also be required in non-competitive areas
Regulatory approach Likely policy proposals
Competitive areas Deregulation as areas become effectively
competitive
• Continued duct and pole access and
consumer protection, but no access
regulation ie no requirement on
Openreach to provide wholesale services
Potentially competitive areas Build on existing wholesale local access
(broadband) and business line approach
supporting network investment, by
Openreach and new entrants
• Anchor product regulation will consider
competitor build costs, Openreach legacy
investments and fibre premium
• Continued pricing flexibility for higher
value services
Non-competitive areas Focus on most upstream remedy that will
support competition and innovation
• Wholesale access regulation - Potential for
dark fibre
• Support Openreach investment in fibre

8. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 8
Physical infrastructure market

9. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 9
Summary of remedies
• Unrestricted PIA: PIA remedy that can be used for any purpose and anywhere in the UK except the Hull Area
– Will therefore allow, inter alia, the following uses compared to the current obligation supporting just local
access services:
• Backhaul for broadband, business and mobile networks
• Dedicated leased line use
• Support for fixed wireless access networks
• No undue discrimination: Strict equivalence in respect of all processes and sub-products that contribute to
the supply and consumption of network access services in the Physical Infrastructure markets, unless BT can
demonstrate that a difference is justified ie the way BT and Openreach consume their own duct should as far a
possible be on the same basis as third parties.
• Cost recovery for repair and enabling works: Costs recovered from all users of the infrastructure, up to the
same financial limit of £4750 per km, which we consider will cover the vast majority cases as it can be treated as it
can be averaged over an order.
• PIA pricing: Price cap on PIA prices.

10. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 10
2018 Geographic markets green consultation

11. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 11
Geographic analysis – overview of
approach
Existing
broadband
network coverage
(From Connected
Nations)
Existing leased
lines network
coverage (From
BCMR)
Network operator plans
Potential areas of future economic
deployment
Area 1: effectively
competitive
Area 2: potentially
competitive/
prospect of
network rollout
Area 3: limited
prospects of
network rollout,
Openreach
unlikely to have
incentive to
invest due to
competitive
threat

12. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 12
Identify “urban” UK
postcodes – initial
modelling based on
postcodes with area
less than 100,000m2
Create “clusters” of
“urban” postcodes
Identify postcode
sectors where at
least 65% of
premises within
the postcode
sector fall in the
clusters
Identify clusters
with more than
20,000 premises
(based on data on
number of
premises per
postcode)
Process to identify areas where build could be
economic

13. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 13
Geographic analysis illustration
Number of
postcode
sectors
Number of
premises
(millions)
Percentage of
all UK
premises
Competitive areas 0 0 0%
Potentially
competitive areas
Existing network
presence
3,599 13.5 46%
Plus planned
networks
4,665 17 58%
Plus potential rollout 6,116 20.4 69%
Non-competitive areas 3,912 9.1 31%

14. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 14
2019 Remedies green consultation

15. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 15
Access Review – Initial proposals
Geographic area 2 (potentially competitive) Geographic area 3 (no prospect of full
competition to Openreach)
Our focus is to bring about consumer benefits by means of
network competition through unrestricted access to
Openreach’s duct and pole infrastructure and wholesale
remedies aimed at promoting investment in rival networks
Our focus is to bring about consumer benefits through
wholesale access regulation to Openreach’s network and by
incentivising Openreach to invest in full fibre networks
WLA services
Broad continuation of our current approach to charge
controlling anchor product (MPF+FTTC 40/10) at level to
support investment in FTTP
No charge control of higher bandwidth services
Fair-bet approach with rival fibre investment expected to
incentivise BT to invest in FTTP
WLA services
Cost-based charge control across all bandwidths
No significant rival fibre investment is expected so will not
provide trigger for BT to invest. Proposal for Regulatory Assess
Base (RAB) approach to encourage BT to invest in FTTP (with
costs being recovered across fibre and copper services in area
3)
Leased line services
No dark fibre requirement
No charge control on VHB circuits
Cap on up to 1Gbit/s circuits to ensure stable prices (in
support of network investment)
Leased line services
Dark fibre at cost for high capacity services (seen as primary
remedy)
Cap on VHB circuits to ensure stable prices to provide
customer protection as transition to dark fibre
Cap on up to 1Gbit/s circuits to ensure stable prices to provide
customer protection as transition to dark fibre

16. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 16
We have used the March remedies consultation to signal the
potential changes to regulation to support copper retirement
Initial changes
• We will consult on modifying the general access regulation to remove the Openreach obligation to develop new
copper based access services
Changes with FTTP coverage of a full exchange area would potentially trigger (either immediately or after some
defined period). Note there may be some G’Fast use where FTTP is not possible
• Remove the obligation to supply copper for new lines in a given exchange area.
• Remove the charge control on copper based services subject to regulations on, or commitment from, Openreach
on the treatment of existing customers
• But impose a new anchor charge control on FTTP (with a small premium to reflect improved quality)
• Modify QoS regulation to make any necessary allowance replacement rather than repair in specified circumstances

17. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 17
Progress on duct and pole access

18. PROMOTING CHOICE • SECURING STANDARDS • PREVENTING HARM 18
While some of the negotiations were strained we now have a
significantly improved PIA reference offer
• Improved systems and interfaces available to telecoms providers to view maps and place
orders
• Investment by Openreach in new service management centres and more civils direct
labour
• Flexibility / structure of how the Network Adjustments fund should operate
With more improvements to come over the next six months
• KPIs and other measure to ensure no undue discrimination
• Moving towards a more streamlined process for the verification of requests for network
adjustments
• Appropriate SLAs; and
• Appropriate Service Level Guarantees (SLGs) and link to forecasting accuracy