- 3 Mar 09, 15:40 GMT
"This is a very significant day in the deployment and history of Britain's communications," said Ofcom's chief executive, trying to gee up a roomful of sleepy hacks in a conference room this morning. Ed Richards, the impossibly youthful looking boss of a very powerful regulator, was obviously excited about an announcement which he says will "clear the way" for investment in superfast broadband. But should the rest of us care? Well yes. This news is significant for three groups - BT, Virgin Media and anyone who's interested in getting a faster broadband connection.
BT was cock-a-hoop, rushing out a happy statement just minutes after Ofcom's announcement. The telecoms giant had warned it wasn't going to spend billions on a new fibre network if the regulator wouldn't allow it to make a decent return. It had two worries - the price it could charge other firms to use its network and the fact that existing regulation meant it would have to send two sets of engineers to 8000 fibre cabinets across the country, vastly increasing the cost. Openreach - the BT local network division - is run at arm's length, treating the firm's own retail broadband business as just another customer, so when anything happens at exchanges two sets of engineers are involved. Now Ofcom has, in its own words "varied BT's undertakings", so that Openreach can do the whole job. More significantly, BT can charge its rivals whatever it likes for access to its new network. So now it's promised to press ahead with its investment in fibre-to-the-cabinet, with the rollout of 40Mbps broadband starting early next year.
Virgin Media got two things today - it was left alone by Ofcom and also got a glowing endorsement from the chief executive. The regulator was in no hurry to order Virgin to open up its network - and Ed Richards was keen to point out that the cable operator was already way ahead of BT: "People say nothing is happening in the UK when it comes to super fast broadband. That just isn't the case- it's unfair to what Virgin have done. By the end of this year 50% of the UK will be covered with superfast broadband before BT have started."
So it sounds like there was good news for consumers too. By 2012, 40% of the UK will have BT's 40Mbps service, and 50% will have 50Mbps Virgin cable broadband - and although the two firms will overlap a lot, that means well over half of the UK should be in the fast lane. But two problems remain - how much are we going to pay, and what will happen to the large numbers of people who still won't get access? Ed Richards said he'd be surprised if consumers weren't willing to pay a premium for a fast product - but the market would limit the cost :"You're not going to be able to charge £300 a month, when customers can still get 10-20Mbps for just a few pounds." And he pointed out that the take-off of mobile broadband would also mean there was plenty of competition.
But what we haven't learned today is how we can stop a new digital divide opening up. "We don't know how far the market will take us," said Ed Richards, "but the market is not going to provide super-fast broadband for 100% of homes." That will be the subject of phase two of Ofcom's deliberations - but may be more of a question for Lord Carter's Digital Britain report. We still have no idea of the cost of bringing in a "Universal Service Obligation" to make sure every home can get at least 2Mbps, so working out how to give 50 or 100Mbps to every home in the UK is going to involve an awful lot of head-scratching.
The debate has already started - the Country Landowners Association said Ofcom had failed to understand the needs of rural communities, and the effect of deregulating broadband would be to create such a gulf between town and country that "the rural economy could find itself on its knees".
As we found on our Broadband Britain tour last year, speed is an issue which really gets people worked up. And nothing gets them more agitated than the fact that everyone else seems to be accelerating away into the distance. So prepare for a long and bloody broadband battle.
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