At a recent industry event in London, ‘Building a Full Fibre Future’ Sharon White the Chief Executive of Ofcom said in her closing remarks that BT would not be able to compete with its investor backed rivals unless it starts seriously investing more capital in full-fibre networks.

White added that the company has reached a critical juncture that will define whether the business survives, “Incumbents face a choice in my view — fibre up or risk fading away. History is strewn with once-successful companies that failed to anticipate and act on shifts in customer demands and to innovate. Think Kodak, Polaroid, Palm and Blockbuster. The UK cannot afford for BT to be added to that list.”

White told delegates that modernising the UK’s infrastructure was a key priority, with key emphasis on moving away from a “Victorian-era copper network to a modern, full-fibre network fitting for an advanced economy.”

Ofcom Committed to Fair Bet

White also outlined how Ofcom planned to better support long-term investment in UK broadband through a more consistent and coherent approach to market regulation. According to White, Ofcom will continue to anchor its approach in the principle of ‘fair bet’, meaning risky investments will make a fair return. She also confirmed that Ofcom was committed to extending the length of its market reviews in the telecoms sector from every three years to every five after Brexit, a move welcomed by the industry.

Contenders of the Telecoms Market

Currently, BT has dominance in the broadband market, with 18 million customers and revenues of more than £24 billion it is the biggest telecom provider in the UK due to its ownership of Openreach. In recent years, new entries to the telecoms infrastructure market such as CityFibre, Gigaclear, Hyperoptic and Community Fibre, all of which are backed by infrastructure investors, have put pressure on Openreach to up its game.

CityFibre, which has partnered with Vodafone just recently agreed to a £538m takeover by a consortium of infrastructure funds backed by Goldman Sachs, a move that could see it become a real contender to the telecoms behemoth. Greg Mesch, Chief Executive of CityFibre, said: “As much as we love BT, we all want to lessen this country’s dependency on this one company.”

At present, the UK lags behind other European countries in terms of full-fibre connectivity, only 3% of UK premises can connect to full-fibre. To put this in perspective, Portugal and Latvia both enjoy 80% coverage while in Denmark, Luxemburg, Romanic and the Netherlands 25% of rural homes have access to full-fibre. It is this slow progress that opened the door for the new contenders to enter the market.

BT Full Fibre Future?

White’s comments follow Ofcom’s recently released draft regulations that will see Openreach made to open its telegraph poles and underground tunnel infrastructure available to its competitors. This move would dramatically cut the upfront costs of laying fibre cable by 50%. BT’s rivals do not face the same level of regulatory red tape as Openreach does, which is one of the main reasons they can build and offer significantly cheaper full-fibre.

Openreach CEO Clive Selley, said: Reaching three million premises by 2020 sets Openreach on the right trajectory to achieve its ambition of building a 10m Fibre to the Premises (FTTP) footprint by the mid-2020s and, if the conditions are right, to go significantly beyond, bringing the benefits of FTTP to the majority of homes and businesses across the UK.

However, Selley said that its inclination to build full-fibre networks will be dependent upon its ability to generate an adequate return on investment and called for greater support from Ofcom and the Government. The UK Government is planning to publish their Future Infrastructure Review, which will consider possible changes to be made to boost investment in full-fibre. Potentially, this could see further obstacles for BT.