Virtual1 (en-GB)

What future now for Dark Fibre Access?

18/08/2017

James Hickman - CTO at Virtual1

Earlier this week, Openreach won its case in the Competition Appeal Tribunal to not share dark fibre assets with network operators. Had it lost, any UK operator could insist on taking bare, dark fibre between their own PoP and customer premises, and light it themselves. Openreach would be reduced from being an Ethernet service provider to simply running stringy glass between two points. Why would this have been a bad thing?

First off, Openreach invests in the UK national data infrastructure through the revenues it generates from the product set it provides. Removing the value-add on top of the fibre removes any incentive to innovate and reduces the funding to do so. The volumes at which Openreach buys things such as fibre terminating equipment must provide some capability to discount that operators might not necessarily be capable to achieve on their own. All that is without me getting started on dark fibre tax liability too.

Imagine the influx into the market of smaller operators, trying their hand at lighting fibre. Inexperienced providers would likely provide a poor service and would look to compete with like-minded souls and in doing so drive the prices down. In theory that sounds good for the consumer, but you end up with a market flooded with high-bandwidth products that most likely will be unable to provide the bandwidth levels promised. The perception of Fibre Ethernet would be marred irrevocably by these offerings and look no better than broadband in some people's eyes.

This kind of attempt by a telecoms regulator to unpick the infrastructure providers network has been attempted in other countries too. Australia's former incumbent telco, Telstra was fighting as far back as 2007 to protect what it described as "confiscation and mutilation" of its network by potential third-parties whilst at the same time having to incur "significant costs". This led to the abandonment of a Government initiative to force Telstra to run fibre to premises and then open it to third-parties that had not been required to come up with any infrastructure investment. The UK deregulation is some way ahead of Australia and we seem to only now be hitting these issues due to Ofcom finding its teeth when confronting BT as a business.

So where now? The dark fibre marketplace isn't a heavily populated one as it takes time to create infrastructure and even longer to recover the costs. Openreach are as valid a provider as any for hub-to-hub connections, but the precious last mile needs a bit more protection from both drive-to-the-bottom competition and any detraction from the end consumer universal access rights. Business customers need choice where there is a credible opportunity for third-party providers to deliver a sustainable alternative. Where it isn't commercially viable, a predictable, dependable provider working under regulation to give fair access to all operators is a sensible, modern approach. We should keep it that way.

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