UK - Ofcom sets outs plan for regulation of gigabit connectivity

Ofcom has published a set of proposals to update and refine the regulatory framework governing UK fixed telecoms markets that underpin broadband, mobile and business connections for the period 2026 - 2031.  The consultation entitled - Promoting competition and investment in fibre networks: Telecoms Access Review 2026-2031 Consultation: Promoting competition and investment in fibre networks: Telecoms Access Review 2026-31 - Ofcom - is open until 12 June 2025 (TAR).  The TAR aims to promote investment in gigabit-capable networks.

The TAR builds on Ofcom’s strategy, initiated in 2016, to promote investment in gigabit-capable networks through network competition where this is viable. Investment in faster, more reliable, future-proof networks directly benefits consumers and businesses that use these networks for work, accessing public services and entertainment as well as drives economic growth.  

The TAR refreshes the measures put in place in the previous Wholesale Fixed Telecoms Market Review 2021 which runs until 2026.  Since 2021, the UK’s coverage of gigabit-capable networks has reached 25 million premises (83%), with 20.7 million premises (69%) now having access to full-fibre broadband, reflecting significant investment by Openreach and multiple alternative network providers (altnets).  Over 70% of UK premises now have access to at least two networks and 22% of premises have access to at least 3 networks.  However, Ofcom notes that further investment is still needed to deliver gigabit connectivity across the UK as well as measures to stimulate continued full fibre take up by consumers.  

In addition to measures designed to promote continued fibre investment the TAR also addresses business connectivity (leased line services) used by businesses to support access to the internet and cloud-based services as well as by communication providers to provide connectivity as part of their networks.  It also covers inter-exchange connectivity used by communication providers to connect with BT exchanges.  

Ofcom proposes to continue to regulate BT and proposes a range of remedies across a number of markets to provide regulatory stability, maintain incentives for investment and network competition.  The key measures, include:  

• Access to Openreach ducts and poles – require Openreach to continue to allow network operators to deploy and operate their own fibre networks using its infrastructure through Physical Infrastructure Access (PIA).  Openreach will be subject to non-discrimination obligations as well as pricing remedies.
• Wholesale broadband access remedies – notwithstanding continued fibre investment, Ofcom considers that regulation is still required and proposes to maintain price controls and set flat, inflation-adjusted charge controls, on basic superfast broadband products (80Mbit/s download speeds) with more flexible pricing for higher-speeds.  Ofcom also proposes to maintain restrictions on Openreach’s ability to set geographic discounts to mitigate overbuild risk as well require Openreach to give 120 days’ notice of commercial terms as well as provide guidance on related terms.  
• Copper switch off – to support the migration to full-fibre and the replacement of copper networks, Ofcom proposes progressively to transfer regulation from copper to full-fibre services as well as facilitating exchange exit.
• Leased lines and business connectivity – these services have been subject to differing levels of regulation depending on the level of network competition with the central London area deregulated in 2021.  Ofcom is maintaining its deregulated approach to the central London area but proposes to continue to regulate other areas where there is more limited network competition (referred to as High Network Reach areas, Area 2 and Area 3) and set differing remedies depending on the level of network competition and whether there is likely to be potential for material and sustainable competition. 
• Internet Exchange Connectivity – Ofcom proposes to deregulate exchanges where there has been an increase in competitor presence (where Openreach faces 2 or more competitors).  In other exchanges, Ofcom proposes to require Openreach to provide dark fibre with prices set to reflect reasonable costs as well as provide active price-controlled IEC services. 
• Quality of Service (QoS) Obligations – Ofcom propose to maintain existing rules governing repair and installation with adjustments to reflect full-fibre deployment. 
• Investment certainty – Ofcom has signalled that beyond 2031, it would expect to continue to regulate in a way that continues to support investment and sustainable competition.  If there is a need to move to cost-based regulation of Openreach in the future, it will honour the fair bet principle. This means that in setting any price controls, it would expect to allow BT to keep the upside (i.e. returns in excess of its cost of capital it has earned up to that point), as well as ensuring it can earn its cost of capital going forwards. This means that BT would have the opportunity to earn a return above its cost of capital over the whole fibre investment cycle.

Ofcom’s TAR proposals signal a firm commitment to promoting long-term investment in gigabit-capable connectivity and bolstering network competition.  By reinforcing key obligations on Openreach, introducing clear pricing and QoS measures, and enabling a smoother transition from legacy copper infrastructure, Ofcom aims to ensure that the UK remains at the forefront of broadband innovation.  Final decisions are anticipated in March 2026.  The consultation is open until 12 June 2025.

For more information, please contact Anthony Rosen