Report states that Labour’s proposed boardband plan greatly reduces network competition, both now and in the future, which is likely to have a negative impact on quality, choice and innovation.
The Future Telecoms Infrastructure Review was announced in the Government’s Industrial Strategy, with the aim of examining the market and policy conditions that will enable greater investment in future telecoms infrastructure at pace. The Review addresses key questions that could affect the evolution of the UK’s digital infrastructure such as the convergence between fixed and mobile technologies, and the transition from copper to full fibre networks.
The report, produced by Frontier Economics for DCMS, looked at various models for increasing deployment of broadband in the UK. The models considered were:-
- Enhanced Competition model
- National monopoly model
- Franchising of regional licences
National monopoly model, as proposed by the Labour Party– this model could, in principle, deliver 100% coverage, support nationally uniform prices and result in lower deployment costs (as there is no network duplication). However, this model also has drawbacks: □ It greatly reduces network competition, both now and in the future, which is likely to have a negative impact on quality, choice and innovation. While dynamic efficiencies associated with innovation may be less pronounced in other utilities (such as energy and water), telecoms sector is strongly driven by technological innovation. Reducing network competition could be detrimental for quality and choice in the future;
- The model involves a significant departure from the current approach, raising a number of issues related to implementation: it will require a new legal/regulatory framework, compensation mechanisms for acquiring existing altnet FTTP assets, and is highly likely to require a lengthy implementation phase. There is also a case that the national monopolist should be restricted from offering retail services, as in the New Zealand case, which would likely further add to the implementation period;
- Competitive tendering is unlikely to work effectively in this case, as it is not clear at this stage that there are credible contenders, apart from Openreach, to deliver this model. In the absence of an effectively competitive award process and ongoing benchmarking of the monopolist’s performance, it may be difficult to incentivise BT to deploy FTTP networks rapidly and efficiently. The evidence from Australia, where a similar model, has been implemented, is very mixed on the merits of such a model;