Openreach War Ends, Now Market Decides

The war over Openreach (functional or structural separation) is over. BT and Ofcom have reached agreement on a long-term regulatory settlement that will see Openreach become a distinct, legally separate company with its own board, within the BT Group.

In a sense, the disagreements have centered less on the “wholesale” approach (that was never in question) but only on the amount of possible favoritism Openreach might show to BT, compared to all the other wholesale customers. The new arrangement loosens, but does not break, the ties between Openreach and BT. Openreach is an independent company within the BT Group.

To the extent that facilities-based fixed network competition exists or expands, it will come from cable TV companies who rely on their own networks, using different technology standards. Longer term, facilities-based competition will come from mobile networks (5G in fixed mode) and possible other platforms. In fact, mobile substitution already seems to be growing.

Beyond that, we still do not know the extent to which other platforms will prove to have scale (power line, balloons, satellites in low-earth orbit, drones, Wi-Fi). As Openreach starts to build more fiber-to-home facilities, it is likely the shares of “fastest” access will change. Up to this point, cable operators have supplied a disproportionate share of such lines.

That has been true in the U.S. market as well, which chose to rely on facilities-based competition rather than wholesale.


Fiber-to-home will be important if Openreach has to compete head to head with cable networks, which already have technology to reach gigabit speeds without plant upgrades, and have suppliers working to boost speeds into the 10 Gbps range with plant modifications.

Distance to cabinet (metres)
Estimated downstream connection speed
Estimated upstream connection speed
Cumulative %'age of premises at this distance
100m
100 Mbps
25 Mbps
5%
150m
80 Mbps
20 Mbps
10%
200m
65 Mbps
18 Mbps
20%
300m
45 Mbps
17 Mbps
30%
400m
42 Mbps
16 Mbps
45%
500m
38 Mbps
15 Mbps
60%
600m
35 Mbps
14 Mbps
70%
700m
32 Mbps
11 Mbps
75%
800m
28 Mbps
10 Mbps
80%
900m
2 5 Mbps
9 Mbps
85%
1000m
24 Mbps
8 Mbps
90%
1250m
17 Mbps
5 Mbps
95%
1500m
15 Mbps
4 Mbps
98%
source: Thinkbroadband
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