Regulated prices in the connectivity industry generally result in less investment. Pricing freedom, on the other hand, tends to lead to more investment. That was true in the U.S. market and seems to be shaping up in the U.K. market as well. U.S. policy, early in the wake of the Telecom Act of 1996 focused on robust wholesale pricing.
Wholesale discounts as high as 40 percent encouraged lots of new competitors to buy wholesale capabilities, while also leading the providers of facilities to complain that they had few incentives to invest robustly in optical fiber infrastructure, given the existence of robust mandatory wholesale policies.
“We currently do not expect to introduce cost-based price controls (on new fiber to the premises) facilities until at least 2031,” said Ofcom.
That is expected to lead to faster investment by OpenReach and BT, since a higher return is possible.
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