Ofcom, the U.K. communications regulator, hasn't come to terms with BT about ways to speed up fiber to customer investments in the U.K. market. Up to this point BT has objected to earlier proposals that would have applied relatively robust wholesale requirements to new optical access plant. Perhaps there is new hope for some compromise that reassures investors, speeds up fiber deployment and yet offers some hope of a return. Around the world, fiber to customer deployments seem poised to accelerate, but both competitive providers such as Illiad in France and Verizon in the United States have been punished by the financial community for daring to proceed with such deployments, which are costly, no doubt. U.S. cable companies have the same problem. Every time there is a hint that capital spending plans might intensify, equity values get hit. Comcast appears to be under that cloud as well at the moment.
Irrespective of the competitive elements of such decisions--obviously the providers making the investments want to keep the rewards, if they can be had--these networks can only be built by private capital. And private capital keeps making clear concern about the payback, whether those investments are made by cable companies, incumbent telcos or competitive providers.
At this point it is a simple fact that the investment framework has to reassure the capital markets. Yes, competition is desirable. But that has to be balanced against capital markets that actually loathe competition. Let's hope Ofcom and BT can thread this needle.
