A long read – Forging our Full-Fibre and 5G Future

The Government has announced the conclusion of its Future Telecoms Infrastructure Review. The Review which was announced in the Industrial Strategy sets out the targets and overall policy framework for the sector for the next 15 years.

The headlines are a confirmation of the Government’s targets for full fibre coverage to reach 15 million premises by 2025 and full coverage by 2033, with 5G coverage by 2027. The targets and accompanying policy shifts – in particular the change in competition models – mark a significant evolution in the Government’s approach.

Commenting on the publication of the report the BSG’s Chair, Richard Hooper CBE, commented “The BSG welcomes the Government’s publication of its Future Telecoms Infrastructure Review and is pleased to be playing a useful role in barrier-busting in implementing fixed and mobile networks, and in PSTN switch-off which is the important precursor to fibre switchover.”

Fixed

The Review marks a significant shift towards greater emphasis on infrastructure competition, justified by the Government’s analysis of ultrafast deployment in Australia, France, Germany, New Zealand, Spain and Sweden.

Outlined below is Government’s estimation of how coverage can be delivered in particular areas. It should be noted that the c33-83% of coverage is particularly variable dependent on the number of competing networks – in this instance too much competition/overbuild in the first 33% will have a negative impact in the second area.

In total, the Review outlines the costs of this is in the region of £30bn. These figures haven’t changed much since the BSG’s work in 2008 given that the majority is due to civils work (ie digging the hole). Government also believe that access to capital is not the issue – but ensuring efficient investment is. Therefore, realizing this ambition will require getting 5 things right:

1. Making the cost of deploying fibre networks as low as possible by addressing barriers to deployment, which both increase costs and cause delays;
2. Supporting market entry and expansion by alternative network operators through easy access to Openreach’s ducts and poles, complemented by access to other utilities’ infrastructure (for example, sewers);
3. Stable and long-term regulation that incentivises competitive network investment;
4. An ‘outside in’ approach to deployment that means gigabit-capable connectivity across all areas of the UK is achieved at the same time, and no areas are systematically left behind; and
5. A switchover process to increase demand for full fibre services.

A more detailed list of actions that the Government intends to take is outlined at the bottom of this page. However, the Government has followed through on the recommendation of the National Infrastructure Commission to employ an ‘outside-in’ approach. This is focused the final c10% that will require subsidy and over which Government has the greatest control. It has already identified £200m within the existing BDUK Superfast Programme that can further the delivery of full fibre deployment (in practice this is accelerating what is already underway). However, it is also clear that this area will require somewhere between £3-5bn in public subsidy. The Review is quiet on where this funding comes from but given the Chancellor’s support it will be worth watching the Autumn Budget for more information.

5G

The Government wants the UK to finalise the rollout of the 4G network taking it from the current 87% reach to 95% by 2022. For 5G, it is targeting that the majority of the population have a 5G signal by 2027. The Review recognises that the roll out for 5G will not follow the same path as previous mobile generations and expect to see phases of deployment – with a low capacity layer providing wide area coverage (700 MHz band), high capacity for high demand areas (3.4 – 3.6 GHz) and mmWave bands providing for very high capacity hot spots.

The Review examines three potential future market models to most ably promote 5G investment and innovation: the current model, a single national wholesale network (a shared network pooling spectrum and operating on a wholesale service to MNOs) and the Government’s preferred market expansion model (expanding on competition between multiple networks with a ‘neutral host’ infrastructure and private networks.

Government also highlights the measures is has taken to make it both easier and cheaper to deploy mobile infrastructure and what future steps its believes might be necessary. Many of the potential obstacles were highlighted in a report prepared by Analysys Mason and published last week for the BSG on ‘Lowering the Barriers to 5G Deployment’.

The Government, in line with the National Infrastructure Commission’s 5G Report recommendation, recognizes that more flexible spectrum licensing might be needed to allow for the innovative services and new investment models of 5G. Spectrum sharing models could facilitate a greater number of services and address the specific connectivity challenges of the high frequency bands and potential for a resulting low geographic spectrum efficiency. The Government intends to ask Ofcom to report on spectrum utilization in the mobile bands so as to identify where potential for spectrum sharing exists.

Convergence

5G is often referred to as a fibre network with a wireless interface. There is some truth to this but importantly there is also increasing similarities between how fixed and wireless networks look from a network viewpoint. Government has signaled a short term point – unrestricted access to Openreach’s infrastructure (currently just for domestic broadband) to allow MNOs to take advantage of it for wireless backhaul – and a longer term issue which might signal a greater regulatory change. This is the potential for unified market reviews for ‘access’ networks rather than currently looking at fixed and wireless markets in isolation. Niche but one to keep an eye on.

Key recommendations and actions from the FTIR:

• New legislation that will guarantee full fibre connections to new build developments;
• Providing Operators with a ‘right to entry’ to flats, business parks, office blocks and other tenanted properties to allow those who rent to receive fast, reliable connectivity, from the right supplier at the best price;
• Reforms to the regulatory environment for full fibre broadband that will drive investment and competition and is tailored to different local market conditions;
• Public investment in full fibre for rural areas to begin simultaneously with commercial investment in urban locations;
• An industry led switchover (from copper to full fibre) coordinated with Ofcom;
• A new nationwide framework which will reduce the costs, time and disruption caused by street-works by standardising the approach across the country;
• Increased access to spectrum for innovative 5G services
• Infrastructure (including pipes and sewers) owned by other utilities such as power, gas and water, should be easy to access, and available for both fixed and mobile use;
• Ofcom to reform regulation, allowing unrestricted access to Openreach ducts and poles for both residential and business use, including essential mobile infrastructure;
• Alongside the FTIR, Government has also published a Digital Infrastructure Toolkit which will allow mobile networks to make far greater use of Government buildings to boost coverage across the UK.