Ofcom threshold reduction

Ofcom is to reduce the second threshold qualifying target from 100% of an exchange area to 90% from April 2029. Ofcom Statement available from here, also reported on TBB and ISPReview news today.

It seems to me that this reduces OR's incentive to build out the final 10% in many cases. Where the reason for leaving an area is that there is already an established altnet or nets, then this may reduce wasteful overbuild. But in cases where the reason is cost, then OR may decide to be content with the 90% and just leave the rest to sink or swim on an increasingly unreliable copper connection (or pay through the nose for MuskNet). I'm guessing that in a lot of places that FTTP doesn't reach, 4G/5G isn't too clever either.

If there is a significant ADSL cohort remaining, then the Exchange closure program may compel them to do more. But VDSL doesn't need the local exchanges and could persist for many years.

And isn't this just kicking the can down the road? Sooner or later the residual copper network will become unmaintainable, and will have to be retired. What will happen to the unlucky 10% then?

There will doubtless be situations up and down the land, where there are premises that either:

1. Cannot get FTTP and therefore the only option for them is to stay on copper
2. Are covered by FTTP but choose not to move away from copper

For the folks in the first camp, my understanding is that they will have a regulatory price cap protection, for however long their property is only served by copper.

For folks in the second camp...at some point they will have to be encouraged to move, and the best encouragement is usually to make it too expensive to stay.

As for Openreach being disincentivised to build out the final 10% - why would they be? If the majority of their estate now has fibre based access, why keep copper if it is more expensive and costly to repair and upkeep? Again that may come down to being prevented from installing FTTP (say in an apartment / MDU situation where the building owner refuses) or it is simply not economically feasible for the network to build there.

I'd expect the incidence of both of these to reduce as time goes by. How quickly though is the wet finger in the air.

This decision is about the second threshold - the one where copper price controls end, allowing Openreach to price people off of copper. The first threshold is 75% FTTP coverage, which lets Openreach move an area to FTTP Priority (no new copper orders accepted except by exception). The second threshold moving to 90% FTTP coverage from April 2029 is what Ofcom consulted on; Ofcom felt that the alternative of requiring every unserved premises to be allocated to a defined exception category imposed an excessive regulatory burden.

Openreach will need to reach a third threshold to remove their copper regulatory obligations in an area, which Ofcom has not yet started to define and is unlikely to become available before April 2031. The third threshold must be reached in an area for Copper Retirement to take place.

It seems likely that the third threshold will follow the same "minimum notice period of 12 months, minimum of 24 months since the previous threshold regime started in the area" regime as the second threshold.

As I said in my first reply, this decision confirms Ofcom's proposal that the second threshold, which will remove copper price controls, will be set at 90% FTTP coverage, rather than 100% FTTP coverage less any premises that Openreach can put into a defined exception category (defined exceptions was the alternative, non-preferred proposal that seemed likely to impose too high a regulatory burden on Openreach). I cannot remember who, among those who cannot get Openreach FTTP, will be exempt from copper price rises under the second threshold regime.

A third threshold, yet to be defined by Ofcom and not expected until at least 2031, will remove Openreach's regulatory requirements relating to copper in an area, allowing Openreach to undertake Copper Retirement. Openreach will want to reach this threshold in the Exchange Exit areas as quickly as possible. BT Group sold and leased back the exchanges, giving Openreach a strong commercial incentive to exit exchanges it does not intend to retain before the current leases run out in the mid-2030s. Because Copper Retirement and subsequent Exchange Exit activities will take time, and the third threshold will likely use the same "12 months' notice and at least 24 months since the previous threshold was reached" regime, Openreach will want to move areas through the thresholds as quickly as possible.

My understanding is that Openreach's strong commercial incentives to proceed with Exchange Exit and retire the copper network (allowing recovery of cables for recycling and the cessation of copper network maintenance) in all areas mean Ofcom does not need to resort to heavy regulatory measures to get Openreach to proceed with FTTP infill (including addressing DIG areas, currently unserved MDUs, and fibre spine extensions into areas that were commercially unviable earlier in the FTTP rollout).

In reply to a post by David_W2:

I cannot remember who, among those who cannot get Openreach FTTP, will be exempt from copper price rises under the second threshold regime.

It's in their statement here.

3.6 (d) those premises are passed with Openreach FTTP (if they are not, price control
regulation continues to apply to the anchor copper service at those premises);

Reading just that statement it sounds like that means an MDU with fibre in the street outside but blocked from internal build by the landlord becomes exempt from copper price controls. If that's the case then I agree with it.

In reply to a post by Pheasant:

In reply to a post by David_W2:

I cannot remember who, among those who cannot get Openreach FTTP, will be exempt from copper price rises under the second threshold regime.

It's in their statement here.

3.6 (d) those premises are passed with Openreach FTTP (if they are not, price control
regulation continues to apply to the anchor copper service at those premises);

Thanks. That means 80/20 SOGEA (the anchor copper service) remains under price control at any premises that cannot get Openreach FTTP, even if the area reaches the second threshold. Openreach can use its copper pricing leverage in second-threshold areas only for those who can move to Openreach FTTP.

The regulatory approach is intended to increase Openreach's incentive to make FTTP available to currently unserved premises over time using a light-touch regulatory regime that allows commercial levers to promote FTTP rollout, rather than creating this incentive through more onerous regulatory action with the attendant risk that Openreach has to spend money on compliance measures that could have been spent on FTTP rollout.

In reply to a post by jpm:

Reading just that statement it sounds like that means an MDU with fibre in the street outside but blocked from internal build by the landlord becomes exempt from copper price controls. If that's the case then I agree with it.

Unfortunately, it seems that your interpretation is wrong.

The requirement for the second threshold to disapply price control is that the premises is "passed". I believe the definition of passed is that is that from Volume 7 Part A of Ofcom TAR 2026-31:

In reference to www.ofcom.org.uk/siteassets/resources/documents/consultations/state...:

“Homes passed” means premises:
i) with an active connection to the Dominant Provider’s network;
ii) with an inactive connection to the Dominant Provider’s network; or
iii) where the distribution point contiguous with the customer lead in that will
serve the end premises is connected to a node forming part of the Dominant
Provider’s network, and when services are provisioned to the end-premises
the end user would expect to pay only a published pre-agreed connection
charge, if one was to be imposed;

A premises where FTTP is available at the CBT and where Openreach would connect the premises for no more than a published pre-agreed connection charge appears to meet the third limb of the passed definition, even if the refusal of a landlord or other wayleave would prevent an installation from taking place.

In reply to a post by David_W2:

In reply to a post by jpm:

Reading just that statement it sounds like that means an MDU with fibre in the street outside but blocked from internal build by the landlord becomes exempt from copper price controls. If that's the case then I agree with it.

Unfortunately, it seems that your interpretation is wrong.

The requirement for the second threshold to disapply price control is that the premises is "passed". I believe the definition of passed is that is that from Volume 7 Part A of Ofcom TAR 2026-31:

In reference to www.ofcom.org.uk/siteassets/resources/documents/consultations/state...:

“Homes passed” means premises:
i) with an active connection to the Dominant Provider’s network;
ii) with an inactive connection to the Dominant Provider’s network; or
iii) where the distribution point contiguous with the customer lead in that will
serve the end premises is connected to a node forming part of the Dominant
Provider’s network, and when services are provisioned to the end-premises
the end user would expect to pay only a published pre-agreed connection
charge, if one was to be imposed;

A premises where FTTP is available at the CBT and where Openreach would connect the premises for no more than a published pre-agreed connection charge appears to meet the third limb of the passed definition, even if the refusal of a landlord or other wayleave would prevent an installation from taking place.

That’s could get sticky where the CBT is, for argument sake, located within a chamber within the MDU property curtilage - think groupings of low rise blocks with roads etc - where the lead-in cable comes from that existing CBT but the TMO/Leasholder/common property owner refuses actual building entry (pathways, fire regs etc, the list of excuses is endless). The CBT ports are effectively allocated but the drop cables are refused.

Around the end of last year ISTR the Govt saying they planned to make it easier for flat owners to get gigabit broadband. I think they intended to prevent landlords refusing or ignoring wayleaves for fibre installs without reasonable grounds. There was a consultation but I don't remember seeing anything more. That would have been in the Starmer years, and maybe the new broom has quietly swept it all under the carpet?

In any case it's not legislation yet, and the devil will no doubt be in the details. I'm sure m'learned friends will be looking forward to arguing endlessly about what is "reasonable" etc.