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UK fibre providers oppose Ofcom's dark fibre plan

CityFibre, euNetworks, Virgin Media and Zayo – all significant private investors in UK digital infrastructure – have formed an industry group to campaign for a regulatory regime that encourages investment and infrastructure competition.

The Infrastructure Investors Group (IIG) has been formed ahead of the anticipated publication of responses to Ofcom’s Business Connectivity Market Review. The review proposes, amongst other things, that BT must supply access to dark fibre in areas where the market is uncompetitive (see Ofcom says BT must offer rivals access to dark fibre).

Ofcom says the measure is designed “to ensure that businesses have effective choice, and to encourage competition and innovation”. However, the IIG’s members say that such measures are unnecessary and could even harm investment in fibre infrastructure.

The group points to their ongoing investments as evidence that the market is already competitive.

Virgin Media’s £3 billion Project Lightning is the most prominent of the group's ongoing investments, while CityFibre’s programme of Gigabit City roll-outs is gathering pace (see, for example, CityFibre and Peterborough seal partnership on Gigabit city roll-out). In addition, both Zayo and euNetworks have invested large sums in network projects in the US and Europe, and are looking to expand their UK footprints with further major capital investments.

The collective capital in new infrastructure projects will result in a significant economic stimulus to the UK that is expected to vast exceeding the investments themselves, the group asserts.

The Internet economy is expected to contribute £180 billion to the overall UK economy in 2015, up from £120 billion in 2010, according to a recent report by the Boston Consultancy Group. At 10 per cent of gross domestic product (GDP), this is a larger percentage than in any other G20 country.

Sustaining these investments is essential if the UK maintain is to maintain its lead as a digital nation, the group says. The implication, of course, is that a regulatory environment that reduces the firms’ “appetite for investment” could damage the wider UK economy.

Mark Collins, director of strategy and public policy at CityFibre, explained: “The debate is about where further regulatory intervention is required. The BCMR proposes additional layers of regulation on BT, in particular at the passive networks for dark fibre. The IIG members feel is this additional layer of regulation is not justified and that Ofcom have not undertaken sufficient analysis before making their proposals.”

Regulation cannot replace the genuine investment incentives that result from infrastructure competition, the group asserts. However, it can create a pro-investment framework that will support efficient investment in innovative and effective network infrastructure. This is the aim of Ofcom’s overarching strategic review, which has not yet been published. The IIG suggests that the BCMR be considered in light of the overall strategic review and not as a separate process.

Collins added: “The material benefits of healthy infrastructure competition are clear. We must ensure a level playing field for pro-competitive fibre investment. This is essential if we are to provide a credible alternative national infrastructure and unleash the technological and economic benefits our investments bring to our towns and cities.”

David Howson, president of Zayo Group's international business division said: “It is an exciting time in the UK fibre market with a strong need and demand for new networks driven by the explosive growth of broadband, mobile and cloud-based services. Along with the other members of the IIG, Zayo is investing significant amounts of capital to build out our network specifically to accommodate the needs of this new network demand dynamic. We share the IIG’s belief that a clear, open and competitive market is the best environment to continue to encourage this type of long-term investment in the UK, to the benefit of all.”

The IIG is open to membership from other communications providers with similar goals.

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