Openreach engineer laying fibre broadband cable
© BT

Telefónica has stepped up the pressure on Ofcom to stimulate more competition in the British broadband market, claiming that the UK is being left behind in the laying of fibre-optic cables. 

Mark Evans, chief executive of Telefónica UK, which trades as O2, said he was “puzzled” Britain was so far behind Spain in the provision of fibre lines running directly to the home, given it is a larger economy. “I am bemused about where we are. I put that down to the state of competition,” he said. 

Spain is expected to have run fibre lines to 70 per cent of the country’s premises by 2017 with Telefónica, Orange and Vodafone all investing in their own cables. BT owns Openreach, which controls the national broadband network, and has instead put its weight behind a technology called G.fast that uses copper as a more cost effective way to speed up the country’s broadband. It will deploy full fibre to connect business parks and high streets. 

Sources close to Telefónica said that Sharon White, chief executive of Ofcom, led a delegation to the company’s Spanish headquarters last month to hear how Spanish regulators had boosted investment in full fibre. Networks in Spain were told four years ago that there would be no regulation applied to services offering speeds of more than 30 Mbps, which prompted a flurry of investment in fibre from both the incumbent and its challengers. More than 20m homes and businesses can now connect to a fibre-to-the-home network.

Companies including Sky and TalkTalk have called for BT to be broken up so that Openreach can concentrate on rolling out fibre independently of its parent’s consumer-facing activities. BT has resisted that push, but remains in talks with Ofcom about how better to ringfence the unit.

Yet Telefónica executives questioned whether the pressure on BT to improve Openreach’s independence would translate into more investment in fibre. “They think imposing more controls on BT will increase fibre in the UK. I don’t believe it,” said one source.

Ofcom has laid the groundwork for a third fibre network provider to emerge by reviving plans to open up Openreach’s network of ducts and poles to other companies.

O2 has not been vocal about its views until now, but called for more competition in providing fibre connections needed to connect mobile phone masts. Mr Evans said it was “ironic” that Ofcom had participated in the move to block Three’s takeover of O2 on the basis that the UK needed four mobile operators to preserve competition, but that there are only two significant players in fibre — Openreach and Virgin Media.

The mobile operator reiterated its call for a spectrum cap to be applied so that Three and O2 can better compete with BT’s EE and Vodafone, which control 70 per cent of the nation’s airwaves. 

“Spectrum is the blood in our veins and they have more blood,” said the Telefónica source.

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