Broadband speeds must be faster, says Ofcom
on July 4th, 2008 at 10:49 amTelecoms regulator Ofcom has called on fixed line operators like BT and Virgin Media to offer much faster broadband speeds and has promised to let them make a return if they make the necessary heavy investments.
With the UK under pressure to offer faster download speeds to remain competitive, Ofcom chief executive Ed Richards told a trade conference that industry leaders should accelerate the roll-out of super-fast broadband across the UK.
“Ofcom favours a regulatory environment for the next generation of networks and access that both allows and encourages operators to make risky investments, to innovate for the benefit of consumers and, if the risks pay off, for the benefit of their shareholders too,” said Mr Richards.
“We are very clear that if operators are going to make investments in new infrastructure, investment that is inherently more risky than developing the existing infrastructure, then they need to know that the regulatory framework will allow them to make and keep a rate of return that is commensurate with the risks they are taking.
“And they need a time horizon that gives them a degree of assurance for a realistic period in the future; that they know for example that the regulator will not suddenly change the rules of the game to reduce the returns just as the rewards for the risk start to flow in.”
His comments provided relief to BT, whose shares rose 5.75 to 212.75p on the news. “We welcome Ofcom’s comments and commitment to removing the barriers to making a return from next generation broadband,” said BT chief executive Ian Livingston.
BT shares have come under pressure over fears that the company could risk billions of investment in new broadband networks without regulatory certainty about its ability to make a return.
Mr Richards also suggested that the rapid take-up of mobile broadband services – whereby people access the web on mobile phone networks using laptops and USB modems – would add pressure on fixed line operators to upgrade their networks and offer superior speeds.
