Ofcom has published its Telecoms Access Review (TAR) consultation which sets out how it proposes to regulate for the period 2026-31.
James Robinson, Senior Analyst at Assembly Research comments:
“The TAR, Ofcom's most important telecoms market review, has seen more pages of submissions than perhaps any that have gone before it. This reflects just how much is riding on achieving a stable and predictable regulatory environment for Openreach, as well as a commitment to competition for altnets. Having signalled its intent publicly over the past two years, Ofcom's proposals come with few surprises and we expect only limited change between now and the March 2026 statement. In our view, Ofcom is right to stay the course halfway through what was always sold as a 10-year pro-investment framework. A commitment to the regulatory enablers and fair bet even beyond 2031 will buoy fibre builders, and crucially their investors.”
In summary:
Straying from the path set out in the 2021 WFTMR would have been surprising and wrong at this stage in the development of the fibre market. Ofcom’s proposals reflect a commitment to the regulatory enablers and the fair bet, as well as the ongoing objective to promote effective network competition. Maintaining the stability of the last review that saw significant investment also aligns with the Government’s desire for growth and competitiveness.
Ofcom has listened to all stakeholders, including some more radical suggestions, but its preliminary decision to champion stability is the right one given the uncertainty for the future. Proposals to maintain PIA regulation and extend QoS standards to fibre are appropriate, if expected, as is its caution in determining areas having already developed ‘established competition’.
Openreach’s wholesale pricing, especially regarding discounts, has proved particularly contentious. Altnets may be disappointed not to see Ofcom propose a price floor, although requiring a longer notice period without prohibiting further Equinox offers seems to strike a appropriate balance between ensuring stronger safeguards without preventing competition on the merits.
The regulator has correctly focused on the principle of preserving competition over protecting specific competitors. Despite acknowledging the fragmented nature of the market, it was never Ofcom’s role to protect any one operator or business model – instead it was to give altnets an opportunity, but not a guarantee, to succeed. However, given the likelihood of at least some altnet failure in the future, Ofcom and DSIT should resume talks about preparing for a worst-case scenario.
It is inevitable that the UK’s fibre market will see consolidation, although it is unclear whether this will mean an orderly flow of deals, a fire sale of distressed assets or a combination of the two. Post-2031 (the next review) is when we expect to see scope for more substantial change to the regulatory framework, with cost-based pricing and the identification of competitive areas likely to be priority issues for Ofcom.
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