Friday July 4, 01:50 AM
Call to encourage broadband investment [at Financial Times]
By Ben Fenton, Media Correspondent
Companies that build the next generation of superfast broadband must be enabled to make sufficient money from their investments to justify the risks, the broadcasting regulator said on Thursday. Ed Richards, chief executive of Ofcom, announced
a new determination to create a business environment friendly to the development of optical fibre networks that would allow broadband speeds of up to 100 megabytes per second, compared with present rates of up to 20mbs.BT (LSE: BT-A.L - news) , which analysts believe is the company most likely to make the investment - reckoned at about £10bn ($20bn) - has expressed concern that it will not be allowed to make enough money, as it is unlikely to have exclusive use of the network. In a speech to industry executives in London, Mr Richards said that superfast broadband was crucial to the UK's future. "Here as much as anywhere we need to ensure that there is a healthy environment for investment - which can support, in turn, competition and innovation. "Our position is clear. 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." He said Ofcom was clear that if operators were going to make investments in new infrastructure - which was inherently more risky than developing the existing broadband network - then they needed to know that the regulatory framework would allow them "to make and keep a rate of return that is commensurate with the risks they are taking". Mr Richards told the Financial Times: "This is a step-change in our activity, it is a step-change in our determination to get the issues on the table and work with industry to resolve them." "That's why I will be writing to the chief executives of all the major companies to establish a concerted dialogue." Next generation networks will form part of the critical infrastructure of the country's economy and will be central to the way we live our lives in the future, Mr Richards said, with superfast broadband radically changing perceptions of communications. "Alongside mobile broadband, it will, in time, have a similar impact on our society and economy as the first generation of broadband." Ian Livingstone, chief executive of the BT Group, said in a statement: "We welcome Ofcom's comments and commitment to removing the barriers to making a return from next generation broadband." Martin Mabbutt, telecoms analyst for Nomura, said: "This is a reversal of the normal pattern for regulators because here they are having to persuade people to do things rather than ordering them not to do things."
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