Kroes suggests raising copper prices to support broadband rollout

By Derek du Preez
29 Nov 2011 View Comments
BT Infinity broadband screenshot

The European Commission will allow ISPs to raise the price of their old copper infrastructure to support fast broadband rollout.

Neelie Kroes, Commission vice president for the Digital Agenda, told the European Competitive Telecommunications Association that the low price of copper means consumers are less likely to take up fibre, also referred to as next-generation access (NGA).

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"Our target is to ensure that markets know that NGA investment can be profitable for the long term," said Kroes.

"We are looking at whether copper prices could be gradually adjusted after a certain time. If wholesale and retail prices for NGA products were met by prices of copper products for a transitional period, operators would be more likely to invest.

"We should not forget that, in some places, copper and NGA are in a close competitive relationship. Where consumers haven't yet seen what fibre offers, they might still be unwilling to pay a premium."

The proposal will mean higher prices for businesses and consumers, at least in the short term, but Kroes believes fibre deployments will become more attractive to ISPs if the price of copper is raised.

"Where there is a firm and credible commitment to investing in NGA, it may be appropriate to increase copper access prices," said Kroes.

"They could act as an anchor for higher returns on fibre. That is the first plank of the approach we are exploring."

The UK is currently grappling with the problem of how best to stimulate investment from ISPs.

It was revealed last week that Geo Networks has pulled out of the Broadband Delivery UK (BDUK) framework, a list of suppliers chosen to deliver broadband at a local level, as it believes BT charges too much for access to its ducts and poles.

Communications regulator Ofcom stipulated that BT has to open up its infrastructure to other ISPs in the hope that it will drive investment in hard-to-reach areas. However, there have been ongoing disputes about the charges involved since the announcement in October 2010.

The government pledged £530m last November to ensure that 90 per cent of households in each local authority can access fast broadband as part of its Comprehensive Spending Review.

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