Last week saw the publication of Francesco Caio's Final Report into Next Generation Access which was commissioned by the Government in February [link to the full document on the BERR website here].

Whilst provision of residential networks is not currently part of Geo's core business, the implications of the move to a more developed broadband infrastructure in the UK are critical to Geo's business customers and overall levels of demand over the next few years. Here is our reaction to some of the Report's recommendations.

The Positives

The Report contains a sensible list of initiatives for Government and Ofcom to take to encourage private investment in next generation access. In particular, we would support:

1. Initiatives to lower the cost of build-out; 2. The adoption of open access network models at the infrastructure level; 3. Establishing common standards for local open access networks (especially those being funded by public money); and 4. Reforming the business rates system.

The Report adopts the data about build-out costs from the recent Broadband Stakeholder Group's report [web link needed here] without further enquiry or debate. The cost and other assumptions in this related report need a lot more work by the industry and Ofcom, who are due to complete their own survey.

Open access network models at the infrastructure level are, in our view, essential to the long-term future of a competitive broadband economy. This is exactly the model which Geo developed for its core business when it launched in 2004 and is the model we have developed with the Welsh Assembly Government for their £30m investment in a new fibre network in North Wales (FibreSpeed) that we are in the process of building for them (launches Jan 2009).

Geo supports regulation to mandate that the owners of existing or new optical fibre networks are compelled to offer access to that fibre to other service providers so they can in turn offer services to their customers. A competitive wholesale market (at the infrastructure level) is key to the development of the broadband market. History has shown that if those network assets are limited to the primary benefit of the company that owns them, their full value is not realised.

Reforming the business rates system (as it is applied to optical fibre cables) also represents a real opportunity to encourage investment in the deployment and use of new fibre. Fibre and copper cables are currently treated differently creating barriers to investment for fibre to the home - Government should either remove the tax or make it simpler and equivalent between copper and fibre.

Caution Needed

The Report has continued to suggest that alternative ducting methods are an important part of the overall solution. Whilst they may have a role to play, caution is needed here. As the operator of the capital's sewer-based optical fibre network and a 3000km national network built next to the main gas pipeline network, Geo has direct experience of running these types of networks.

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