This is a response to Chris Barton's column "Telecom's new monopoly".
The UFB initiative provides incentives to encourage competition and innovation including capped pricing for 8 and a half years, binding open access rules from day one, full regulatory scrutiny, competition from cable networks in some geographic areas, competition at the wholesale layer 2 for fibre and, over the medium term at layer 1 on the fibre network (from physical unbundling from 31 December 2019). UFB transaction documents with Telecom commit it to promoting fibre, innovating and supporting efficiency on the fibre network, and provide checks and balances to ensure these terms are being met.
UFB contracts require the partners to commit to funding their entire part of the network build - this means that they need to borrow or raise funds based on the entire construction period.
This introduces significant risk for them. It involves predicting likely demand, which is challenging in a nascent market.
It does not protect partners from the risk of end users churning off the network, or from other businesses (including variation in the cost of construction). These risks remain substantial.
