A huge decision soon will have to be made by Ofcom, the U.K. communications regulator, about the business framework for fiber-to-customer networks. Basically, it all boils down to one question: What is the best way to stimulate investment in those networks?

 

And the outlines seem clear: Ofcom wants to craft a framework that allows BT (News - Alert) to make money while preserving wholesale access for competitors. That will be an interesting balancing act.

 

"We are very clear that if operators are going to make investments in new infrastructure, investment that is inherently more risky than developing the existing infrastructure, then they need to know that the regulatory framework will allow them to make and keep a rate of return that is commensurate with the risks they are taking," Ed Richards, Ofcom chief executive, says.

 

"And they need a time horizon that gives them a degree of assurance for a realistic period in the future; that they know for example that the regulator will not suddenly change the rules of the game to reduce the returns just as the rewards for the risk start to flow in," says Richards.

 

"Ofcom favors 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," says Richards.

 

So Ofcom is launching a new round of policy discussions in the fall of 2008 about regulatory policy governing fiber-to-customer networks.

 

It will be a big deal.