back to article Ofcom flashes cash guarantees at BT for fibre investment

The boss of Ofcom has given the clearest indication yet that regulators are ready to offer BT more control over a next generation UK broadband infrastructure in exchange for investment. In a speech in London at IT bigwig yacking shop Intellect yesterday, Ed Richards sympathised that "operators" who might invest in new …


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  1. Anonymous Coward
    Black Helicopters

    Aircraft carriers!

    Only £15 billion? I'd rather the government abandoned plans for a couple of aircraft carriers plus aircraft (to cost £16 billion) and did the infrastructure themselves. Then rent it out to ISP for a profit which would reduce my tax burden*. But I'd like nationalised post office and utilities so no chance, then!

    *Or maybe they could save up and buy a couple of aircraft carriers...

  2. Geoff Bowen
    Paris Hilton

    Why share?

    What I don't get is why BT should have to open up any fibre it lays to other service providers. This is not like the copper situation where BT inherited a nationalised infrastructure and therefore a competitive advantage, all fibre work has been done / will be done since BT became a private company and as far as I am aware, there is no real barrier to any other provider laying their own fibre that is not also present to BT.

    So can someone enlighten me as to why they cannot expect to have complete exclusivity on its use?

    Paris, as there's a real possibility I'm missing something very fundamental here...

  3. gautam


    Its just a palliative and making right noises. Dont think its gonna happen in my generation.

    Instead of Aircraft carriers, why not sell Norhtern Rock back to investors and recoup the £24 Billion and use it for FIbre optics for the whole country as a government grant? Then sell it to all comers at a nominal cost and THEN see fibre B/band take off and make UK competitive?

    That would be REALLY investing in infrastructure and established players wouldnt like it.

    Keep dreaming.

  4. Anonymous Coward

    @Aircraft carriers!

    Or we could just not host the Olympics or, since we've already spent lots of money on that and we'd just lose it, whatever the next money pit is.

    The Military is useful to the country, even if we don't immediately see the benefits. Don't take more money/equipment off them.

    An Ethernet - over- Fibre, properly routed (so local traffic doesn't end up going through London, for example), high upload/high download, uncapped, Nationalised Network with privately run ISPs tapping off it is the way we should be proceeding. 100MBPS or Gigabit fiber-based links between the Exchange and home (so no signal degradation for rural areas), Terabit fibre links between exchanges to allow a low contention ratio w/ redundant Terabit links to other exchanges to improve system up-time and to allow busy exchanges to offload some data onto less used local exchanges.

    The connection to the wider Internet would probably be a little slower than our country-wide network, but who cares- we'd have a better network than anyone else anyway!

    It may end up costing more than £15Bn but it would be pretty much future-proofed, even including a huge increase in P2P and IPTV/VOIP traffic. I mean that's a 5MB (entirely legal) song in about a third of a second or a full Blu Ray disc in about 8 minutes. Plus you'd be able to make money back by selling it to the private ISPs rather than having a government run ISP to sink more money into. You could probably sell the extra to "regular" phone companies as well.

  5. Dazed and Confused


    The problem is if the government were to try and install the network.

    The cost would escalate to £100B

    They hold lots of public enquiries

    They'd argue about what colour the bits should be

    They'd build a protype

    The prototype would be 100 years late

    It wouldn't work

    Add to that,

    You'd only be able to access it if you had a valid ID card

    You'd only be allowed to access it to access the new Labour website.

    All access would be logged. The logging process would be so slow you'd be better off on dial up via a mobile phone.

    At least it sounds like Ofcom are finally realising that no one is going to build a £15B network unless they get some assurances that they'll get their money back.

    Now they just need to stop Europe interfering.

  6. Anonymous Coward

    Already there

    It already exists, it's called Virgin Media, which used to be a multitude of companies competing with each other. Now they're merged I can't understand why they're allowed a monopoly on their network when BT are not.

    All it's done is allowed VM to rip off their customers at every turn.

  7. James Delaney

    The answer to high costs

    Put them in the sewers.

    the cables that is, of course if they never get round to sorting out a decent fibre network maybe we could put the bigwigs at ofcom down instead.

  8. Anonymous Coward
    Anonymous Coward

    8 Year payoff...

    According to the Times, the UK government is helping Pakistan out with its insurgency problem to the tune of 1 billion quid and this makes it the second largest recipient of uk aid.

    So, if we ditch one and two the whole thing could be paid off in 8 years without anyone noticing.

    >why they're allowed a monopoly on their network when BT are not.

    It's because the infrastructure is not just cable but the exchange buildings as well.

  9. AJ

    @ Anonymous Coward

    Because VM did not aquire a nationalised network originally owned by the government, they have billions of debt as a result so your missing the point on why BT have to rent out their network!

    Regardless, there is 3 companies that offer cable networks: Virgin Media, H20, and Smallword Media - where as VM & SWM have their own networks, H20 are building a network in the sewers to rent out to providers as wholesale....

    ... So if this is the case why on earth doesnt OFCOM look at the H20 option so that cables and expansion can be rolled out quicker and cover at least 95% of the UK. This would avoid BT having to start from scratch, which to be fair would be a shambles as BT is a load of rubbish anyway!

  10. Anonymous Coward

    Subsidise for a reason.

    Actually, it's probably a good idea to guarantee BT's investment (or anyone else's for that matter) provided it means that they fibre up all the under-served rural locations first, along with those places that have no wired broad band, or lousy rate aluminum, or whatever. These are expensive to connect so the operator needs encouraging. Sod the urban centres, people are already offering triplicated services there since the economics are much more favourable.

  11. Ian


    Some time ago I contacted BT regarding DSL broadband, their response was ... what is that?

    3 years ago i was working in N Ireland. The locals had to raise a petition to get DSL in the local area, BT would not provide it without a "good business case".

    The company has had the best part of 20 years income from third party telecos (prior to LLU)

    It has procrastinated over the past decade over the introduction of broadband.

    It inherited a network of exchanges and cabling infrastructure in the 80s.

    It enjoyed a monopoly status for 20 years or so, plenty of time to upgrade its existing network.

    WE USED TO OWN BT. It was sold from under us for the short term gain of one political party.

    BT is now a bunch of companies under one umbrella. BT the exchange and infrastructure people can and should plan a roll out of a Fibre network. They are still effectively a monopoly. BT the telephone people should be spun off, thaken out from under the BT umbrella. At that point fair charges can be levied equally and fairly against ALL the telecos.

    If BT refuse to upgrade the network... Nationalise it, take back what was gifted to it. (won't happen but we can dream)

  12. Nursing A Semi

    @Dazed and Confused

    You missed one,

    The contract would be given to EDS who would deliver it at two or three times the expected cost and three or four years late. It would have half the expected bandwidth and only be available for 3 hours on alternate Sundays.

  13. Trevor Watt

    @ Geoff Bowen

    Because BT also inherited all the exchanges and the ducting that the cales run in. So where a new start-up would have to dig roads up (or run in the sewers) to install the ducting, and exchanges to terminate it in, all BT has to do is pull the fiber through the existing manhole covers that are everywhere.

  14. Gavin Johnstone


    I believe what AC was meaning was that if VM are allowed to maintain a monopoly on the network that they laid why couldn't BT be allowed to maintain the same level of freedom on any new network that they lay at their own expense.

    To repeat myself a bit here....

    If BT were to spend £15B laying a new network independent of the current copper then that would not have been inherited and should be able to remain completely under their control.

    If however they'd be replacing the current network then fine, all they should be guaranteed is the ability to, at the very least, break even before control is wrested away from them.

  15. Jay Zelos

    BT's 21CN

    Don't BT already have a plan to fibre up Britian with 21CN?

    As I understand it the backbone is being done first and the main reason is cost savings to BT that they intend to pass on to the end customer, (according to the presentations).

    It seem's like Offcom is just waving a flag to say I'm here.

  16. Anonymous Coward

    @ James Delaney

    Don't put cables into sewers!


    Rats have very sharp teeth and happily chew through cables.

    Then there is the problem with servicing of sewers. Very aggressive machine is used.

  17. Hate2Register
    Paris Hilton

    High-speed broadband, AND aircraft carriers!

    Aircraft carriers are cool to watch on youtube, and they will project force or aid boxes around the world in a useful way. Superfast broadband is also cool, and needed so that Reg readers can cruise HD porn on t'internet. In the best traditions of "having my cake..", I would like aircraft carriers AND a high speed, connection. I for one would watch aircraft carriers pounding Robert Mugabe in high-def youtube glory.

  18. Watashi

    Bigger picture

    BT is getting all this money because it is the government's new pal, just like Virgin. Notice a pattern here? Government watchdog challanges Sky's ownership of ITV, and soon after, Virgin Media rolls over on P2P. BT promises to stop people using its ISP service to share copyright material and the Government turns a blind eye to Phorm and promises BT a load of cash to upgrade its infrastructure, so helping it maintain its near monopoly on ISDN broadband infrastructure (until the EU steps in, which won't be until after the next election).

    This is classic New Labour stratergy; get the private sector to run the public services so that the government can a) avoid the blame when things going wrong (eg Railtrack) and b) hide the costs of buying infrastructure for public services. The tell is in the quote: "Richards said the debate on next generation access in the UK has been "slow to ignite" because the existing copper-based broadband market is so competitive." What this actually means is that companies have been avoiding investing in new infrastructure because they would have to pass the costs on to the consumer and so price themselves out of the market. If Brown had any sense he'd have seen this coming years ago and would have paid for the inevitable cost of upgrading the system directly, instead of holding us back in comparison with other nations, only for the consumer/taxpayer to have to pay the costs (plus private sector mark-up) anyway.

    It is very easy to be a good Chancellor/PM cum economist when credit is easy to come by, when consumers have money burning holes in pockets and when the system is looking after itself. The tricky bit is dealing with the system when it breaks down, and Brown has been pretty hopless when it comes to intervening in any poorly performing market sector.

  19. Les Matthew


    "WE USED TO OWN BT. It was sold from under us for the short term gain of one political party."

    Sold? I always thought it was given away at a fraction of its value.

  20. dervheid

    BT install new cables?

    BT can't even organise the repair of a damaged cable within an acceptable timeframe, and have no appreciation of how long a job will actually take in the real world. We need to have them do the job as positively the last resort, cos it'll still not be done by the end of the NEXT fucking millenium!

  21. heystoopid
    Paris Hilton


    So now the taxpayers fund a new network that at a point in time in five years will be privatized for less then one cent in the dollar whilst the corporate sector reap the other 99.985% plus profits for no cost to themselves as their chief stockholders multiply their fortunes one hundred fold totally subsidized by the poor unfortunate tax payers too and the man in the street end user pays through the nose with their rapidly shrinking wallets how evil can that be !

    What a true bargain indeed , as a certain female would say or the ghost of Winston Churchill still stalks the land as SS Enterprise Great Britain follows the same tragic route of the RMS Titanic to it's deep watery grave as the case may be !

    Those that fail to learn the lessons in history are doomed to repeat the same mistakes in an endless mobius loop !

  22. Anonymous Coward
    Anonymous Coward

    Take another look

    >all BT has to do is pull the fiber through the existing manhole covers that are everywhere

    As you drive to work in the morning have a look at how many telegraph poles you pass then think about the investment required to either string fibre over those poles (which has a whole set of new technical problems) or replace them with UG ducting ( which is VERY expensive and at times impossible)

    Not quite the easy 'pull through the ducts' solution you think.

  23. Martin Nicholls

    Break it up..

    "all fibre work has been done / will be done since BT became a private company and as far as I am aware" - no, they're fibre, or will be to the exchange. You won't get any better unless you're a business where BT can make more profit from you by giving you IP-based services - enough hone lines = less cost for BT if you're on fibre, but you don't get lower prices, they just make more cash.

    As for the whole EC regulations thing it's all BS - the issues go away if you put it up for tender - we give you xBn, you go away and install the fibre and reap the profits under x conditions - as long as it's for tender i.e. anybody including BT and like, even comcast could come and do it there's no issue. The problem with that is OFCOM and the government like to spend as much time as possible protecting BT and it's shareholders so we couldn't possibly do that.

    You could even break the country up and put fibre up for tender - everywhere that's fibre has their BT exchange ripped out and killed, and a company could bid on certain sections and build a network, in return for certian capacity and pricing structures and even SLAs.

    Oh wait we have that - it's called the UK cable network pre-NTL. With all the bitching about NTL/VM, it's easy to forget that it's an experiment that worked well until the VM days which could be repeated if the removal of BT and a bit of infrastructure cash is in the offing (which should have happened from day one), and it would be well accepted if fibre connections are on the table.

    If you broke it down you could possibly open the door up for people like VM to come in and fibre properly - their network is in place so it'd be cheaper for them to do it, a little more still for BT but there would be nothing stopping them bidding also.

  24. Anonymous Coward
    Anonymous Coward

    @Trevor Watt

    Your point could be valid, however:

    The current number of exchanges is completely unnecessary for fibre, you only really need a few street cabinets and a small number of much larger exchanges. Also, BT have no idea where the older underground cabling actually is, so they would have to dig up the roads anyway.

    For the people who mentioned 21CN, this is mainly for the core network, not the last mile*.

    *Mile because nobody lives more than a mile from the exchange as far as offcom is concerned. Anyone further than that doesnt care about competition.

  25. MarmiteToast
    Thumb Down

    @Posts 1, 3 and 4

    Or we could just you know not spend money on anything, no police, no NHS, no governance, no international aid... oh I could go on. Then we could all have fibre our our arses because it's clearly the most important thing we need. I just can't stand youtube taking 1 minute to load a video.

  26. Rob

    Nothing wrong with the sewers...

    ... internet's full of shite anyway*, best place for it.

    *El'Reg, being the exception to the rule obviously.

  27. John Smith

    No Way Jose

    Incentivise BT to invest in fibre ?? B*******!! Why pay an inefficient, highly dominant operator to do something that an independent, more efficient organisation could do cheaper, quicker and better. Start by fully separating Openreach from BT and letting private equity and the rest of the industry invest in it, that should reduce the headcount by 30% in quick order. Monopoly might not be so bad when it is wholesale only and separated from the retail side, and is appropriately regulated to ensure its customers' (all the operators) needs are being met. It's crazy to try and encourage competing infrastructures - that was tried with the cable operators, of which we now have only one, heavily indebted example.. - re-use the existing duct network, fibre it and regulate appropriately.

  28. Anonymous Coward

    Break up BT

    Simple, make BT sell its infrastructure unit then run it as per the electricty industry model. One company owns the infrastructure, makes the investment and is regulated as to the return it can make. The other companies must use that infrastructure and compete for customers. I live in Japan and have a 100mb connection right now so how hard can it be? Dr Who takes 3 minutes to download :)

  29. Geoff Eagles

    Short memories

    Actually BT did offer to run fibre to the premises for its customers way back in the 80's - On the condition that they were allowed to offer broadcast services. The Thatcher government turned down that opportunity.

    I'm not sure BT's is in a position to do much anymore. It's research and development has mostly been outsourced to India and the infrastructure is crumbling as the last guys who knew how it hung together leave. Rather sad.

  30. Anonymous Coward
    Paris Hilton

    But which 'infrastructure arm?'

    Openreach own and 'manage' the core network.

    BT Operate run the core network and exchange equipment.

    BT Group Services (Property) own the buildings.

    BT Design plan the core network.

    The core network has been all-fibre for some time now.

    You just can't rip apart a company that has always been responsible for finding its own investment and turning a property (even the GPO was self managing and self funding).

    Paris, because she's been screwed as many times as the access network.

  31. Anonymous Coward

    Uuumm, Let me see, where's my calculator?

    In other words the "new" cable line is likely to be too expensive and grossly undersubscribed so cable co's can say: see we told you there is no demand for it!

    On the other hand maybe they might wish to pile it high, sell it cheap and watch the cash flow in?

    It seems a typical UK based stitch-up to me (regulator approval before there is anything to regulate).

    An appeal: pile it high, sell it cheap and watch the cash flow in.

  32. Anonymous Coward
    Anonymous Coward

    Let me see...

    Given a 100Mbs connection at full pelt I'd get through my 25gig monthly allowance in half an hour.

    Also, someone I know has fiber. If there is a power cut he can't phone anyone and as a power outage stuffs some part of the mobile network as well, they've got no way of dialing the emergency services.

    8Mbs is fine for me, thanks.

  33. Carl Thomas


    Ofcom imply no unbundling to be required, as you'd hope, but a strong wholesale model. Probably just as well considering that some ISPs wanted BT to lay individual fibres from each exchange to each home so that they could physically unbundle, something no-one else in the world has done.

  34. Phil Thompson

    Battery backup

    "If there is a power cut he can't phone anyone"

    get a battery backup or UPS then.

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