Telcos snub UK.gov broadband cash pot

Telcos are walking away from the government's £530m Broadband Delivery UK (BDUK) project with one ISP citing, among other things, "uncertainties" around incumbent BT's restrictive physical infrastructure access (PIA) pricing plans as the reason for withdrawal. Geo Networks boss Chris Smedley said in a cutting blog post on the …

[Alex Brett]

Fibre

One of the biggest issues with laying any sort of fibre network is the fact that fibre optic cables in the ground are subject to (believe it or not) business rates, though on a very strange scale (it gets significantly cheaper per fibre the more you have, such that it presents a big barrier to entry for new players who will only have a few).

Combined with the fact that because BT apparently don't know how much fibre they have, they have a deal worked out with the valuations office, that (from 2010 figures) means their bill comes to £255m, but if worked out (very approximately) on the distance rules everybody else pays should be over £1bn...

[AndrueC]

It never was going to be plain sailing. Most companies would fight against being told to open their infrastructure up to competitors. The other problem is that by definition BDUK is dealing with the final third. Despite what BT haters might like to think there's a very sound financial reason why BT isn't going there.

It's a sad fact that no amount of ranting will fix. The final third is damn' expensive to service and has a very poor RoI. When tackling a project like that it's better to go in with your eyes open. BT's pricing is apparently lower than that in other countries and don't forget that everyone is paying for this. Only Virgin Media and Kingston Comms customers are not involved here. If BT's margins are squeezed on PIA then anyone reliant on BT's local loop is going to pick up the bill one way or another.

[CowardlyAndrew]

?Problems Geo had with PIA...you mean they have actually tried to use it, or this is just an on paper assessment that it does not let them do what Geo wants.

PIA was never about long distance backhaul, it has always being about local infrastructure.

Geo has installed fibre between business parks in North Wales, how did it do this before PIA existed? Many teleco's have fibre backbones too.

Issue appears to be that BDUK is not a blank cheque to sustain a business, but rather requires investment from the business or a source of capital from VC's

[Anonymous Coward]

Typical

BT playing hardball and OFCOM twiddling their thumbs (not even a slap on the wrist of BT). Why cant they just split up BT and get on with it? WHo are they afraid of? Where is the real competition?

The govt is gonna do f'all. ANd Fibre price will remain high forever.

[John 98]

Demerge the ducts?

How about we get BT to spin off their last mile assets as a separate company? Then they and anybody else rent space in the cabinets, ducts, on the poles etc. Level playing field.

[TheresaJayne]

I would love ADSL2 or even the BE bonded service at home, however Where I live BT has chosen to only offer ADSL1 and there are no plans to upgrade the exchange at all.

Whereas, the village next door (a stones throw from the Top Gear Test Track ) will never Have ADSL of any type with BT refusing to provide more than 14400baud connection.

When will BT realise we want Fibre to the cabinet everywhere and not just in the middle of cities.

[bobbles31]

Probably when people agree to pay a sufficient amount for the cost of running it into their back yard.

[AndrueC]

Well technically BT are in breach of their license if a line only supports 14k. The legal lower limit is 28k :)

>When will BT realise we want Fibre to the cabinet everywhere and not just in the middle of cities.

Probably the day after customers accept that companies need to make a profit.

[cs94njw]

BT needs to make a profit?

A monopoly on the UK's lane line infrastructure, which they've enjoyed for a good number of years, screwing the customer on high prices, grudginly and very slowly allowing other companies to offer a service to people that BT won't make a direct profit from, and lets not even get into how badly run BT is.... Make a profit? I think BT is doing fine.

You know what. When a buliding developer wants to build houses/flats in an area, they ask the council for permission. The norm is for the council to say, "Well... sure... but what are you doing to do for us?" And in this way, the developer builds schools and other useful things in the community in return for planning permission.

Maybe this idea needs to be extended to landlines...

[Anonymous Coward]

The scope of PIA has been known for a long time, why are Geo suddenly complaining?

[TheManCalledStan]

eh?

Business is inherently risky, if you want to make money safely put it in a bank account...

Geo do not want to take part because it's too risky, fine but don't blame BDUK and BT and OFCOM.

The rules have been out for a long time and were quite clear, leased lines are not part of the deal because BT does not have SMP. There is loads of competition for leased lines, looks more like trying to get a cheap way into a competitive market, without taking on the debt that everyone else has to. Taking on debt for infrastructure is part and parcel of the business, good revenue streams allow you to take the rough with the smooth and survive in the business. If your revenue stream is not large enough for the game, you cannot play in that market segment (simple economics).

PIA is not supposed to be cheap, it's an alternative to creating your own network. This allows you spread your costs. If PIA is unjustly expensive, then surely building your own network is cheaper...

Theresa, don't complain about BT if BE or any other ISP is not LLU'ing your exchange, it means that it's not economical to do so... otherwise those ISPs would have done so already! And BT has nothing to do with those economics!

[Juan Inamillion]

Oh

This'll be Fujitsu of 'fuck the NHS' fame to the tune of £billions...

ffs

[Brian Miller 1]

@TheManCalledStan

Well, BT are legally required to connect a telephone line to any residence or premises in the UK. This is despite the lack of an economic case for doing so based on the usage that the line will have.

Undoubtedly this has proven beneficial in the long run, people in the countryside can phone the emergency services for example when they are required. During the war (WWII) I am sure that having telephone lines run throughout the nation saved a great number of british lives etc etc etc.

It is expected that people have sufficient access to communications technology in this day and age. You can't just leave out people because they live in rural surroundings. They after all are the people who FEED everyone. So I think the business case isn't really that relevant. The money is there to subsidise this rollout to an extent and if the terms being made by BT are blocking the utility and implementation then they should be pressured into making the terms more attractive. 'Nuff said.

[Steven Jones]

Universal Service Obligation

"BT are legally required to connect a telephone line to any residence or premises in the UK."

There is a caveat to that - it's cost-limited to £3,400 pound. If the installation costs exceed that figure it's a cost to the customer. Having said that, it takes an awful long time time to recover £3,400 at wholesale line rental rates, especially when such costs include maintenance, rates and so on.

http://stakeholders.ofcom.org.uk/consultations/uso/main/

[TheManCalledStan]

@Brian

True Brian, there is USO for telephony and the same for other utilities... in which case costs above £3.5k in the install falls to the customer to pay. Hence, the shocks some people have when they buy a house in the middle of no where with no phone and find it'll cost £18k to run 5 miles of copper.

There is no USO for broadband... how would that be implemented? Solely with BT or for all ISPs? Do you subsidise BT completely for this or force them into a loss situation? What about other companies with nationwide ducting and networks (C&W, VM and Fujitsu), do you leave them out or include them in this plan of yours?

PIA is not a regular lease... it is access to infrastructure. It is currently fit for function, i.e. BT telephony. Geo and VM are complaining about ancillary charges. e.g. when there is a blocked duct, BT want to charge for the work needed to clear it and things liek new boxes,etc.... BT don't need to clear it for their telephone system to work, they will clear it if and when they pass their own fibre through and bear the cost. But why should BT bear the cost for another company's network roll-out? This is the kind of thing VM and Geo don't want to pay for. VM has even quoted what they would like to see charged... which is less than what VM charges contractors when they accidentally damage VMs network...

http://www.derrycity.gov.uk/DerryCitySite/files/8e/8e45ded4-f244-401b-ae75-fd0d143954c9.pdf

http://www.thinkbroadband.com/news/4812-openreach-publishes-lower-prices-for-duct-and-pole-access.html

Don't imagine that the telecoms are altruistic, they put their own spin on all of their annoucements and tailor the PIA requirements to fulfil their own goals, which is to improve their own margins!

[wispa_limited]

Ofcom, BT, Geo, Government - whose fault is it?

We recently published a white paper, specifically looking at the problems of delivering broadband in Wales (with particular emphasis on rural areas).

Ofcom are a significant issue (they have totally failed to deliver the competitive market space they claim - chase headlines - mislead the reader of their press releases).

BT are an issue - but primarily because they need to chase profit, rather than any malign or malevolent motivation.

Government has lots to answer for, with some of their decisions in the past.

We've a lot of sympathy for Geo's position, but are we surprised.... Not at all. The broadband infrastructure in the UK is about to slip into several decades of malaise - unless something is done - and done now.

For those that are interested the full paper is here: http://issuu.com/richardbrown0/docs/broadband-wales

[ElNumbre]

Back to the 80's

Can't we nationalise Openreach, and charge BT Retail/Global et al and all the other telco's a fixed rate?

Or is that too simplez?