back to article BT: Ofcom's planned wholesale price cap? Just a smidge too tight

BT should slash its wholesale prices for competitors that access the former national telco's copper network, comms regulator Ofcom said today. Operators such as BSkyB and TalkTalk could then pass on those "real-terms" cost cuts to their customers, the watchdog added. Ofcom is proposing that BT's Openreach biz, which is …


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  1. zaax

    I pay £240 to Sky so maybe Sky's prices should come down with out BT whoesale price coming down.

  2. Anonymous Coward
    Anonymous Coward

    I'm all for cutting prices

    but really, how much of those savings will make it to the consumer? None? None sounds about right. Lets look at the other price slashes over the years.

    VAT, cut down to 15%. Majority of stores kept their current prices.

    VAT upped to 20%. All stores upped their prices, including the ones who never cut the prices in the first place.

    Companies are greedy, they can make all the savings they want but those savings are for them, they will not be passed on to us.

    Lets look at manufacturing. I make a machine that does something. I find out I can swap 80% of the parts for cheaper alternatives to lower my margin by 15%. I then find that if I buy in bulk that cuts another 7% from my margins. Do I lower the cost of my machine from £10,000? Hell no that cuts into my profits.

    We have an economy built on greed where the rich get richer and the poor get poorer. Unless there is some way to force the chain to pass the savings down, we will never see those savings.

    Here's a real world (ish) example

    worker a makes a chip

    that chip is bought in bulk for machine b

    machine b is sold to company c

    company c uses machine b to make something

    worker a buys that something with his hard earned cash.

    Current economy

    worker a makes a chip

    the company that wants the ship haggles and threatens to cut the cost of the chip in half. Worker a fails to get a pay rise to save on expenses.

    company makes machine b

    company c wants to buy machine b, but they don't want to pay full price. They argue and barter for machine b and eventually knock the price down. This means that the machine maker needs to cut costs further, forcing people further down the line to lower costs.

    company makes the machine. They have cut costs on the machine by 20%, but inflation has gone up by 5%. They therefore charge 5% more for the machine

    worker a stuck on his low wages, buys the machine for 5% above the initial cost. Worker a was effectively screwed while company made an extra 20% profit.

    Sadly this trend will continue and never end, because the world is run by money and it's the companies who have the money.

    1. DayDragon

      Re: I'm all for cutting prices

      What you said above is correct, it's all about money but then that is because we (UK/Europe) live is a Capitalist society and the US are a Conglomeratist/Capitalist society...

      What would you do? Become Socialist where everyone works for the good of the whole?

  3. AndrueC Silver badge
    Thumb Down

    Well that does little to encourage BT to invest in the network. And I wouldn't mind betting that VM are deliberately holding back for fear of having to comply as well. Seriously - why would anyone want to invest in the infrastructure if they can't make any money from it?

    It's well and good encouraging competition in the retail sector but this is a wholesale cost. I doubt customers will see much of a reduction so all it does is line the pockets of a different set of companies while further damaging the business case for NGA.

    At least one ISP - Be - has tried to compete in the wholesale market but it couldn't make it work. If BT are forced to drop their charges even further that will do nothing to encourage competition at the wholesale level and that means no help at the physical level either.

    1. AndrueC Silver badge

      Ah. FTTC based products are still excluded so that does at least bolster the case for NGA. It means if BT wants to retain its mark-up it should get more people onto FTTC. Typical Ofcom though - always the stick, never the carrot.

    2. richard 7

      Good joke

      BT, Invest in its infrastructure, excellent, I see what you did there.

      Fact of the matter is, BT are so busy chasing the huge pork barrel that is rural broadband that they are stretched beyond the ability to cope and the old infrastructure is falling apart. Whatever the reasoning BT are following the money trail and its only when you did deeper the cracks appear.

      Customer A and customer B are 200M apart.

      Customer A is on a 62Mbit infinity line. No issues, reliable, fast and (bar some sod nicking the cable) stable.

      Customer B is struggling to maintain 2Mbit, unreliable, unstable and BT to be frank, don't give a crap.

      Both are in the center of Portsmouth close to the exchange they are served by, you can see each premises from the other. However a number of premises round Customer B have the same issues. The cause is Aluminium lines, and general lack of maintenance and care taken adding customers. There are NO plans to deal with this according to BT, 1Mbit in the middle of a city is enough.

      Customer A are nice, touchy, feely people (oh err missus) and have allowed us to install a Class C AP and Infinity line on their premises and bridge to Customer B.

      This is NOT a one off

      BT are creaming off the grants and doing the absolute bare minimum they can get away with and still avoiding an investigation (look out boys the FSB are coming btw)

      So I ask again? WHAT investment?

      They day they manage to actually run a reliable, stable service, live up to their promises, maintain the network and CARE about customers, stop peddling crap to customers to get 'the biggest wireless network' and all the other borderline legal crap they do, I *might* shed a tear. Seeing as they cant maintain their network, why shouldn't someone else be allowed to try and do a better job.

      Cue the downvotes

      1. Anonymous Coward
        Anonymous Coward

        Re: Good joke

        The question is why do we only have the choice of BT, LLU suppliers, Virgin or an ISP using wholesale BT access.

        There should be 3 or more cable companies you have choice from.

        1. Tom 38

          Re: Good joke

          There used to be, they all went bust, apart from NTL who went super bust then somehow managed to buy everyone else anyway.

          You can never "choose" from cable companies though, no cable company ever puts their kit in a street already with cable. I guess you want to have another layer, with a wholesale cable provisioning company and a bunch of resellers? Doesn't seem that useful tbh.

      2. AndrueC Silver badge
        Thumb Down

        Re: Good joke

        So I ask again? WHAT investment?

        Someone spent a lot of money installing a cabinet near me (and customer A in your example). Someone is providing me and customer 'A' with a reliable high speed service. I'm pretty sure BT would say it was them. That's what they've told their shareholders, the business community, the government, the banks and the entire country.

        If it wasn't BT who do you think it was?

        Just because they aren't investing as much as you'd like or where you'd like doesn't mean there hasn't been investment at all. As for BDUK - BT won the bids. That means the councils all thought they were the cheapest and/or the best. Either every single council was bribed or else BT came up with the best offer. Yes, probably because of their position, but still the best offer. You want someone else to do it - you pay the premium.

        I'm not going to downvote you because I understand your pain. However claiming that BT have not invested any money is a bit churlish.

  4. Anonymous Coward
    Anonymous Coward

    BT shouldn't have such a stranglehold that they need to sell a product to a rival.

    There should be a comms equivalent of the national grid or transco.

  5. Disco Dance Donkey

    I live in a 6 year old house. This means my cabinet is 6 years old. BT refuse to upgrade our cabinet to FTTC as they can't depreciate the cost of a cabinet that quickly. It took me a good time on the phone to get the actual reason out of them.

    1. Anonymous Coward
      Anonymous Coward

      that's easily fixed by govt telling HMRC to allow depreciation of IT assets over their actual "market" lifetime, not artificially long periods, when considering assets that could be overtaken by technological change in a year or two.

      A former client once had an argument with their accountants (who I Probably Won't Care about naming) where a junior auditor with no IT experience said a network device - which was in use in the network for two years, then 'retired' because it was too slow - had to be depreciated over five years because that was their "recommended policy" for assets over £25k. Idiots.

    2. chipxtreme

      I live in a 5 year old house on a 6 year old estate but the cabinet that serves it is quite old. We luckily got fibre a couple of months back after the exchange having it for a good 18 months. My daughters aunty lives in a brand new house on a brand new estate and BT have installed an old style copper cabinet to serve the new estate even though their exchange is fibre enabled and there's a fibre cabinet 1/4 mile up the road.

      It will probably be years before they get fibre as BT won't install it until there's a decent enough customer base to get their money back and as the estate won't be finished for about 2 years+

      1. Spiny_Norman

        Ah, well your daughter's aunty should be asking the estate developers this question. It's standard practice to get the utilities in place as part of the plans and BT would have been only too happy to fibre it up, provided the developer paid them to do so - which they might well have made a feature of the estate and recovered on marginally increased sale prices. Otherwise why should BT provide 'Fibre to the Fields' for two years before it could even start recouping revenue?

  6. TheManCalledStan

    Cut, cut, cut, cheap, cheap, cheap... you get what you pay for.

    If OFCOM keeps applying price cuts, it's no surprise to me that BT will only install FTTC and roll out slowly as they are unlikely to get the profit margins that are required for more substantial infrastructure investments.

  7. Anonymous Coward
    Anonymous Coward

    These changes don't go far enough, sign this instead:

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