Ofcom: Legal separation will force Openreach to eat more fibre Sharon White, the boss of UK comms watchdog Ofcom, hopes plans to legally separate Openreach from BT will force it to increase its investment of two million fibre-to-the-premise (FTTP) connections over the next four years. White was speaking at a briefing following the announcement by the regulator this morning that Openreach …
I live at the end of 1375m of ductwork from the exchange (1300 from the FTTC cabinet) - we know it's in good order (because Openreach recently (last 6 months) pulled a zonking great multicore copper cable through it to serve a new development even further from the FTTC cabinet & no new cabinet is planned).
If they didn't want a kidney for FTTPoD I'd have done it in a heartbeat - however why they can't target the easily done FTTP like mine? I know too much like common sense.
Further I bet if myself and my direct neighbour both asked for FTTPoD at the same time you just know that Openreach would charge us both the full costs as if they were done entirely independently...
If they didn't want a kidney for FTTPoD I'd have done it in a heartbeat - however why they can't target the easily done FTTP like mine? I know too much like common sense.
Perhaps common sense did prevail. Your premises might have been an "easy target" but what reason would BT have had to believe that the cost of providing you with your own individual fibre would be recovered on a reasonable timescale?
Or were you expecting someone else to subsidise it in perpetuity?
"Licensed premises" applies only for pubs because you see them in double-vision (and pick the door in the middle) so they're never singular. No longer applies to pubs that are FTTP-enabled though, just don't look blearily into the fibre with remaining eye.
The use of "premise" is valid for residential properties as it translates into "proposition of fibre" since FTTP rarely exists in the real world.
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Unfortunately it opens up openreach to the influence of the likes of Talk Talk and Sky. That could mean that whatever sympathy for rural areas they used to have will be overridden. I'm not saying that BT has always done a bang up job of rolling upgrades out to all four corners of the country but it's done far more in that respect than the LLUOs ever did.
All Sky will want openreach to do is target VM areas. Talk Talk will probably think the same. In fact most CPs will likely think that. They all make most of their money from selling services to city dwellers. Us country bumkins might be about to face a more severe digital divide.
Hopefully it won't go like that but we need less partisan control over openreach not more :-/
20 - yes TWENTY - years ago a friend bought a house so new, the pavement hadn't been laid, and the road was rubble.
having had fibre (Videotron) for 3 years at that point, I naturally assumed the cable company would be around before the road was finished, spend a couple of hours dropping a conduit in, and save a fortune on civils. He said it was the first thing he thought of, but they weren't interested.
As of today, still no fibre.
Location ? Greater London.
I've just done a little calculation. For 20 million homes, 2000 installation engineers and if each engineer does 4 homes per day without holidays and working weekends, then it would take 7 years to connect fibre to every home. I don't think people realise the scale of any changes to the system. This maybe why BT is using its existing copper lines first before going the FTTP route.
Actually it would be really, really nice to have 10mbps! I know 2mbps is better than my old modem (33kbaud on a good day) but all these fangly websites that want to sell me stuff I have already bought are slurping up my bandwidth. And Lord help me if I want to work while the little one is watching Peppe Pig
Although it is perhaps a little OT I still find myself wondering who is supposed to benefit from Ofcom's existence.
With service providers being allowed to quote "up to speeds" as long as 10% of their customers will actually get it it is impossible to believe that the interest of consumers are uppermost.
Try selling "pints" on the basis that 10% of the customers will get the right measure and you'll pretty soon have Trading Standards breathing down your neck.
Try selling petrol on the basis that 10% of the customers will get the right measure and "ditto".
It is hard to see Ofcom as anything other than a willing victim of Regulatory Capture.
You need better analogies. Beer and petrol are goods. Broadband is a service. That means different rules and requirements. Not getting all the beer you pay for is breach of contract and actionable. Not getting the speed you paid for(*) is only a problem if it's because of incompetency.
A better analogy is to wonder if you could complain that having bought a Ferrari F40 you've never been able to get out of second gear on your daily commute. The answer of course would be 'no'. An F40 can travel at speeds up to 201mph. That doesn't mean you as a particular driver will be able to do that.
(*)And anyway no good network engineer is ever, ever going to guarantee throughput. Even if you have a fixed speed service you're not going to get that. Networks are just too large and too complex.
As for the 'up to' used with DSL - you are getting exactly what you paid for. A technology that supports a variety of speeds depending on the condition of your line. As long as the provider gave you a reasonable estimate up front you have no legal basis for complaint.
Oh and Ofcom don't have anything to do with advertising anyway. That's the ASA. And they are a bigger bunch of walruses than Ofcom.
You're quite right; the analogies are less than perfect. By why are you so eager to defend their right to sell us a service of a higher standard than they actually provide?
At least when I am stuck in traffic in my Ferrari I can see the congestion; if my broadband slows down I have no way of determining why and assessing if it is in anyway "understandable".
Please don't hand them any reasons for continuing to cr*p on the paying customers.
How do you know if the slowness is due to your connection or the remote system?
Well first off make sure all tests are performed using a wired connection. A lot of people these days blame their ISP or connection when in fact it's because their house is within range of loads of other WAPs and the airwaves are 'full'.
The simplest way is to check your router's connection speed. xDSL should connect at more or less the same speed 24/7. If your throughput drops at certain predictable times (especially the evenings) then ISP congestion is very likely the cause.
You could run the Thinkbroadband speedtester and if the single threaded result is different to the multi threaded that would indicate congestion. Then complain to your ISP. If that doesn't help consider paying a bit more for your service. It's difficult and tricky to match capacity with demand when demand changes so much throughout the day (which is why good restaurants require you to book in advance). More expensive ISPs can afford to have their network being underutilised more of the time which translates to being better able to cope with peak demand.
By why are you so eager to defend their right to sell us a service of a higher standard than they actually provide?
But that's the point. As far as xDSL services are concerned we are getting exactly what we payed for. I pay roughly £14 a month to be connected to a port on a DSLAM that is technically capable of achieving a speed of 80Mb/s.Now my particular telephone line is about 300 metres long and suffers a little bit from interference from my neighbour's line(s). Consequently I actually connect at 67Mb/s.
That is not the fault of the DSLAM. Nor my ISP. The technology was specifically designed to adapt to conditions (which is part of what I pay for) and it's doing exactly that.
Now granted you could choose to require that we only pay for what we're actually getting but there are problems with that. The biggest one is that the cost to the supplier doesn't change. It doesn't matter to my CP whether I'm connecting at 80Mb/s, 67Mb/s or 12Mb/s. The cost is the same to them. In fact if anything the slower speeds cost them more. It's going to be marginal but longer lines require a bit more electrical power to push the signal through and there's more to go wrong with a longer line so statistically the lifetime maintenance cost is higher.
So as far as xDSL is concerned I take the view that I'm impressed with what the technology is achieving and think that overall BT have made the right decision to go that route. A good compromise between aspiration and practicality. With their forthcoming G.FAST I've gone back to being sceptical and thinking that the time is right for the final leap to FTTP but time will tell on that.
However... (sorry for the long post).
If you are complaining that your connection slows down overnight, then it's slightly different. I still acknowledge the legal right of a service to 'under perform' and accept that balancing capacity with usage is difficult but I'm prepared to work with you to try and resolve the issue. That's because while there are unfortunate real-world constraints on the last mile there are fewer on the backhaul and ISP networks. An ISP ought to always be able to provide you will all the bandwidth your line can provide. The only reasons they might not are to protect their margins and occasionally dealing with faults.
Lastly - paying customers
Residential broadband in the UK is cheap. Amongst the cheapest in the world. Ofcom have publicly stated that their policy has always been to keep the price down to encourage take-up. It worked. We have long had some of the highest take-up rates in the world. Unfortunately we also have some of the lowest CP margins in the world. That makes the case for RoI very poor. So when people demand a national FTTP roll-out that would be one of the biggest and most expensive engineering projects in British history you have to understand the difficulty of doing that in a market where pricing is in a race to the bottom.
Here endith the lesson :)
I hope I'm not annoying anyone here. My intention is not to say 'put up with it'. It's merely to temper the discussion with a little reality (an annoying habit of mine). I'd love the UK to have a national FTTP roll-out. It'd make us look great internationally. But..I'd also like us to have roads that don't have potholes. An NHS without waiting lists and for me to always have a gross score below 80 at every golf course I visit. Sadly none of these are particularly likely. We shouldn't stop trying of course :D
I think the analogy of buying a Ferrari and complaining about the roads is a poor one, because the two aren't the same.
Perhaps a better one would be that of of buying a rail season ticket with a guaranteed seat on the non-stop express every morning, only to find the service is oversold so you don't get a seat or get bumped onto a later slower train would be better.
(First a hands up > I was a BT middle manager until I left in a huff 20-odd years ago).
The main problem is the levels of investment wanted by Government and the ISPs, and the perceived shortfall from BT.
- BT is a company that once upon a time was a public asset. That was sold off by Margaret Thatcher thirty years ago. Rightly or wrongly those assets are privately held and the property of the shareholders in BT. A lot of people want their cake and eat it.
- The secondary ISPs (I call them secondary because they rely on BT for their infrastructure, Virgin cable is different) want BT to invest heavily in fibre in the areas that they want to expand. They don't want to invest themselves because that costs a lot of money and reduces dividends. On the other hand, BT is in competition with these SISPs so is understandably reluctant to subsidise the competition. The Government wants BT to act like a public service. Trouble is they sold it!.
The separation or distancing of Openreach from BT is designed to overcome the latter point but it still begs the question of where the money is going to come from?. Will BT still be required to finance the increased investment by the separated Openreach? Will BT be expected to borrow and carry that debt?
We need a solution worthy of Solomon so here is my input. (snigger)
Once an SISP reaches a threshold of market share (say 1% or maybe a two step: 1% and 3%) it is required to either take an equivalent equity stake in Openreach, or to share in all new Openreach investment to the level of market share in the appropriate year. If Openreach needs to invest a billion pounds in new fibre and an SISP has 3% of the market, it is required to pony up £30 million. It can deduct what it invests in fibre from that total. If its investment in fibre is greater than its market share then it can claim it back. The idea is balance the financial load against the benefit.
I expect howls of protest from the poor souls at TalkTalk and Vodafone etc. They still want BT to their jobs for them.
I nearly gave you an upvote but stopped when I realised that there are a couple of flaws in the argument.
Firstly from what has been said today Openreach will not have a separate share issue so it won't be possible for anyone to buy a stake in it; in BT as a whole, yes; in Openreach, no.
Secondly the likes of TT or Sky or whoever taking a (major?) stake in BT would result in them getting to vote at Board or shareholder level, and that might would almost certainly have an undesirable outcome.
However it is impossible to argue with They still want BT to their jobs for them. Trouble is that on the PR front the likes of Dido Harding are setting the agenda and I have no recollection of BT mounting anything like a spirited defence of its position - not in public anyway. BT certainly seems to be trailing in the PR offensive.
(corrected title. I'm an Engineer: I don't have to be able to spell; I only need to know that correct spelling is possible).
@Commswonk:
I accept your point that taking an equity stake is not on the table for now at least. That is why I suggested the alternative of having to join in the investment programme.
Forcing the likes of TalkTalk, Sky, or Vodafone into an investment programme would likely cause their CFOs to choke on their mid-morning croissants.
I am not so sure about the deleterious effects of having these SSIPs involved in investment. You are probably right in the short term but in the longer view, it would change the industry. We may finally recognise that you can't run a whole industry, let alone a whole economy, by servicing each others' needs and someone has to actually build and run something that needs servicing in the first place.
And that requires long term investment.
"Firstly from what has been said today Openreach will not have a separate share issue so it won't be possible for anyone to buy a stake in it; in BT as a whole, yes; in Openreach, no."
I wouldn't put it past a numpty management in BT to float it off as they did with O2, see it sold to Telefonica or the like and then have to buy VM a decade or so later so they can have a network.
I get annoyed when I see outsiders criticising BT. You need to have worked there to be properly vituperative about BT management.
I like your post. I'm not sure about your Solomon solution but it's worthy of discussion. The only point I'd add is that I think the creation of BT in the 80s was a good thing. The government of the day was not investing in the telephone network and service levels were a joke. It couldn't even roll-out the technology it had developed in its own laboratories.
It would be very nteresting to visit an alternative universe to see what the UK telephony network would look like if still operated by the PO. I reckon that an ADSL roll-out would be ongoing with PO announcing plans to consider trialling VDSL from the cabinet in a couple of large cities.
@AJ2
Exactly
From Ofcom Facts http://media.ofcom.org.uk/facts/
Market shares of fixed broadband providers in the UK
BT 31%
Virgin Media 20%
TalkTalk 16%
Sky 21%
EE 3%
Others 9%
(End of 2013)
BT 32%
Virgin Media 20%
TalkTalk 14%
Sky 22%
EE 4%
Others 8%
(End of 2014)
These are all private corporations with shareholders. BT seems to have about a third of the market but the other ISPs and the Government behaves as though they were much larger and should be the UK network sugardaddy. . I agree with you that this is not maintainable. BT should load Openreach with assets and debt and cast it adrift and tell the ISPs to Foxtrot Oscar.
BT Retail should then start to invest in areas that it wants to make money. This will look unsurprisingly like the business plans of Vodafone, Sky, and TalkTalk and in the same manner it will completely ignore anyone more than 2 miles from an existing network node. Rural areas will get screwed which, from a purely dispassionate financial viewpoint is the correct strategy.
OK there is a lot wrong with BT & Openreach but for goodness sake do not split them up. Whilst Openreach remains under the BT umbrella no one is going to make a bid. I hear Sky & TalkTalk whinging, well it is time they put their own house in order. Remember how many customers Talk Talk lost not so long ago & why? As for Sky, now there is a company I would like taken down a peg or two. We used to be with O2 until they sold us down the river to Sky; for nearly three years we had quite fast broadband with a clear telephone line. When we were shunted over to Sky everything was hunkey dorey for the first year then everything went down the pan. The broadband at is now either slower than dial up or non-existent. Every time I ring them they insist on me at nearly 80 crawling across the floor, then lying flat on my belly unscrewing an ADSL V1 socket. They keep telling my line is OK which is probably correct but what about their crap equipment which they have now shoved me on. We also have Sky TV, it took the whole night to download a programme in SD which was an hour long. If it wasn't for my sick husband I would get rid of Sky all together. It's a pity Ofcom don't investigate them.
That Ofcom Poster Child may only be two years old, but he already looks like an Ofcom Employee, a f**king dickh***d. - white, middle class and priviledged*
White privilege. That cheeky grin is the innate knowledge he’s Ofcom, rich, advantaged and will never know *any* difficulties or hardships in life of slow Rural Broadband as long as he tows the BT line.
“Let’s find photos of 3yo Syrian refugee children in Notspots and see if they look alike, eh?”
Don't worry “I’m sound in my socialist, atheist and republican opinions."
“I don’t believe Ofcom have any place in a modern democracy, least of all when they live on public money. That’s privilege and it needs to end.”
We might then have a non BT biased agenda then, that doesn't stifle real fibre optic technology and allows families to live and work in the communities they grew up in.
(*Sharon 'White' been the exception, who's little Civil Servant in-joke was it appointing her. Almost a straight script lift from 'Yes Minister'.)
You have to question who’s side the regulator is on. This is just more gas bagging, nothing is going to change. 10 years from now we will still have the same situation we have now while the rest of the world will have moved on. This is not just about the home user wanting to what films from Amazon prime or netflix or do a bit of online shopping / Banking. It is about UK PLC it`s about doing Business in this country and across the world. While we are stuck with low investment and clapped out old copper lines the majority of our global competitors will have high speed fibre. Not to forget the bandwidth requirements going forward for 5G where copper will not come close to being up to the job and the Gfast tech is just BT leading the gullible politicians down the garden path with more B/S and trying to fleece the Taxpayer of more money.
Don't worry! Now that those pesky meddling Eurocrats are out of the way you can all have the new Torycom Broadband. It comes in Upper Class (for chums, chaps, bankers and old Etonians only), middle class Torycom (a bit slow but everything is safely filtered unless you register as a perv.), Working class (good enough for you! Back up they chimney! Aren't you lucky to have dial up?) and OoopNorth class (probably runs on steam engines or something!)
All broadband is subject to 100% data retention and passwords and keys will be assigned by the head mistress eh, I mean prime minister's office.
Before we can have any genuine and impartial changes made to our infrastructure and how BT monopolises and abuses it's position we need the right tools for the job - this means replacing Ofcom with a suitable organisation (again stressing the word "impartial"). Then and only then can we set about reviewing our infrastructure problems and proposing possible solutions to address the myriad of problems.
The situation with Ofcom and BT over the years seems so uncannily like a scene that I'm sure we have all seen. You know the one I mean, you're in a supermarket and witness a spoilt brat with a parent totally lacking in parental skills who is hopelessly trying to get their child to do (or not do something). The parent issues an ultimatum which is coupled with the words "I'll count to ten".
We all know what's going to happen here just as surely as the brat does. For those of you who have been fortunate enough to avoid this scenario it goes like this.
"One!" - no reaction from the child.
"Two!" - no reaction from the child.
"Three!" - no reaction still.
"Four!" - nada
"Five!" - zip
"Six!" - the child yawns and looks as bored as you reading this.
"Seven" - the child continues doing what it was (or wasn't doing before).
"Eight!" - child stares blankly at the adult with a grinning expression of "really?"
"NINE!" - child facial expression tells a story of "we've been here before and remember what happened?"
"NINE AND A HALF!"
"NINE AND THREE QUARTERS!"
"NINE AND FOUR FIFTHS!"
You get the idea, the child learns nothing except that it can push it's luck as far as it likes and that it's parent has an average understanding of fractions".
This is what has been playing out between Ofcom and BT down through the decades (and probably will for many more to come unless we have something vaguely resembling an impartial arbiter with some back-bone.
Oh btw I particularly enjoyed the comment from Sharon White "Openreach must become a "legally" separate company from BT – with its own independent board". I am sure that there must have been a cheesy wink as she said this.
The problem isn't who owns the wires, it's that there's no competition or incentive to upgrade them.
Why would separating Openreach make any difference?
You need to be frightening them with alternative access networks.
At least over here in Ireland the publicly owned owned power company ESB Networks has begun to take on OpenEir (yes eircom wholesale really did rebrand themselves that...) by rolling out FTTH across their duct and wire networks. It's not all that widespread yet but it is in several towns already offering gigabit internet access and it's an wholesale product so other ISPs can get on board too.
That's frightened Eir (Ireland's main telco and BT counterpart) to get moving as ESB reaches every home in the state, unlike Liberty Global / Virgin media which only does 360Mbit/s and only in larger urban areas.
ESB's product called Siro has really shaken them even if it's only a beginning, they've had no choice but to speed up their own FTTH rollout. They already offer up to 100Mbit/s VDSL from ever street cabinet.
Also we're moving forwards on opening the duct networks to competition too, albeit slowly.
We're also seeing serious progress on using fixed point to point LTE in rural areas initially offering 70Mbit/s from at least one provider. This doesn't use mobile spectrum but is vastly better than rural DSL solutions and could become a lot faster with LTE Advanced upgrades.
If you don't have a major competing infrastructure player, what incentive will BT or anyone else who owns the wholesale access network ever have to invest? You can't just whip them into doing things. They won't budge if it's not going to result in lost revenue not to move.
Ultimately no reorganisation will have any effect other than splitting the BT pension deficit.
Rolling out anything requires resources. That's plain reality. A rapid expansion of OpenReach's staff for a rapid roll-out would probably result in Brookes's Law coming into operation, large training costs, reliance on half-trained staff or some combination. In addition a large staff would have to be paid off when the roll-out was complete.
Then we have people complaining that problems don't get resolved. With any given level of resources there's a split between maintenance and new installs and wherever that split goes there'll be complainers.
It's the old, old story: good,quick, cheap, pick any two. In my time I've come across at least one senior BT manager who'd never heard of the Iron Triangle. I'd have hoped not to find that repeated amongst elReg readers.
None! They set the standard to candle power and you can be thankful that they bother to even give you any light at all!
If you live in an unprofitable area without competitors, you can use a white-label, wholesale provided OpenCandle as nobody else is providing these new-fangled 100W light bulbs and no matter which ISP you pick (unless you're in a cable area) you're getting our candle powered service!
You can have any brand of light, as long as it's one of our candles! Incidentally, candle rental applies so pay up!
Please note, candles get significantly dimmer the further your home is from our candle facilities.
Regardless of who owns OpenCandle, the rational and forces driving the business will be the same as you're stuck in a paradigm of having a single, private monopoly.
So long suckers!
Muhahaha!
Lots of love from the crew at OpenCandle.
X
"Regardless of who owns OpenCandle, the rational and forces driving the business will be the same as you're stuck in a paradigm of having a single, private monopoly."
Yet again ignoring Virgin who reach most UK homes and the dozens of alternate operators covering big cities.
Normal monopoly behaviour is to raise prices to increase profit, yet UK prices are cheaper than average. If there was demand for fibre and a monopoly refusing to invest, someone else would have stepped in to compete, but very few have.
The market issue is that FTTP costs, on a global average, £2K a building. Customers only want to pay about £15 a month for that and where better broadband is available, the majority of customers vote with their wallet and buy what's cheapest. Who will invest or lend money to a business that wants to roll out a loss-making network that few people actually want?
I've got 30 years experience of this stuff globally, I have the contacts and expertise to do the engineering but I'm stuffed if I can see how I'd ever make any money - and if I can't see how I'd do that, neither will the people I'd have to borrow from and give equity to for it to happen. The only businesses that can take that kind of long term punt are utilities but we privatised those and their primary duty now, legally, is to shareholders.
I think ISPs should only be able to charge you the actually achieved line speed, not the "up to" speed. They can recover the costs from BT OpenReach for the quality of the line.
So if you have an "up to 80M" service and the line can only do 20, you pay only 25% of the normal rate, and the ISP gets a refund from BT on their costs of renting the line.
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