BT ordered to cut Openreach fees for rivals National telco BT will cut the amount it charges its rivals to use Openreach telephone and broadband lines after Ofcom officially set the company's wholesale prices this morning. The proposed fall in fees was submitted to the European Commission by the UK's communications watchdog last month. Ofcom regulates BT's Openreach …
I would imagine that BT can still make money off this but obviously not as much. What bothers me is that BT is currently investing far more than anyone else in rolling out high speed connectivity to far more people than anyone else. It seems unhelpful to then penalise it by depriving it of some of the profits.
Upgrading national networks is expensive enough in the first place. Then you force BT to hand over some of the profit through wholesaling. Then you reduce the margin even further. Exactly how is this supposed to encourage BT to keep investing?
It's not much of an incentive for anyone else to join in either. I bet VM are really glad that Ofcom doesn't deem them to have market superiority anywhere. Forcing them to open up their network for wholesale access would kill them.
Its not the rental charges thats the issue here, its the CDR and Burst charging when using their Wholesale Broadband Connect. £80-£90+ PER MBPS is daylight robbery! How can we run a unlimited FTTC service when they charge this. Thats how only BT offer a unlimited connection, they price everyone else out the game!
I don't know where a 'not-for-profit' would get 30 billion from, but openreach won't need anything like that because, as a 'for profit' company they don't have the slightest intention to 'upgrade the entire local loop to something decent' - only the mega-profitable bits where Virgin provides effective competition.
[Says the embittered, sub-half-meg, narrowband user...]
You're wrong there though. BT is going to roll FTTC out (and therefore FTTP-on-demand) to two thirds of the country. VM only cover 50%. I know for a fact it's rolling out in my rural town where VM can't be bothered to go. Oh and according to Ofcom VM is not providing effective competition. If it were they'd be forcing VM down the wholesale route.
So as I wrote - BT is currently doing more to improve more people's connection than any other telco in the UK. Yet it seems all that Ofcom can do is erode their margins.
As an example, you can go buy your line rental (as wholesale line rental) from, say Primus (http://www.homephonechoices.co.uk/hpc_summary.asp?pid=443&kt=mse) for £81.84 a year and broadband from say Plusnet (http://www.plus.net/broadband/) for £77.88 a year.
You may also note something about these prices in relation to the wholesale cost.
You may also notice that Plusnet is owned by BT, and their prices in relation to BT Retail's.
AndrueC: From my point of view, that's exactly the problem with BT, rather than upgrading all the exchanges to 24mpbs, they're focussing on upgrading the most lucrative exchanges to Infinity.
David Rickard: the 'broadband only' part, presumably means when an ISP provisions broadband but you continue to pay BT for line rental. There will never be a broadband only product (unless the line rental charge is incorporated, in which case it would be pointless not to have a phone service thrown in as well)
True but it's /still/ more than any other telco.
VM haven't done more than roll out some minor in-fill here and there. Most of the LLUOs gave up extending their reach years ago and have made it clear they intend to go back to using BT's network so almost cease to qualify as LLUOs where FTTC is concerned.
For sure BT aren't doing everything that everyone wants - but they are still doing more than anyone else and I just don't see how this helps.
>> There will never be a broadband only product
Actually there are ISPs (or at least one, Gradwell) doing MPF (Metallic Path Facility) lines where all you have is the broadband.
But does anyone else think the definitions seem designed to confuse ? At least the descriptions in the article are confusing - "broadband only" is actually a line connected to a BT phone port at the exchange, so the low rental is in addition to the "phone line" rental.
http://www.thinkbroadband.com/faq/sections/migration.html#247
sorry, have to say this, having been a BT victim for many years - not only of their vapid saturation advertising, but also their control over OFCOM, their introduction of rental in advance, of paying £5 to pay your own fucking bill. Not to mention they were given the entire UK telecoms infrastructure and property portfolio, gratis, but paid for by years of our public investment.
Oh, and the hypercomplex and inane "plans" where if you ring a registered friend on his birthday, the call is half-price, or whatever (well OK I made that one up) - I can't find anything to like about them.
@AC
BT were not "given" the infrastructure you idiot. It was sold to the shareholders for an amount rather higher than BT's current capitalisation. Ofcom consistently undervalue the fixed line assets in order to produce their wholesale charges.
Note that the amount raised by the government in the three tranches of BT share sales is higher than current market capitalisation in cash terms - feed inflation into the equation and it's less than half the capitalisation now.
You've also compounded your idiocy by conflating retail charges (for which their are manifest alternatives) with wholesale.
BT have no control over OFCOM, the boot is on the other foot. I used to work in network & switch configuration ( datamanagement in BT speak ) and the problems we had with the then new Other Licensed Operators ( OLO's ) was terrible. One old example. I provided a new digital route to the then Mercury. This included C7 signalling & multiple 2mb 30 channel systems. It was enlarged, using precious scarce hardeware on this large BT trunk switch. All this sat there for several years and was never used. It was eventually recovered.
In a similar vein an OLO asked for us to cease some 2mb systems. These carried the C7 signaling links. We refused, and told them why! They got OFTEL to order us to do it. We did, they screamed, we told them so, still they screamed until OFTEL ordered us to restore it.
Whatever an OLO wanted, however stupid it was, they got it! We could do nothing right, they could do nothing wrong. What a palaver.
@Buzzby: I'm afraid that is the price to be paid for running a monopoly for years with precious little investment or value offered to the end customer. Eventually the worm turns, you get shat on, and nobody sheds a tear. BT should have banked their money wisely in those fat years for the lean ones.
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