Br0kenTeleph0n3

Following the broadband money

BT masks ‘unjustified’ doubling of Final Third broadband bill

with 99 comments

BT is trying to disguise its true costs to supply next generation broadband to the Final Third by adding overheads, new job types and not reducing costs where these jobs are already accounted for.

If BT’s proposals are accepted, local authorities could pay almost twice the actual costs, and BT will not have to match public funds with its own.

In addition to direct and planning costs, BT asks for state aid to cover “Availability payments” and bonuses for customer connections. Based on a financial model (see table below) of a 20% take-up from 100,000 homes passed, this would raise the public contribution to BT’s roll-out from £11.4m to £22m.

BDUK’s CEO Robert Sullivan declined to be interviewed on the apparent doubling of roll-out costs, saying he was “not allowed to” speak to the press. However, in response to a question from Br0kenTeleph0n3, he told a Westminister e-Forum conference the reference financial model is critical to setting a comparable starting point for all BDUK-funded procurements. Insuring that local authorities received value for money is an important part of BDUK’s value-add, but it is a complex regulatory issue, he said.

An internal BDUK discussion paper seen by Br0kenTeleph0n3 shows the DCMS agency preparing to question BT’s financial proposals for its fibre to the cabinet roll-out in the Final Third.

The proposals aim to justify BT’s claim for state aid for bringing access to broadband speeds above 2Mbps for download to people living in areas considered commercially unviable under a BDUK procurement framework. The BDUK analysis aims to establish a challenge to the value for money offered by BT’s proposals.

The author of the analysis believes that BT wants to establish a price history and methodology that result in a “wholesale price” rather than show its actual costs to deliver next generation broadband access (NGA). Actual cost is a key component for calculating the amount of state aid required.

BDUK’s comparison of BT bills for early NGA procurements in Northern Ireland, Rutland and North Yorkshire with current proposals shows that BT has continuously increased its apparent cost by adding new job types and not cutting costs where jobs are already accounted for.

The analysis suggests BT is trying to recover all its direct costs for a full roll-out despite assuming only one-fifth of residents will take up the new high speed services.

The BDUK analysis concludes that BT is “imposing an abstract model to establish a wholesale price and define a cost unrelated to the inputs of an individual roll-out.”

BDUK says of BT’s proposals, “Cost inputs and assumptions on cost recovery for element costs are not revealed. Model outputs are driven by a take-up assumption which is unrelated to the actual assets built or needed.

“BT is using the opportunity of a framework structure to create a wholesale price – not a cost as understood in calculating state aid.”

The author believes this is because BT assumes it might have to re-sell this “product” to Fujitsu, the only other supplier accredited to supply networks under the BDUK procurement framework.

Following a Cabinet Office assessment that Fujitsu is a “high risk” supplier, it is now unlikely that Fujitsu will win any of the 45-odd contracts at stake.

BDUK says BT’s stance is unjustified, even though it is understandable given its obligations to wholesale telecommunications services, its right to recover costs, and even though the framework encourages it.

The effect of BT’s proposals is to fix the “standard cost” of adding a house to an NGA service (anything above 2Mbps download speed) at £520 for the physical infrastructure plus £84 to connect, total £604, excluding VAT.

By comparison, rural fibre network operator Gigaclear offers a guaranteed 10Mbps symmetrical installation, bursting to 1Gbps, for £100, which includes 20% VAT. Fitting the equipment is on a DIY basis or contractors will do it for £85 for a 50m “drop” between the curb and the premises.

Community-funded B4RN, which is building a 1Gbps fibre to the home (FTTH) network from scratch in the most broadband-unfriendly part of Lancashire, reckons its average cost per connected house will be less than £1,400.

The author believes the £520 per connected customer at a 20% take-up rate represents all BT’s direct costs for extending 2Mbps coverage from two-thirds to 90% of the population. (BT has already committed to covering two-thirds of the population using its own money.)

The author notes that BT’s financial model does not disclose how many “nodes” (street cabinets) and “hand-off points”. It calls for BT to provide suppliers’ invoices to verify these numbers. These details are essential to establish value for money for the FTCC component for the call-off (actual procurement under the framework), it says. (Click here for more tables BTfttcPriceProposal)

BT Framework abstract model per 100k homes passed – summary
Framework March 2012 Premises passed Premises connected Estimated nodes built Planning Infrastructure build Availability payments Take-up bonus Total public funds
Total premises 100,000 20,000 781,438 11,411,137 7,607,425 2,200,000 22,000,000
Solution type Estimated splits
Handover points 15
FTTC 72,691 14,538 400 771,438 5,498,069 5,478,499 1,599,180 13,347,185
FTTP 17,309 3,462 5,498,069 1,304,526 380,820 7,183,415
BETS 6,000 1,200 25 10,000 415,000 618,000 132,000 1,175,000
Satellite 4,000 800 206,400 88,000 294,400
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Written by Br0kenTeleph0n3

2012/09/16 at 19:01

99 Responses

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  1. Far better to give money to altnets like gigaclear to do the job once and do it right than to pay BT to deliver and obsolete USC to the rurals for nearly the same amount of dosh. Far better bang for your buck with an altnet…

    chrisconder

    2012/09/16 at 19:08

  2. Ah, the expected anti-BT first comment!

    Altnets (quite rightly) cherry pick their relatively small areas. What would their FTTP costs be across the areas that the BDUK funding covers?

    Presumably the 20% take up reflects that many close to exchanges, where the majority may be, are/will be happy with speeds from ADSL2+.

    Somerset

    2012/09/16 at 20:01

    • I think B4RN prices give a top end price indication – under 1400 per FTTP house. How much would that add to your mortgage over 20 years?

      Ian Grant

      2012/09/16 at 20:30

      • What would B4RN costs/property be with normal contractor costs for digging along roads and pavements?

        Somerset

        2012/09/16 at 20:34

      • You cut your coat according to your cloth. B4RN isn’t trying to be BT. Besides, BT outsources most of its network build (which is why Fujitsu knows that PIA is so overpriced), so what’s your point?

        Ian Grant

        2012/09/16 at 20:38

      • That the £1400 B4RN is a top price for FTTP, if I read that correctly. They are fortunate to have low cost digging.

        Somerset

        2012/09/16 at 20:49

  3. Gigaclear does not provide telephony with battery backup, what might that cost? Their minimum broadband cost is £37/month or £444/year which they ‘keep’, unlike the ISP situation with Openreach. That needs explaining to make a fair comparison.

    Somerset

    2012/09/16 at 20:10

    • Fifteen per cent of the population already is “mobile only”, Ofcom says. People can live without back-up batteries. How else did we get through life until Mr Bell had his bright idea?

      Ian Grant

      2012/09/16 at 20:28

      • Not what Ofcom think, convince them and that will make it easier for everyone. Still 85% know there is a landline phone that will work if the power goes off, unless it’s cordless…

        Somerset

        2012/09/16 at 20:44

      • I hardly know a soul without a mobile, even those without mobile signal have one for when they travel. Battery backups are easily available for voip services. Far cheaper than paying for landline rental.

        chrisconder

        2012/09/16 at 21:43

      • Somerset says “Still 85% know there is a landline phone that will work if the power goes off”. Well I have a landline, I have power but my phone doesn’t work because my service provider is BT. I have been without phone or broadband now for 8 weeks and the reason is simple. The BT group of companies are Incompetent, dishonest and greedy, they have my landline in a monopolist vice-grip. If we had a choice of alternative providers, the British consumer wouldn’t have to suffer such poor service.

        forbesk

        2013/02/15 at 08:46

    • Most people have dect phones that need to be connected to the power supply. I did a quick check myself and of many old handsets (several from BT) none are the type that is powered from the phone line. I think Chris is right, if battery backup were an optional extra on FTTH few would complain.

      Malcolm Corbett

      2012/09/18 at 12:18

    • No they don’t, but a UPS from Amazon could set you back less than £50 and should keep your modem and VOIP phone running for several hours. Gigaclear are currently installing in my village and I can hardly wait till they get to my house. The overall cost, including a UK VOIP subscription, will be comparable to what I am currently paying BT for line rental and broadband (maybe £2-3 per month more) but the guaranteed symmetrical 10Mb will be a vast improvement on the ADSL I “enjoy” now. Those already connected are seeing speed test results in excess of 950Mb symmetrical at times.
      I don’t understand your use of the word “keep”. Of course Gigaclear keep all the money, they installed the cables and own the equipment, no one else is involved, they don’t go anywhere near the BT system or the local exchange. In the case of Openreach / ISP, you pay the ISP who ‘keep’ some of the money and pass the rest on to BT Openreach as the wholesale cost of the service and they ‘keep’ that portion.

      Peter Jennings

      2012/09/21 at 14:14

  4. The Gigaclear retail price doesn’t provide much useful information, they didn’t bid for the Framework so we don’t know what the comparative would be. As the Framework is presumably an a la carte menu of services for Local Authority projects to call off against it is likely that they are pitched at some sort of average scenario, rather than highly localised scenarios like Gigaclear or B4RN.

    PhilT

    2012/09/16 at 20:10

    • As you will remember, the criteria to qualify as a BDUK framework bidder were written to exclude small, local network operators, including wireless operators. Gigaclear was excluded from the start from bidding for BDUK money, so it’s a bit unfair of you to complain that you can’t judge what it might have offered. Blame KPMG and Pinsent Mason, and BDUK for rubber-stamping their recommendations. Besides, what is wrong with local communities doing it for themselves? All they want is cheap backhaul. Make ALA mandatory for all carriers, regulate transit prices, and watch Broadband Britain take off.

      Ian Grant

      2012/09/16 at 20:25

      • What do you do for the communities that do not want to do it for themselves? Look at the mess Selling has got into and the NextGenUs story.

        Where is the UK Network Operators’ Forum on ALA?

        Somerset

        2012/09/16 at 20:41

      • If communities don’t want high speed broadband, why force them? This isn’t Orwell’s 1984 UK. Yet. I don’t know about Selling, and NextGenUS had plenty of outside interference as well as personnel problems. C&WW tells me complying with ALA is not hard. I’m told BT’s GEA is an alpha implementation, so BT could in theory be compliant in weeks rather than months. If it wanted. Or Ofcom told it so.

        Ian Grant

        2012/09/16 at 21:05

    • I don’t understand why you comment about ALA but do not know the detail of why it’s relevant. See http://wooster.org.uk/2011/05/observation-british-broadband-2/

      Selling Parish Council signed up with an ‘altnet’, ICS. And this shows what having few skills in a parish council to manage a technology project can result in – http://forums.thinkbroadband.com/notspot/4143131-selling-village-broadband-project.html?fpart=all&vc=1

      Somerset

      2012/09/16 at 21:28

    • This is about giving all the ability to purchase high speed broadband. A community could be 10,000 or 10 people and any number, large or small, may want broadband. And that’s the problem.

      Somerset

      2012/09/16 at 21:45

  5. I don’t know why everyone thinks I am against BT, they are just a company doing what’s best for their shareholders and employees. I just think that we taxpayers are entitled to say where our funding goes, and I think its better spent on altnets than giving a massive company (who don’t actually need the money) it, to keep their obsolete assets going for another decade. We have to think about what is best for the country. And a monopoly selling to countless ISPs isn’t what most class as ‘open access’. I agree with Ian, get affordable backhaul to smaller companies and let them build new fibre networks, and if a community doesn’t want to help them then fine, let them have the 2 meg usc from BT and good luck to them.

    chrisconder

    2012/09/16 at 21:01

    • It’s the way you say it! It’s so important for all on forums to be sure of our facts and be able to back them up.

      What’s the cost, installation and annual, of typical affordable backhaul? Presumably the B4RN backhaul costs in.

      So BT don’t need the money for broadband rollout for all have obsolete assets…

      ps – I’m now on moderation here! Chris. would you please unblock me on twitter.

      Somerset

      2012/09/16 at 21:38

      • No, it’s not important to be sure of our facts on all forums. We are all ignorant about different things. The only sin is to remain willfully ignorant, and this forum is here as an information exchange, to try to make us all a little less ignorant. We all gain by sharing knowledge. And you are not moderated on this forum.

        Ian Grant

        2012/09/16 at 22:24

      • Yes, but surely question the obvious. Like ’24M is the top end for FTTC’ when there are many getting significantly higher speeds and finding out what is ALA all about and is there a reason it is not happening. Asking for suppliers invoices is a strange request without explaining how these would be interpreted.

        A previous posting said ‘awaiting moderation’ and then disappeared!

        Somerset

        2012/09/17 at 20:21

      • Please repost it, Peter. I assure you, this is a free-fire zone.

        Regarding the invoices – you can count what is charged for, and you can then check that against delivery and installation to see if you’ve got what you paid for. Why would there be any interpretation, unless the numbers don’t match? Even then, one would expect a plausible explanation and checkable evidence as to its veracity.

        Ian Grant

        2012/09/17 at 20:33

  6. regulate transit prices? thats the craziest idea I’ve ever heard. How would you even start to do that?

    As for ALA I’d love someone to explain what this and GEA has that is different!

    neilmcrae

    2012/09/16 at 21:05

    • Regulating transit prices is pretty easy if Ofcom lets you big boys tear each others’ prices to pieces. Just pass on the savings to the rest of us so we can grow your traffic. And then you can sell us guaranteed QoS. Unless you are a net neutrality advocate.

      See response elsewhere on ALA. I don’t know what the difference might be. Perhaps you can tell us. If there’s no difference, why doesn’t BT market it as such? Ofcom would like it.

      Ian Grant

      2012/09/16 at 21:13

      • Ian you’ve finally proved that you really don’t have a grip on any of the economics that make up how we build networks or the relationship between the various network components and services.

        The fact that IP Transit has been unregulated has seen the price reduce from £1000′s to around £1 per mbps/month and has seen the UK become one of the biggest Internet hubs in the world with more of the Internet routing table available here in the UK than anywhere else in the world.

        How would OFCOM regulate the cost of terminating traffic in the United States!? Or put a value on one piece of the Internet over another?! Guaranteed QoS is a myth if you run out of bandwidth you drop something. So for QoS just never run out of bandwidth, Tesco do the same with baked beans.

        Marketing!? Sorry I don’t think I get that- thats like saying why does Mars call their chocolate Galaxy and not chocolate!

        neilmcrae

        2012/09/16 at 21:29

  7. Chris,
    You can’t have your cake and eat it and your notion highlights the problem that we face. Owing to the way we have regulated the industry our country now has an broadband infrastructure that requires someone to make a loss. Either in the last mile, the middle mine or at the service layer. The number of real infrastructure alnets can be counted on one hand. And even then they are limited in the infrastructure that they build and most of them haven’t ever done any significant build for years or at all.

    If you tell me that its good value for the tax payer to have lots of companies building something and then collectively having a higher cost base versus a few that use economies of scale then I think you have your sums wrong. Telecommunications is an economies of scale business.

    On the point above, does anyone really think it only costs £100 to lay fibre and drill a whole into someones house? You can’t even get a TV aerial installed for that sort of money! (I work at BT now, but I use to work at C&W and COLT and I’ve dug more fibre round europe and the world than most people have had hot dinners). £100 is no where near what it costs to lay fibre into a building. Even a dolls house would cost more!

    Lots of carriers who started down the FTTP route are now backing off and heading to FTTC because the cost to deploy FTTP is simply far to expensive and critically people aren’t willing to pay for it, and if people aren’t willing to make a choice to pay for it then why should the taxman pick the bill up? FTTC upto 80M and G.FAST upto 1G will be good for the vast majority of people.

    Neil.

    neilmcrae

    2012/09/16 at 21:20

    • We ain’t got cake Neil.
      We ain’t even got mobile or even dial up in parts of our parishes. One area doesn’t even get terrestrial TV. (7 miles from a city). FTTC is no good where there are no cabinets? Line lengths of up to 11.5km.

      The taxman is picking up the bill to make folk who already have a connection go faster if BT get the funding.

      Far better to support altnets. Soft loans? get ROI? Use the money to get more bang for your buck.

      Most men of grit can drill a little tiny hole in their wall. Most families have a man who can wield a spade. A house install needn’t cost the earth, and communities can help elderly or infirm neighbours by sharing a dig and drilling a tiny hole for them. Why make a song and dance about it? Gigaclear are doing self install packs, thats a brill idea, and the sort that altnets come up with.

      We had to pay BT’s excess charges which ran into hundreds when they had to drill through a single brick last year – two vans – two men came for the one job.

      chrisconder

      2012/09/16 at 21:30

    • So what’s the solution for long lines, with or without cabinets, and EO lines? Not BET or satellite for obvious reasons…

      Somerset

      2012/09/16 at 21:47

      • one answer would be to dig fibre 12.5km – which I promise you will cost a lot more than £100 and probably more than £1000! It cost me personally £4,677 (plus vat!) to run fibre along my street about 8 years ago.

        There is a lot of work going on in this space and from my personal point of view, nobody is trying to solve these issues more than BT.

        neilmcrae

        2012/09/16 at 21:52

      • Neil – you have to tell us what possessed you to run that fibre! What did the decision tree look like? What’s your ROI?

        Ian Grant

        2012/09/16 at 22:28

    • Thanks for that, Neil. I think BT must shoulder some of the blame for the way things have turned out. Did no-one pay any attention to John Harper ? We are at a transition point – analogue to digital, fixed telephony to mobile data, etc. Risky but possibly fun, right? If we have too few altnets, BT has played its part in reducing competition. If, as you suggest, there’s money to be made as a carrier, why doesn’t BT get rid of the dross (eveything except Openreach)? Why spend almost 1bn on five years of sport broadcast rights? That really puts BT’s 2.5bn investment in 20 year+ NGA into perspective. I can’t speak with authority, but Gigaclear’s 100 fixed cost per house may indeed not cover the capital cost, but it does charge 37 a month – some of that may contribute to the fixed cost. The key thing is that the bits and pieces of plastic I saw (and you can see in the video here) looked less than 100 worth. The engineers at Adastral House might quibble, but the kit seems pretty robust. It’s amazing what you can dream up when you don’t have the access to BT’s cash resources, or have to pay its overheads, like Ian Livingston’ salary and pension. We shall obviously have to wait to see how Gigaclear’s tech works out in real life. I’m sure I can rely on you to keep us up to date if we miss something. But the important bit here is new business models. BT remains a gargantuan monopolist in a world that is increasingly based on cooperative crowd-sourcing (despite Google and Apple). Does BT think it’s too big to fail? This story shows the way it is positioning itself for a state handout for rural NGA suggests it has more in common with investment banks than with engineering companies, only less abject. As to the cost of NGA, as this story makes plain, BT plays games with costs and prices. Nothing wrong with that, but don’t expect anyone to believe you about your costs. Show us Huawei’s invoices if you want to start winning us over. Most people regard comms as a utility – if they can’t afford it, they change their behaviour, go without or find an alternative. We don’t care what it costs you; we care what it costs us. (That’s why BT prices fibre and copper broadband the same, right?). When you get that right, when you stand in your customers’ shoes and respond appropriately, you might start to win some hearts and minds.

      Ian Grant

      2012/09/16 at 22:17

      • Ian – do you really, really think seeing a supplier invoice would help understand anything and why is ALA important?

        Somerset

        2012/09/16 at 22:31

      • Wow Ian, you are fantastic at putting peoples words in their mouth and then babbling on irrelevantly with no real point made, nor responding to the points I made.

        All though to start with, I agree, you can’t speak with authority. In fact you don’t appear to be able to speak with real facts at all, made up hyperbole and anti-BT nonsense is all you seem to be able to pedal. Fixed to mobile? Absolute nonsense. The mobile guys are desperate for fixed, hence you see Voda buying C&WW.

        Why does BT invest in other stuff? Same reason as any other company of course! Because customers are asking for it, or because there are gaps in the market!! Its Marketing 101 Ian!

        The kit to connect customers is cheap, if it was just about that we’d have fibre all over the planet, sadly, if you had spent as much time researching the real costs of networks and the economics of networks, you’d know that the long pole in the tent cost wise is construction to customers homes.

        co-operative crowd-sourcing are you sure you aren’t in marketing? what has that to do with building networks? All though you might argue BTs partnership of the Olympics and Paralympics was co-operative crowd sourcing.

        Why would any company show its invoices to anyone? And we’ve already established that there are many parameters to how we build networks have we not?

        As for our customers I meet customers every week, the vast majority are over the moon especially with Infinity. Can we do better? absolutely and we will.

        and finally speaking for myself, a blind man with a cane could see that your story is far from proving any point, other than you perhaps you don’t like BT, let alone anything else.

        neilmcrae

        2012/09/16 at 22:47

      • Feeling better, Neil?

        You say regulations have given us what we have. How would you change them?

        Ian Grant

        2012/09/16 at 23:02

  8. Chris,
    The problem with your approach is that the vast majority of communities don’t have the expertise. If its voluntary community then why get the alnets involved at all? The technology isn’t obsolete, but it does have its limitations, fibre also has limitations, noted above with regards to voice, which I guess you need given you have no mobile coverage?

    Your solution that the taxman should pick up the bill is very questionable- I’d like a bigger hospital near where I live too but I suspect I will be disappointed, I’d like the taxpayer to run more police patrols so that the burglary spree going on here is reduced, I suspect I will be disappointed.

    The taxpayer is deciding, you just don’t like what the taxpayer has decided. And that is to get as many people as possible connected at fast speeds as possible, rather than focus on less than probably 1% of the country.*

    Regards,
    Neil.
    (* a guess at the size of the country in this position).

    neilmcrae

    2012/09/16 at 21:47

    • With all councils facing budget cuts the last thing they would want to get involved with is managing a high tech project like broadband. So then it’s down to individuals getting together and from experience, I’m sure we all know that the initial masses soon dwindle. So any community broadband project would find one of the ‘altnets’ to do the work. Yes, FTTP is ideal, but how many would take it up and what would the cost be of revisiting at a later date for a new installation?

      Remember how all the separate cable companies eventually merger into VM.

      Somerset

      2012/09/16 at 21:58

      • Nearly all carriers outsource all or some of their network build and operation. Ericsson is second only to China Mobile in terms of customers on its networks. Community networks could be just EE writ small.

        Ian Grant

        2012/09/16 at 22:33

    • Neil
      Every community has the expertise, within them live engineers, network managers, diggers, etc etc. They just need to get together if they want to. If they don’t, and if affordable backhaul is close by then an altnet can come in and do the job for them. If they don’t want either, then fine. There is no law says you have to be digital. The government wants folk digital to save money, on ehealth, education and security services. A good internet connection will do all those things. Leaving a third of the country on poor service is not the answer, and they don’t need to focus on 1%, they focus on that third, building from the hardest to reach places with the funding which spread to the rest, eventually reaching the 66% that BT can cater for and providing some decent competition. Its up to the government to create the right economic environment for competition, by levelling the playing field and giving support where it will do the most good. A lot of the levelling won’t cost them anything. The taxpayer isn’t deciding. The government is.

      *your guess
      *according to BT is the 10% they still say they can’t help, even with funding. This equates to a vast amount of area, where tourism, farming and travellers still suffer with connectivity and probably always will despite the hype of 4G.

      chrisconder

      2012/09/16 at 21:58

      • That’s an interesting view about community expertise but I think not realistic in the majority of places. The main problems with speed are on the periphery of exchange areas which makes the areas difficult to deal with.

        People with full time jobs may not want to get involved with the community broadband that needs 24×7 support. They may also want to charge realistic amounts for their time to install fibre into the local (profit making) businesses.

        Somerset

        2012/09/16 at 22:10

      • Unemployed and under-employed people in rural areas ma have a different view. How about spending some BDUK money on training and entrepreneurship to fibre up the not-spots.

        Ian Grant

        2012/09/16 at 22:37

      • I disagree completely. Few communities have the expertise. Yes random folks can dig random holes with spades, can they deal with optical power budgets? Or how to deal with broadcast storms? or multiple mac addresses? or mac-in-mac? IPV6? I don’t think so, and those that do have them, will they be able to rely upon those people for the longterm?

        you cannot manufacture competition. you can manufacture a fake scenario that makes it look like there is competition. In my view, our current regulatory model has done nothing for competition, otherwise we wouldn’t have the infrastructure gaps that you talk about.

        neilmcrae

        2012/09/16 at 22:24

      • ‘training to fibre up the non-spots’. The money would go to the company they would be working for.

        Somerset

        2012/09/16 at 23:06

      • Which would give them skills and employ them…doh!

        Ian Grant

        2012/09/16 at 23:41

      • Why spend money on training when there may be people available with the skills.

        Somerset

        2012/09/17 at 08:52

  9. So in summary:

    1. Men who cannot use a spade are less than men, and anyone who said that on radio would be hung drawn and quartered.
    2. It does not matter about broadband roll-out, as if people really want it they will DIY it
    3. BT is evil for trying to make a profit
    4. Getting people to work for free reduces cost of FTTP rollout
    5. About the content of the blog we are none the wiser, as to whether it means councils will need to pay more money above the contract signed amount in a year or two, or whether it is just a BT document used to show councils what various amounts of money will give them.
    6. Every community has a network engineer
    7. The plastic bits and bobs Gigaclear use look cheap and cost under £100

    Andrew Ferguson

    2012/09/16 at 22:41

  10. Personally speaking I’d de-regulate the entire industry – it would create opportunities for companies to build and compete with the knowledge that they would get a return on their investment, rather than risk building something only for a price control to wipe it all away.

    neilmcrae

    2012/09/17 at 07:40

    • That’s fair enough in an ideal world, even one as monpolised as the UK comms market. It wouldn’t stay that way, I’m sure. The Gigaclears and City Fibre Holdings would find their niches and grow them and perhaps even become regional and national telcos. Meantime, who takes care of the critical national infrastructure and gives communications data to the law enforcement authorities?

      That said, it would be nice to see BT inventing things again.

      Ian Grant

      2012/09/17 at 09:56

      • Inventing costs money, and we want to regulate BT to provide things at or below cost to allow altnets to install their final few metres of connectivity.

        Therefore how does BT pay for R&D?

        Not precisely true, but as true as most other comments around here.

        As for critical infrastructure, we have already decided that fibre is not critical as ok to go down during a power cut as the mobile phones will keep working. Or will they?

        Andrew Ferguson

        2012/09/17 at 10:21

      • How did mankind make it up to the 1860s without electrcity and telephones? Beats me. Besides, you make the case for sustainable power. Perhaps BT can invent a communications network that doesn’t run on mains power. There might even be some customers for it. Oh wait, it’s starting in India and Africa already.

        Ian Grant

        2012/09/17 at 10:44

      • When did I mention sustainable power? Putting words into my mouth when I did not utter them.

        I was just pointing out what had been said earlier, that battery backup is not needed for fibre, because we can all use mobiles.

        So many questions asked of the article, but so few answers. So hard to know what is conjecture and what is fact.

        Andrew Ferguson

        2012/09/17 at 11:23

      • Ask BT and BDUK to confirm or deny the figures in the model. Do your job instead of waiting for press releases. Or perhaps you aren’t a journalist, just a pretender.

        Ian Grant

        2012/09/17 at 13:10

      • How do you know I have not asked, and am asking both sides of the story, i.e. you too?

        You have inferred that BT will be asking for more money once project is underway, where as my information suggests this is more to do with showing councils that Xm from them gives this result, but X+Ym gives this result.

        Notice how I’ve not questioned about price of cabinet shell, duct clearing, but just your interpretation.

        By the way I am NOT a journalist, and ask you to retract your insults. Questioning facts I do not mind, but personal attacks I take umbridge at. Plenty of people I disagree with but still have respect for their views.

        Andrew Ferguson

        2012/09/17 at 19:13

      • OK so you are not a journalist, but you write stories and publish them on the Thinkbroadband website under the title Broadband News. I think that makes you a journalist. Fortunately perhaps, the barriers to entry to this trade are very low.
        Why do you think I interpret. I assure you, any interpretation is that of the author. I did offer before to let you have the originals if you asked nicely. I renew that offer. Then you can see how much or how little interpretation there is. Several people have taken up the offer, even though it was made to you; you haven’t. What is stopping you?
        Regarding the price of ducts, cabinets etc, the story makes plain that BT is doing its best to ensure that the actual figures are not revealed.
        I couldn’t care less what BT pays for goods if it uses its own money. When it asks for taxpayers’ money, I think all taxpayers have a right, even a duty, to make sure it is spent on what BT says it needs it for, and not to help make good a pension shortfall or fluff up executive pensions, etc.

        Ian Grant

        2012/09/17 at 20:53

      • Ian – what did you do before 2007???

        Meanwhile… This is no different to any council or government contract. How many of those require all invoices to be produced, who are you proposing should see them? Some council contracts could be very interesting.

        Somerset

        2012/09/17 at 21:18

      • Before 2007 I learned my trade and raised a family…still learning my trade ;-)

        I am astonished that contractors are not required to provide suppliers’ invoices if they give the work out. This may be one of the reasons EURIM worked out that public procurements are 30% more expensive for the same goods and services than in Europe. It shouldn’t be too hard to negotiate the contractors’ legitimate mark-up.

        Ian Grant

        2012/09/17 at 21:55

  11. I’d say that it’s good news because this shows that the government are actually taking the time to examine BT’s claims, which is important since commercial companies will always be driven by profit and seek to gain any advantage possible (normal). Still it’s harder to delve into this any deeper without seeing the document itself.

    Mark (ISPreview)

    2012/09/17 at 08:34

  12. [...] journalist Ian Grant wrote on his Br0kenTeleph0n3 blog on Sunday that he had seen an internal discussion document on the [...]

  13. [...] journalist Ian Grant wrote on his Br0kenTeleph0n3 blog on Sunday that he had seen an internal discussion document on the [...]

  14. [...] journalist Ian Grant wrote on his Br0kenTeleph0n3 blog on Sunday that he had seen an internal discussion document on the [...]

  15. [...] journalist Ian Grant wrote on his Br0kenTeleph0n3 blog on Sunday that he had seen an internal discussion document on the [...]

    • BT’s reply is misleading. The BDUK analysis suggests BT is trying to pass on the entire cost of extending BT’s coverage from 66% to 90% of the population, not the entire network upgrade. It is significant that BT does not deny the figures quoted.

      Ian Grant

      2012/09/18 at 09:29

  16. Pretty please can this programmer have the original data to verify the claim that a council that has publically announced giving £11m to BT, will at a later have to give another £11m that was not part of the original contract announcement?

    So to give an example.

    Council gets £5.5m from BDUK, matches with £5.5m. BT announces bid with £10m up total = £21m, but you are saying that if takeup is higher than a figure (20% you use) that another £11m on top of the £21m would be required, cancelling out the money BT claims to have invested?

    Also for those of us lacking brain cells, can you list what the new job types that BT is creating?

    Andrew Ferguson

    2012/09/18 at 13:24

    • Andrew, please reread the story and the table. There is no council that has given BT 11m – it’s BT’s model of 100k homes passed – and it contains the information you seek.

      Ian Grant

      2012/09/18 at 14:34

      • Let me add the words HYPOTHETICAL EXAMPLE

        Council ABC told £5.5m from BDUK. Finds £5.5m to match it. BT out of kindness of its heart and to win contract adds another £11m. This is all announced in a nice photo op with Bill Murphy in October 2012, where 90% superfast coverage is promised, i.e. buidling an extra 24 percentage points on top of the existing 66% commercial two thirds.

        So can you tell me, how BT gets more money? Than the £11m in the above example?

        Is it:
        1. BT in 2013 decides it will cost more to meet the 90% target so goes cap in hand and asks for more?
        2. BT in 2014 shows figures demonstrating high take-up meeting performance figure and gets a bonus as was detailed in the full contract?
        3. Council which told BT job was for 90%, changes mind and wants 95% at 30 Mbps not 90% at 24 Mbps, so hands over more money under change of contract terms?

        Remember I am dumb programmer and journalist, so need it not in spreadsheets, but simple examples. My basic understanding is that you are suggesting BT if it wins the projects will end up with councils having to pay double what they originally signed the contract for?

        Or are you trying to say, BT is jolly expensive, and the job could be done a lot cheaper, if it was not BT doing it? Which is very different and not the scandal you see to suggest, but actually normal business in the BT world who are never the cheapest for anything, unless a loss leader to win market share.

        The only scandal as far as I can see it is if councils signup and are forced to hand over more than the contract stated. BDUK/Ofcom has created scenario where BT is the only option.

        Andrew Ferguson

        2012/09/18 at 15:41

      • “BDUK/Ofcom has created scenario where BT is the only option.” I think you nailed it. And, as this report shows, BDUK may be growing a backbone. I am not privy to BDUK’s background thoughts and discussions, although I asked. Sullivan isn’t “allowed” to speak to me/the press, so the author of the paper on which this report is based is even less at liberty to speak to me. Therefore you should ask BDUK, and BT for that matter, to confirm or deny the scenarios painted in the BDUK document. In a matter like this (or perhaps I’m wrong, and 500m+ is neither here nor there, and never mind the end user), the lawyers would be banging on my door if there was anything wrong with the story. So far, BT’s reaction (Neil McRae here, Bill Broadband on Twitter) has been to make personal attacks on me, and to rubbish the story. Neither these gentlemen, BT or BDUK has offered a substantive rebuttal. Draw your own conclusions.

        Ian Grant

        2012/09/18 at 20:36

      • Ok so I’ve thought and analysed and its simple.

        Ian is actually saying the following:

        1. The first BDUK projects BT bid on they worked to certain assumptions
        2. Over time BT is changing these assumptions
        3. Thus price is increasing over time

        Why is this not a surprise?
        Because ask anyone in project management, you bid for work once, and one learning about the project you gain a better understanding of the costs. Or put simply: I say a coding job is 2 days work, it takes me 3 days, so when asked for similar job in future I will cost it for 3 days – simplez.

        Another reason is that BT is still in the middle of its FTTC/P roll-out, the FTTC is around half done, and FTTP is below its targets, so they are learning about the costs to deploy, and as each area of the UK has a different rural/suburban/urban mixture the costs will be different. Also some councils may ask for an Exchange Only line solution, and others not bother, which explains why some say 93% to 96% superfast, versus others saying 85%.

        I am willing to bet that if Fujitsu, C&W and others had bid for projects they’d have done similar as they come to understand the costs of implementation. At no time have I seen any insistance from BDUK that bidders have one set price, i.e. cost for 100,000 Cumbrian Homes MUST be the same as 100,000 Surrey Homes. Yes some elements like the cabinet and MSAN will cost the same, but Surrey might only need 500 cabinets to cover these people, Cumbria might need 750.

        Andrew Ferguson

        2012/09/18 at 18:32

      • Andrew – you say “you bid for work once, and one learning about the project you gain a better understanding of the costs.” You also learn how to do it better, so it should take you less time the next time, so costs should reduce over time.
        I understand the altnets didn’t pursue the BDUK contracts when it became obvious that the dice were loaded in BT’s favour. Ask Geo, or read this: http://br0kent3l3ph0n3.wordpress.com/2011/11/26/geos-exit-from-nga-leaves-questions-for-ofcom/

        Ian Grant

        2012/09/19 at 22:00

      • Ian – so answer my questions about my understanding of what you are saying in the article.

        Andrew Ferguson

        2012/09/19 at 09:37

      • I’m not “saying anything” in the article. I am reporting information that I think is news of material interest to many people. If my choice of material to publish “says anything”, it is that news is what somebody wants suppressed, and that all the rest is advertising. And that is not an original idea; merely the best definition of news that I’ve come across.

        Ian Grant

        2012/09/19 at 18:55

      • From the link ‘the restrictions are expected to leave BT’s monopoly in some two-thirds of the geographic UK intact, and to ensure that few if any residents receive broadband speeds greater than 24Mbps.’

        Are these words regarding 24M true that you wrote?

        Somerset

        2012/09/19 at 22:13

      • It’s early days. Ofcom says the present average across the whole of the UK, including 100Mbps Virgin Media customers is 9Mbps. What do you think?

        Ian Grant

        2012/09/19 at 22:28

      • Your statement was nothing to do with averages, you said few, if any, would get >24M. Clearly very wrong.

        Somerset

        2012/09/20 at 08:31

      • How can you tell that now? The roll-out with BDUK money hasn’t started.

        Ian Grant

        2012/09/20 at 17:20

      • You said ‘the restrictions are expected to leave BT’s monopoly in some two-thirds of the geographic UK intact, and to ensure that few, if any, residents receive broadband speeds greater than 24Mbps.’

        How can that be correct when VM covers 50% of the UK premises and even the existing take up of FTTC makes it more than the possible zero you suggest in the words ‘if any’. And VM and FTTC speeds for many users are well over 24M.

        Somerset

        2012/09/21 at 14:17

      • The secret is in the word “geographic”. Have a look at the Market 1 map.

        Ian Grant

        2012/09/21 at 15:15

      • Yes, i should have seen the word ‘geographic’, but few people see that as significant compared to the % of population. Do you know the percentage of population in the geographic 2/3?

        Somerset

        2012/09/25 at 13:53

      • 19.2% of premises (Ofcom 2007) are in Market 1. http://media.ofcom.org.uk/2007/11/15/ofcom-proposes-wholesale-broadband-deregulation-in-newly-competitive-markets/

        But let’s adapt Julian Barnes’ idea in England, England and move everyone to the Isle of Wight where it would be easier for BT to give each of us FTTP. It’s 384 square km, divided by 65 million of us, gives us each 5.91 square metres. That should bring down the cost of connection to manageable levels.

        Br0kenTeleph0n3

        2012/09/25 at 15:51

      • Are you seriously quoting a 5 year old report? Sky and TalkTalk have unbundled many exchanges since then. TalkTalk over 24m premises.

        Again, what is the population percentage in the 2/3 geographic you quoted that concerns you?

        Somerset

        2012/09/26 at 00:05

      • Please refer to the ONS for population statistics and map them onto Ofcom’s Market 1 map. I’d guess Pareto’s Principle work there. Or perhaps you know of a dramatic shift to the cities in the past years that puts that 2007 figure out by 50%. As you know, Sky and TalkTalk rent BT’s local leads, so I don’t know why you think that BT does not have monopoly on physical infrastructure. You are being deliberately obtuse. That’s not in anyone’s interests. Please try harder to engage with substantive issues, such as the potential boycott by Sky and TalkTalk of any non-BT Superconnected City. If you are truly concerned that the UK has a competitive market in broadband at all levels, start exploring the implications of that, should it happen.

        Br0kenTeleph0n3

        2012/09/26 at 22:12

      • Does BT have a monopoly on physical infrastructure in the UK when VM have ducts to businesses in areas not covered by their home product going through the 2/3. Similarly C&W have ducts running across the UK. However they choose not to provide a consumer product to every premises like FTTP. Maybe the cost of installing to a home and the income received do not stack up.

        Clearly the BDUK money is insufficient for FTTP everywhere.

        re the superconnected cities, is a boycott an issue when most of the areas probably have VM and FTTC? It’s businesses that will want the high speeds and TV won’t be important to them, they will use another ISP.

        Somerset

        2012/09/26 at 23:43

      • True. VM has ducts that pass 2/3 of the population, and Ofcom is under the impression that that is as far as VM wishes to go. That leaves BT with an effective monopolyinfrastructure in the 2/3 of the geographic UK occupied by the rest of the population. There is no point in other companies include C&WW offering a residential telephone service because only BT has that obligation and can use it to extort money it can apply to subsidise that service, and once that voice service is in, BT can sell other stuff on top of it, knowing its basic cost will always be lower than the competition’s. I think the government’s BDUK money was intended as seed money to attract more. Robert Ling, BDUK’s former projects manager, did a great job in persuading local authorities to bump it up to the point where communications minister Ed Vaizey now says there’s 1.5bn in the kitty. That might not fibre up every home in the country, but it’ll do a lot more than BT is planning with its FTTC roll-out. In fact BT appears to be inventing jobs and charges to soak up the extra money. Why is there a planning charge? BT knows or should know where all its kit is, and what condition it’s in, or else it hasn’t been looking after its assets. Can you explain what its proposed “Availability charge” is, or its “Connection bonus”? BT hasn’t yet responded to my query, so we can draw our own conclusions.. If that extra billion was used to guarantee loans to homeowners to buy FTTP, it could generate a whole lot more money from the private sector. Another way to use the money is to back municipal bonds so local councils could borrow against to fund FTTP, and recover it via a small increase in council taxes. Regarding the potential boycott, BT already claims to be able to deliver 80 to 100Mbps in the cities, so why should taxpayers give it 114m? If a threatened ISP boycott “forces” cities to give the money to BT, I expect to see an instant complaint from VM and others about illegal state aid.Is that what the country needs right now?

        Br0kenTeleph0n3

        2012/09/27 at 10:04

      • I could be wrong, but I believe that the Gigaclear installation in Appleton, Oxfordshire taps into the C&WW fiber system, so, whilst C&WW are not providing telephone service or FTTP, smaller third party companies can make use of it to do so.
        Whilst £1.5bn would not be enough to provide FTTP for the whole country, in a recent article Jon Honeyball pointed out that this could be done, in his estimate, for about £9bn, about 1/3 the projected cost of the HST London to Birmingham railway project. Obviously this would benefit the whole country rather than the relatively few who need to get from London to Birmingham 30 minutes quicker. Even if it cost the same, it still seems to me to be a far better use of £25-30bn.
        It greatly saddens me to remember that some 30 years ago, in the days of Maggie Thatchers scientific think tank, I told one of its members who asked me that the way forward was FTTP. Even then we had the technology, although I concede it was in its infancy and would have needed further development.

        Peter Jennings

        2012/09/27 at 11:19

      • Please post a link to the costing by the journalist John Honeyball.

        HS2 is also needed for capacity, not just time saving.

        Maggie said no to FTTP because it would affect all the different cable TV companies starting up, who became VM…

        Somerset

        2012/09/27 at 13:04

      • There is no link to Jon Honeyball’s article as far as I know. It was published in PC Pro Magazine for July 2012 pg170 and does not appear to have been subsequently published on their web site. It was entitled “Forget faster trains – pay for faster broadband”.
        It may be that HS2 is required for capacity, but it’s an obscene amount of money to pay for a relatively short section of track that will benefit only a part of the country. If FTTP were installed nation wide we might not need HS2 at all, the potential users could work from home with video conferencing. But HS2 is off topic and I respectfully suggest we leave it here.

        Peter Jennings

        2012/09/27 at 13:33

      • I was interested in how John calculated £9b. You don’t need FTTP to do video conferencing, 128k or more has been used for years and home working works for many on ADSL now.

        Somerset

        2012/09/27 at 20:04

  17. [...] journalist Ian Grant wrote on his Br0kenTeleph0n3 blog on Sunday that he had seen an internal discussion document on the [...]

  18. [...] to the Br0kenTeleph0n3 blog, BT was inflating costs, forcing local authorities to pay more for broadband projects aimed at [...]

  19. [...] public funding that it can get for its projects. This was asserted by journalist Ian Grant, who  wrote about seeing an internal discussion document on the matter from [...]

  20. [...] information he sent to councils to assistance them get improved value for income was leaked to a Brokentelephone [...]

  21. [...] after information he sent to councils to help them get better value for money was leaked to the Brokentelephone [...]

  22. [...] after information he sent to councils to help them get better value for money was leaked to the Brokentelephone [...]

  23. [...] after information he sent to councils to help them get better value for money was leaked to the Brokentelephone [...]

  24. [...] 12 million customers. The telco recently ran into a spot of trouble however when a whistleblower leaked data showing the telco was ripping off taxpayers by massively inflating [...]

  25. [...] after information he sent to councils to help them get better value for money was leaked to the Brokentelephone [...]


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