How Maria Miller can save British broadband

Miller – talks are not just about saving face, we hope

If tomorrow’s meeting to get a grip on the provision of next generation broadband access (NGA) in the “Final 10%” is not to produce a damp squib, the government needs to commit itself to true competition in telecoms market.

Culture minister Maria Miller called the meeting between her, communications minister Ed Vaizey, and representatives from BT, BDUK and six would-be alternative network operators (altnets) who are looking for money from the Rural Community Broadband Fund (RCBF) in the wake of the highly critical National Audit Office report into value for money from the rural broadband process overseen by BDUK.

Some of the six altnets have been waiting more than a year because the fund won’t release the money until it knows for sure that the areas the altnets plan to cover won’t be over-built by BT’s BDUK-funded roll-out.

BT claims commercial confidentiality in the terms and conditions of its contracts with local councils, especially the speed and coverage details of its roll-out, Besides, they are subject to change following a survey of its local assets, it claims.

BT may claim, but the claim does not stand up. In the appeal of Derry vs the Information Commissioner, the Information Tribunal “upheld the ICO view that a written agreement between two parties did not constitute information provided by one of them to the other, and that therefore, a concluded contract between a public authority and a third party does not fall within section 41(1)(a) of the (Freedom of Information) Act.”

S41 is the bit about commercial confidentiality.

The tribunal went on to say, “We are aware that the effect of our conclusion is that the whole of any contract with a public authority may be available to the public, no matter how confidential the content or how clearly expressed the confidentiality provisions incorporated in it, unless another exemption applies.” (Emphasis mine.)

It also noted that depending on the circumstances, some information obtained from a third party may count as confidential. This was information regarding a pre-contractual negotiating position, and “technical information” either contained within the body of a contract or provided as a separate schedule.

Regarding prior negotiating positions: as noted by reader Mike Phillips, the councils last year ran their open market consultations to identify the so-called ‘white areas’, i.e. locations that require subsidy as well as the ‘no-build’ areas that BT would not consider for three years.

It is not clear why BT should be granted the latitude of service delivery promises being “subject to survey” when it is not available to other suppliers, nor that end users should be denied a higher degree of certainty about where, when and what kind of service they might receive from BT.

BT and the local authorities with whom it has contracts might like to argue that the speed and coverage templates (SCTs) falls into the “technical information” category.

BT is not using secret technology to fulfill its BDUK contracts . It is hard to see why it should keep the SCT secret. However, it does stop altnets from identifying and working in the remaining white areas. This cannot in the public interest, and one could argue that for local authorities to think and act otherwise would be in dereliction of their fiduciary duties.

Having sought and received legal opinion on publishing the SCT details, it is inconceivable that BDUK is not aware of these issues. Moreover, in response to a Freedom of Information request, it has indicated that it expects the SCT details to come out in due course.

One need not wonder whether BT will defend its carefully-orchestrated position and resist the disclosure of SCTs. It has form. The FOI trail on Liverpool Direct (BT’s controversial joint venture with the Liverpool City Council) and here and here shows how hard it will fight (but lose) to keep its contracts secret.

Just who will fight BT’s corner has been subject to change. However, it was revealed on Friday that BT had dropped Sean Williams, its head of strategy, who spoke for the telco when the House of Lords was interested in broadband. BT will now be represented by Openreach CEO Liv Garfield and NGA roll-out boss Bill Murphy, who were the original choices.

Had Williams stayed on, Miller would be been within her rights to question his deal-making authority. This is because Ofcom has required BT to run Openreach “functionally separate” from its other operating companies, even though Williams admitted to the lords that Openreach contributes to and shares the same capital pool as the other BT operating companies.

Because of “functional separation” Williams would be have been hard-pressed to commit Openreach to anything. If he could, it would reveal functional separation as a myth and possibly expose Ofcom for improper application of its own regulation.

Whether this matters is moot. At the annual seminar of INCA, the Independent Networks Co-operative Association, last week, Frank Mather, the DG Connect official who looks after the UK broadband issues, said the European view was that Britain has forsaken competition for transparency as a way of regulating and achieving its broadband goals.

The NAO showed how successful that strategy has been with respect to the £1.2bn BDUK process. In fact, both MPs and civil service have done even worse trying to govern using transparency – the banking crisis, Libor, crime statistics, even MPs’ pay, to name some more serious incidents.

In a recent blog, the well-connected Philip Virgo paraphrases economist Michael Beesley’s insight that “it is impossible for officials or regulators to understand that cost bases of the industries they seek to plan or control. Therefore they should not try. They should instead focus on quality of service, price and barriers to competition (particularly those blocking innovative new entrants), leaving those regulated to work out how to exploit opportunities to make more money by using innovation to deliver better services at lower cost. ”

Part of Beesley’s heritage is due his exposure to the privatisation of British Telecom in the 1980s. In an obituary, Christopher Foster wrote of Beesley, “Sir Keith Joseph asked him to look into the possibility of liberalising British Telecom. Though not all his recommendations were accepted, he argued for more competition than the government was ready for (it would have been better if he had been listened to). Nonetheless, his views were influential on the form of that privatisation – and all subsequent privatisations, and their regulation.”

Beesley’s ideas were later incorporated in the monopoly price governing formula “Retail Price Index-x%”, which Ofcom modified to “Consumer Price Index-x%” in its latest proposals governing Openreach’s monopoly over wholesale broadband and landline services.

So what can Miller get from tomorrow’s meeting? Clearly BT must give her a bone to throw to the Public Accounts Committee, which meets to discuss the NAO report, to save her face. The (leaked) Pennell report that BDUK “lacks commercial nous” suggests she now has the power to bend her civil servants to her will or to ignore them.

Malcolm Corbett, INCA’s executive director, who will be at the meeting, says altnets will be seeking the following:

• that the six projects in the room get their money and protection against BT overbuilding them for a period
• that BT publishes its actual costs, ie invoices and payslips, for state-aided NGA roll-outs
• that Miller re-opens negotiations on Open Access with respect to BT (and other networks) poles and ducts and even fibre
• that the government allows the introduction of alternative models to gap funding and sources for future roll-outs. (The INCA seminar revealed that the only public money in Stockholm’s highly successful Stokab dark fibre to the premises network was SEK50,000 spent on the feasibility study; the rest came from government and bank loans and re-invested profits.)

Fed-up farmers dig for B4RN

One more thing Miller might get. The INCA meeting heard that there is apparently a consultants’ report doing the rounds in BDUK that cross-matches business premises against postcodes and BT’s NGA roll-out. The relationship is inversely proportional, ie the more densely businesses cluster the less likely they are to be passed by BT fibre. This is because BT doesn’t want to swop relatively lucrative leased lines for cheaper broadband connections.

There is plenty of evidence:

• the legal challenge to BDUK’s original Superconnected Cities project
• Virgo’s reportage of BT’s preference to build fibre to the home in sparsely-populated rural Lancashire in competition to B4RN rather than crowded EC1
• former BDUK-community linkman Mike Kiely’s frustrated attempts to get fibre into a Shoreditch co-op that houses 89 mainly high tech start-ups
• a new proposal from BT to Lorne Mitchell’s Goudhurst NGA project, just as they are about to award a contracts, among others.

If true, it shows two things. One is that BT responds only to competition. Secondly, it appears BT is sabotaging Miller’s efforts to build Britain’s economic renaissance on the networked creative, innovative, entrepreneurial sector. Four hundred years ago the heads of those responsible would have decorated London Bridge.