Br0kenTeleph0n3

Following the broadband money

Archive for July 2011

Ofcom price cut likely to cut rural access to fast broadband

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Ofcom’s  decision to limit the wholesale price of basic broadband in rural areas to 12% below inflation for the next three years from August is likely to reduce rural communities’ access to high speed broadband rather than increase it.

Ofcom’s decision relates to BT Wholesale’s IPStream product, which provides a basic 8Mbps broadband service to subscribers, and which Ofcom’s own map shows is honoured mainly in the breach of that promise. Ofcom hopes three million homes will get cheaper broadband as a result of today’s decision.

However, what rural subscribers need is competition between network operators based on infrastructure, not services. By not making BT either sell dark fibre or provide access to its passive infrastructure at cost, Ofcom is perpetuating BT’s monopoly in Market 1 areas.

Richard Brown, COO at Wispa, a Welsh rural broadband start-up said in a statement, “A reduction in the wholesale pricing of 10-12% has just given BT less reason to invest in rural communities due to constantly diminishing returns. The result? Rural broadband is worse off today than yesterday.”

He said the reduction in wholesale bandwidth costs of around 10% was not a 10% cut in costs to resellers and agents of 10% because wholesale bandwidth was a very small proportion of the cost to deliver rural broadband.

“Ofcom’s claim that rural broadband will be cheaper for millions of rural customers will actually increase the discontent within the subscriber base when it doesn’t happen,” he said.

Harsh words

Brown had harsh words for the regulator. “Ofcom seem to be going out of their way to prove that they are not fit for purpose,” said Brown. “This announcement… just demonstrates the total lack of understanding that this body has of a market it is supposed to be the independent governing body for.

“Ofcom, it would appear, have no real understanding of how to generate competition in the market place, and indeed today’s announcement has only served to damage the hopes and aspirations of rural providers and subscribers across the UK.”

ADSL2+ exempted

Ofcom said it decided not to place a charge control on BT’s ADSL2+ product, which could provide subscribers with a 24Mbps service. As Ofcom’s own figures show, the average speed received nationally by subscribers is 6.2Mbps.

Commenting on Ofcom’s decision BT said it was in line with the proposals that were widely reported on earlier this year, and would have no “material” effect on BT Wholesale.

It said BT Retail’s consumer broadband products had always been priced the same in rural areas as in urban areas. “This ruling is therefore of more relevance to those ISPs who currently charge a supplement in rural areas,” it said.

Ofcom said in a statement it hoped ISPs would now invest in rural broadband networks and compete with BT Wholesale.

A spokesman for the Internet Service Providers Association (Ispa) said, “Many ISPA members already offer broadband to rural areas in innovative ways. However, ISPA believes that the increase in competition will encourage further investment and encourage the take-up of rural broadband.”

Rural investment

The decision “will also incentivise BT Wholesale to upgrade services where it is efficient to do so,” Ofcom said.

Asked if the decision motivated BT on those lines, a BT spokesman said, “We’re continually reviewing our plans for our ADSL2+ footprint in Market 1 (the so-called Final Third where BT has a monopoly) and we will continue to invest as long as its commercially viable.”

BT CEO Ian Livingston has said BT would provide matching funds if it was given most of the £530m budget controlled by Broadband Delivery UK, part of the department of culture, media and sport. This would enable 90% of UK residents to receive at least a 2Mbps broadband service.

BT plans to spend £2.5bn rolling out an “up to” 40Mbps service based on fibre to the cabinet (FTTC) to two-thirds of the population. It is also experimenting with a 100Mbps fibre to the home product.

UPDATE

Adrian Wooster of BroadwayPartners says, “We recognise that action is needed in this arena but surely Ofcom should be encouraging new investment in infrastructure – particularly in rural areas where BT has already signalled its disinclination to invest.

“The Ofcom action in lowering wholesale charges for last generation access connectivity seems designed to encourage ISPs to deny transformative opportunities for businesses, consumers and communities working in those areas  that are already underserved.

“Ofcom should argue for a policy of selective tax breaks for new utility infrastructure investment. This is a far more enlightened response to UK economic growth needs  than attempting to shore up BT revenues from legacy access networks.”
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Written by Br0kenTeleph0n3

2011/07/20 at 11:06

CLA to produce a national broadband wayleave deal

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The Country Landowners Association (CLA) is working on a national wayleave agreement that could regulate relationships between landowners and broadband network builders and speed up the provision of high speed broadband in rural areas.

A draft of the agreement has been sent to the National Farmers Union (NFU), which shares a high percentage of members with the CLA. But lawyers for the NFU have questioned the impact of competition legislation on the agreement, suggesting that it might run foul of cartel provisions in the law.

The CLA is currently clarifying this impact, and if it exists, will seek an exemption in the light of the public interest in such an agreement. It hopes to complete the agreement by mid-October.

The proposed agreement is advisory rather than mandatory. The lack of a standard wayleave agreement, even if it is only a guideline, has been seen as an important obstacle to building next generation networks. Many parishes and villages are frustrated by the lack of progress on high speed networks in their areas.

If it comes into force, it will help to regulate negotiations between network builders and landowners on rentals to be paid for crossing land. This will speed up talks and also offer alternatives to BT’s physical infrastructure for network routing, particularly fibre networks, in rural areas.

Around 120 companies have so-called code powers to dig up roads and put in “holes and poles” to install network infrastructure. The proposed CLA agreement would allow firms without code powers to agree deals with local landowners that could give them a competitive advantage over network operators like BT and Virgin Media. However, BT and Virgin Media would also be able to take advantage of the agreement

The present network was optimised for analogue telephony based on copper wires. The design of a digital fibre network would look quite different to the old copper network.

As delegates to the County Broadband conference for Essex parishes heard last night, providing next generation broadband to a village with 100 houses could require separate wayleave agreements with up to 20 landowners, not all of which could be found easily.

This has held up progress on network builds, particularly for the so-called “middle mile” that connects local distribution cabinets to exchanges or points of presence and then to the core national carrier networks and the internet.

Standardising the terms and conditions would at least provide a starting point for negotiations, and speed up the delivery of next generation broadband to parishioners.

The CLA believes this is crucial to narrow the gap between urban and rural broadband access and pricing, to help farmers diversify into sustainable alternatives to farming, as well provide access to public services that are increasingly delivered online, such as renewing licences and submitting taw returns.

Written by Br0kenTeleph0n3

2011/07/19 at 08:17

Rural businesses likely to lose out on BDUK broadband

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Between 200,000 and 300,000 UK businesses are unlikely to benefit from the government’s £530m boost to build high speed broadband networks, according to the Country Landowners Association (CLA).

Speaking at a meeting of more than 100 representatives of 80 Essex parishes last night, the CLA’s head of rural business development Charles Trotman said the latest Ofcom broadband map showed that 20% of the country’s 476,000 registered businesses were unable to receive a 2Mbps broadband service.

“If you add all the unregistered rural businesses, the real figure is closer to 200,000 to 300,000,” he said.

The meeting was set up by County Broadband, a wireless broadband supplier. County Broadband has specialised in getting broadband into villages that are unlikely to receive high speed broadband under the published plans of BT and Virgin Media, the UK’s two main commercial broadband operations.

These plans are concentrated on urban areas that cover two-thirds of the population. Both say they could increase coverage to 90% with BDUK money. Virgina Media is silent on what service people in rural areas might get from it, but BT says its minimum speed would be 2Mbps. As this could be a contended service, the actual speeds experienced could be lower.

Recent documentation seen by Br0kenTeleph0n3 suggests the government wants every consumer to get a minimum 2Mbps service by 2015, but there is no overt commitment to businesses.

Trotman said broadband was essential for farmers to improve their incomes by diversifying from farming. One West Sussex farmer he knew of had lost a £150,000 a year tenant because of a lack of broadband. Another on the Welsh/English border faced losing 25 tenants who were running small businesses and needed high speed broadband to cope with orders that came in from around the world, he said.

“The bed & breakfasts are still there, but the tourists aren’t because there’s no broadband, and in some parts of the country, you can’t sell a house without a good broadband connection,” he said.

Trotman said broadband could have a huge impact on a small business’s costs. He spoke of a Sussex fishmonger who phones Thailand twice a day to order fish. Doing it by phone rather than on Skype would have cost him at extra £20,000 a year, Trotman said.

“Government has still not recognised that broadband is the fourth utility,” he said. This would perpetuate the digital divide between urban and rural broadband services, he said.

“Broadband is the revolution of the 21st century. It is the dynamo that will be power up the rest of the economy.”

Written by Br0kenTeleph0n3

2011/07/19 at 06:21

Angry parishioners seek broadband alternatives

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This evening an Essex village hall will host a meeting at which more than 140 people who represent around 80 parishes will discuss how to improve the broadband service their parishes receive.

These are almost all people who have been promised broadband, paid their money, and been, at best, short-changed.

They are mostly angry and frustrated.

They are not alone.

It shouldn’t be this hard. There’s a market out there that wants broadband. There are suppliers kitted up and fitted out to deliver it. Why can’t they get it together?

There is plenty of evidence that there many communities both rural and urban that now do not get a decent broadband service (i.e above 2Mbps reliably. See the map of Cumbria, for example) are willing to pay to get it.

However, the suppliers, at least the ones that are qualified to pitch for government money through local authorities’ procurement procedures, would rather talk to county councillors rather than to customers.

As a result, as Br0kenTeleph0n3 reported previously, some frustrated communities are getting ready to just do it themselves.

This is risky. There are unconfirmed reports that South Yorkshire’s Digital Region Ltd is on the brink of collapse. DRL rents its network from BT, and recently won a regulatory review of BT’s pricing of local loop unbundling products.

UPDATE

DRL says it was “surprised” to be contacted about the state of its financial health. “Our deployment of super fast broadband across the South Yorkshire Region is currently ahead of schedule and Phase 1 (80% coverage) will be completed by December 2011 in line with the project plan,” it said.

DRL wanted BT’s price cut to around £50 per line. In a letter sent to BDUK in April, Fujitsu Telecommunications and internet service providers claimed BT’s prices were four to five times its actual cost. As a result of DRL’s complaint, communications regulator Ofcom may drop BT’s “metal path facility” (i.e. a copper pair) price 10% from the present £91.50.

In addition, while BT has announced that it will enable some exchanges with high speed fibre, it has not said which street cabinets it will upgrade to “superfast” broadband. It has said previously as few as 70% of subscribers served by a steet cabinet may get the higher speeds of “up to 40Mbps”.

Nor has it said definitively where it will not upgrade its network. It has said it will provide a “superfast” broadband service to 90% of the country if it gets most of BDUK’s £530m budget, but it either cannot or will not say where the 10% live who will not get the upgraded service.

This creates fear, uncertainty and doubt among potential broadband investors and subscribers. Few investors wish to risk creating demand, put in a network, and having BT come in and underprice them, which it can easily do, thanks to the scale at which it operates and because it is probably the incumbent supplier.

In addition BT is usually the only source of backhaul, the link from the street cabinet to the national carrier networks. Potential not spot network operators are reluctant to discuss their plans with Openreach, BT’s physical network provider, for fear that other BT divisions may get wind of them, and scupper them.

There is little doubt that this uncertainty has slowed investment in networks in general and in rural networks in particular. There are stories that lack of broadband is helping to depress house prices, and many rural communities have blamed lack of high speed broadband for holding back economic growth and for depopulation of the countryside.

Ofcom is formally required to ensure that potential investors have more certainty about the investment climate. Its success on this score is evident from the number of investors and network operators providing broadband services to subscribers.

Tonight’s meeting will give further insight into whether the pent-up frustration with the slow or non-delivery of high speed broadband can spark innovative ways around the present obstructions.

Written by Br0kenTeleph0n3

2011/07/18 at 10:30

BDUK misson creeps to include very high speed city networks

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Broadband Delivery UK, the government agency set up to deliver high speed broadband to the country’s broadband “not-spots” is to review proposals for very high speed broadband in cities.

This was revealed in a job advertisement for an accountant. It said, “BDUK is also taking forward other ministerial priorities such as proposals for very high speed broadband in cities.”

The department of culture media and sport, to which BDUK reports, did not respond immediately to a request for comment.

Until now the government has said the BDUK’s £530m budget is to ensure that  so-called “final third” of homes and businesses currently without a decent broadband service will get  one. It has said it will rely on the market to deliver high  speed (above 24Mbps) connections largely in towns and cities.

It is therefore not clear why BDUK should be involved in urban networks.

Virgin Media is already testing a 1.5Gbps network at London’s Tech Hub in Old Street, and BT has said it will have spent £2.5bn on fibre to the cabinet (FTTC), with a little fibre to the premises (FTTP), by 2015. It has started rolling out some 100Mbps FTTP projects in high density locations.

UPDATE

Br0kenTeleph0n3 asked the DCMS press office the following questions about BDUK’s apparently extended mission:

What proposals for very high speed broadband networks in cities is BDUK looking at?
Who has submitted them?
What time period do they cover?
How much taxpayers’ money could be involved over and above the £530/£830m already earmarked for not spots?
BDUK was set up to address the problems of broadband not spots. This looks like mission creep. Is it?

This is its reply in full:

“Broadband Delivery UK – a team within DCMS – was set up to deliver the Government’s broadband strategy, bringing superfast broadband to all parts of the UK.

“The Government wants the UK to have the best superfast broadband network in Europe by 2015.

“Our priority is to ensure the whole country can join the digital age by helping take superfast broadband to areas the market will not serve on its own.

“We have set out plans to provide 90 per cent of homes and businesses in each local authority area with superfast broadband access and everyone with access to at least 2Mbps.

“We are also exploring other ways to ensure Europe’s best superfast broadband network is in the UK.”

Written by Br0kenTeleph0n3

2011/07/15 at 16:12

BDUK offers £50k/y to watch broadband spend, and £16.5m internal budget

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It’s nice work if you can get it. BDUK, the government agency charged with delivering the best national broadband network in Europe by 2015, is looking for a Mr (or Mrs) Moneybags.

The person, who will be paid between £45,380 and £54,595, will manage BDUK’s £530m budget to help local authorities and enterprise partnerships roll out high speed broadband in those parts of their counties, towns, villages and parishes that other networks won’t reach.

They will also manage the £16.5m, five year budget for BDUK’s staff of 25 to 30 civil servants, consultants and advisers, the job ad says.

Assuming BDUK maxes the headcount, that averages £110,000 per year each. Presumably the difference between salary paid and budgeted reflects a nice office, desk and chair for our keeper of the BDUK purse-strings.

The way chancellor George Osborne and culture secretary Jeremy Hunt have been throwing money at Wales and some of the counties, around £110m by now, and with the procurement framework pretty much in place, it seems that the heavy lifting is largely done.

But someone still has to keep an eye on the recipients of the taxpayers’ largesse. “BDUK will need to ensure that the money is granted on a sound basis, and that spend is properly managed and reported back by LAs,” it says.

Anyone fancy the job, get a wriggle on. Applications close at 5pm on 28 July.

And if you want to know more, Andrew Field is your man, tel 020 7215 0152 or Andrew.field@culture.gsi.gov.uk

 

 

 

 

Written by Br0kenTeleph0n3

2011/07/15 at 15:43

NGA funding chasm revealed as Kroes meets industry CEOs

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A massive funding gap will make it hard or impossible to meet the European Commission’s Digital Agenda targets by 2020, yesterday’s meeting between Digital Agenda champion Neelie Kroes and communications industry CEOs revealed.

Kroes told the CEOs yesterday she hoped the commission’s proposal for €9.2bn between 2014 and 2020 would unlock over €100bn in private investment.

McKinsey, a consultancy, estimates the cost of achieving the Digital Agenda goals at around €300bn. The European Investment Bank told Br0kenTeleph0n3 it would cost €200bn.

The Digital Agenda targets are basic broadband for all by 2013, universal access to 30Mbps, with 50% using 100Mbps services by 2020. Kroes asked the CEOs in March for proposals on how to fund the investment needed to achieve them.

There was clearly no consensus. Kroes said in a statement, “While it is understandable that commercial players try to maximise their own advantages, we also need to recognise that we have common interests.”

She said there was more mutual understanding about the issues, especially that digital video distribution is likely to be crucial in stimulating demand for high speed broadband.

However, there is growing evidence, such as the rise in uploads to YouTube, that audiences are becoming increasingly prolific producers. This will increase demand for higher upload speeds.

Kroes reiterated the European Commission’s support for a “robust best-efforts internet to which everyone has access”, saying it’s up to industry players to find commercially acceptable contracts, and that regulation will be a last resort.

Kroes said she wanted more time to study the CEOs’ proposals, but added some points were already clear. These were:

  • The maturity of high-speed networks differed across Europe and take-up levels were “disappointing”.
  • Investors were unwilling to commit funds for a massive NGA (next generation access) roll-out.
  • With uncertain short term demand for very fast broadband, a switch-off date for copper was unclear.
  • Consolidation and specialisation of network operators could create the scale and certainty required to attract investors.
  • There should be a single pan-European regulatory regime.
  • More open and interoperable technical standards were needed to improve efficiency and create uniform wholesale network access products.
  • Net neutrality, i.e. a robust best-efforts internet to which everyone has access, should be preserved. “Players at different levels of the internet value chain should be free to reach commercial agreements to innovate and develop new business models,” Kroes said.
  • The commission accepted that internet service providers should self-regulate the transparency of the terms, conditions and performance characteristics of the products they sold.

The CEOs’ proposals were put to Kroes by Ben Verwaayen of Alcatel-Lucent, René Obermann of Deutsche Telekom and Jean-Bernard Lévy of Vivendi.