Br0kenTeleph0n3

Following the broadband money

BDUK to preserve BT’s rural monopoly

with 16 comments

Many suspected but there was no proof until now: Broadband Delivery UK, the government body charged with procuring the “best superfast broadband network in Europe” by 2015, intends to preserve BT’s monopoly on physical communications networks throughout most of geographic Britain.

This means service providers who want to deliver terrestrial services to rural areas will have to use the physical network owned and run by BT’s Openreach. End users’ choices will be determined exclusively by Openreach’s capabilities and willingness to do business with service providers.

This was revealed in the document in which BDUK outlined its delivery model, dated May and published last month.

In it the agency said, “The primary focus of BDUK is on stimulating private sector investment in the data transport and local access elements of the UK’s broadband communications infrastructure in areas of the county that the private sector, by itself, will not deliver.”

The key part of that statement is “data transport”. In the OSI seven layer standards model of networks, this is Layer 2, immediately above the standards for physical items such as cables, fibres, routers and electricity (see picture).

BDUK’s statement means that all its efforts and money will be directed at encouraging service providers to rent their access to end users from Openreach. This means BT will continue to have the final say over who can sell what to whom, despite Openreach’s “functional separation” from the rest of BT.

Openreach (and Ofcom) will argue that it has “Chinese walls” in place to ensure that other BT divisions do not become aware of competitors’ plans. But a study by Berec, the European communications regulators, published in February noted a number of problems with the results of Openreach’s alleged isolation. These include:

  • late delivery of products to a lower specification than promised
  • delays in developing a “commercial” attitude to customers
  • separating Openreach’s systems (e.g. sales orders) from BT’s was still “extremely challenging”
  • Openreach was slower to separate business-oriented systems from residential ones.

Commenting on Berec’s case study of the impact of Openreach’s functional separation, Telefonica said it “seems to convey the impression that FS has been a complete success in UK, when there are evident signs that the case is not so clear.”

To be fair, Openreach does have competitors. These include the mobile network operators, satellite operator BSkyB, wireless broadband operators such as Kijoma in Sussex, who control their own wireless access to end users, and scores of operators who have taken advantage of local loop unbundling.

But these firms mostly need to use Openreach for “middle mile” backhaul to the core national networks and are therefore competitively vulnerable.

BT’s most dangerous competitor is cable TV operator Virgin Media, whose core fibre network, coupled with coaxial cable from the street cabinet to premises, covers about two-thirds of the population and offers higher speeds and better reliability.

There are a few tiny community-based initiatives, such as B4RN, which is seeking private funding to build a 1Gbps fibre to the home network for up to several hundred homes and farms in rural Lancashire. They plan this network to be completely independent of BT.

The people behind B4RN are right to pursue private funding. The BDUK delivery model document, and the qualification thresholds of the broadband procurement framework it is developing, makes it clear that B4RN will never receive any of the £830m seed money BDUK has to achieve it’s top priority of stimulating investment in the UK’s broadband infrastructure. It might get a slice of the £20m that Defra has, but pinning their hopes on that would be foolish.

If this was not enough, the prices, terms and conditions of Openreach’s revised reference offer for renting its physical infrastructure (poles, ducts, floor space in exchanges and street cabinets etc, aka physical infrastructure access or PIA) should leave no doubt. BT halved some prices but introduced new ones and raised others.

BT spokesmen say there are “no restrictions” on what end users or businesses may do with any copper cables they add to Openreach’s ducts, but any fibre they put in may be used only to service homes.

Update

After some discussion on the uses of fibre under PIA, a BT spokesman says, “It’s more accurate to say that CPs can’t offer business services such as leased lines using PIA and it’s certainly inaccurate to claim that a CP buying PIA is not able to compete with BT for wholesale access. CPs will be free to provide wholesale access to other companies.”

BT’s offer is subject to negotiation. But there is some confusion as to who should rule on what Openreach must do. Ofcom, the communications regulator, insisted that Openreach produce the PIA offer. But BDUK says “The broadband policy team in DCMS (the department of culture media an sport) is responsible for the development of the government’s policy on broadband, creating a level playing field between incumbents and new providers, and the deregulation of access to infrastructure to facilitate superfast broadband.”

DCMS minister Jeremy Hunt has already made public his displeasure at the length of time Ofcom has allowed Openreach to revise its initial offer. It took Openreach three months from October 2010 to the end of January 2011 to produce its initial reference offer. This was rejected almost at once by its potential PIA customers as being too expensive and restrictive. It then took nine months until October to produce the revision.

BT argues that it wanted potential customers to test the system; critics such as the Communications Management Association, which speaks for business users, say the trials were an irrelevant delaying tactic aimed at introducing uncertainty to competitors’ bids for BDUK money.

BT says it can get copper to go faster. It might. But it would appear that people living at the end of long local copper loops will never enjoy those speeds from BT. Obviously, not many people will suffer this. Why then are they not allowed, even encouraged, to find their own solutions?

The apparent lack of official concern about BT stonewalling, the impunity with which BT has been able to stifle community or competitor broadband projects, and BT statements in Europe about its commitment to copper amount to one thing: some people in high places have been convinced that BT is too big to fail. Like the iniquitous business rates tax, that amounts to yet another tax on Britain’s economic capacity. Can the country really afford it at this time?

Update

B4RN’s Chris Conder points out that B4RN is offering subscribers a 1Gbps service from the start, and that although the first phase is expected to service 1,300 homes, the network is specified to 200,000. This leaves plenty of room for the several thousand homes within B4RN’s reach. I have corrected the speed figure in the article above.

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Written by Br0kenTeleph0n3

2011/10/17 at 08:00

16 Responses

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  1. The PIA is a joke. Rural community networks would never be able to afford the costs for clearing out the ducts and the other ancillary charges associated with leasing dark fibre. Its a stitch up to preserve the assets of an obsolete monopoly. The copper cabal is alive and well and throttling the economy.

    Support b4rn and lets show them how to break this monopoly and get market forces into play to up the game and build a digital britain.

    Chris Conder

    2011/10/17 at 08:21

  2. Given that Openreach appears to be the Government’s choice for delivery of access to broadband, as well as for the provision of backhaul, the case for full, structural separation is becoming overwhelming. DCMS and Ofcom owe us a public debate on the pros and cons of creating an independent, wholesale company in the national interest, competing against VM, Fujitsu and a consortium of smaller players (eg: INCA)

    David

    2011/10/17 at 09:41

  3. Ian,

    Great post. My solution is that proposed by John Harper back in 1997 (when he was at BT) in that the access network should be in the “common wheal” i.e. owned by all comms providers (via shareholdings). Needles to say, the model wasn’t taken forward. I observe that the CEO of Openreach reports into the main BT Board!!

    John Nolan

    2011/10/17 at 14:32

    • Yes, Openreach does report to the BT board, but it has Sir Bryan Carsberg and others in the EAB watching very closely what it does. And the EAB is especially concerned (or was) about BT’s PIA offer, which we can now all see is theatre to distract attention from its primary mission to keep out competition based on physical alternatives. Hence David’s call, effectively speaking, for Openreach to be nationalised in the public interest.

      Ian Grant

      2011/10/17 at 21:22

      • Ian,

        just musing, but couldn’t the John Harper model be just that i.e. a nationalised Openreach? Don’t have much confidence in the EAB – do you know if minutes of meetings are published?

        John Francis Nolan

        2011/11/20 at 16:54

      • Hi John

        The EAB (Equality of Access Broad) publishes an annual report and occasional reports. The latest is here.
        You are not the first to raise the prospect of nationalising Openreach. The Communications Management Association is a strong advocate of it.
        I think it would be wrong, and would quickly lead to a pre-privatisation BT, unless there was a regulator who had the power and inclination to inflict very serious penalties for non-performance. Even then, taking cash from a nationalised Openreach would only reduce its capacity to deliver modern services, which is not what we want.
        I shall address this further soon, based on what is now happening in South Africa, a market that was raised in the image of BT, and reinforced by the American investors who more or less wrote the country’s disastrous (for consumers and competitors) communications act.

        Ian Grant

        2011/11/20 at 17:55

  4. I did try to persuade Inca a few weeks back that they should be alerting Joe Public (who are, in general, blissfully unaware but persuaded that their 6km long copper/aluminium rural telephone line will soon be thrust into sparkling ‘high-speed-land’ by BT’s 40/80mb ‘Infinity’ product) to the mess we are heading for here, but there was a deafening lack of interest. I do feel that the National media need to be awoken on this issue. Anyone agree and is Ian willing/able to lead?

    mike phillips

    2011/10/17 at 16:33

    • Thank you for the compliment. I think the mainstream media is easily cowed by the threat of advertisers withdrawing their advertising, and they have enough problems trying to protect their income from predators like Google to worry unduly about this issue. After all, the imminent collapse of the euro is far more “interesting”.

      Ian Grant

      2011/10/17 at 21:15

    • apart from the odd one like Ian the national media are a waste of space. They too have fallen for the con, and instead of being ‘investigative journalists’ they just spew out BT press releases.

      We just have to get on and do it ourselves, or do without. The digital divide is opening up even wider, and as cities get their 80 or 100 meg round exchanges and cabinets the great unwashed will realise they have been conned, as the reach will only be a few hundred metres on fttc, and the money will be gone, and digital britain will be b0rked. It won’t matter, because with the deact the internet will probably stop working too, they will break it before they are done.

      Our only hope is to keep on telling them, perchance there is an MP or two out there with an elementary grasp of physics and no family fortune tied up in BT shares?

      Chris Conder

      2011/10/17 at 21:21

  5. It is strange how the so-called mainstream media don’t pick up on the broadband fiasco that is Digital Britain BDUK style… are D notices exempt from FoIA I wonder?

    The real leader in all this should by rights (and Telly Tax) be the BBC – iPlayer served in the Noughties to drive forward the Digital Agenda as much for networking as the BBC Micro did in the eighties for personal computing after all.

    Certainly at NextGenUs, we are finding more and more communities with Broadband Pioneers ready to wait no more and JFDI – which means simply driving demand.

    There is no market failure in the UK for superfast broadband, just an increasingly desperate attempt by lobbyists and their audience to centrally-plan the future according to their limited imaginations.

    Where does all this end? Well… Digital Region South Yorkshire may offer a guide to what happens next.

    Guy Jarvis

    2011/10/17 at 23:38

  6. Thanks for the heads up Ian 🙂 , Kijoma is still going strong, despite the rather obvious “BT” propaganda and council ineptitude.

    One thing about Kijoma’s network is that at least 95% of it has no direct reliance on BT or openreach at all. This was intentional as when we started over 6 years ago we did use BT infrastructure with its many warts and vagrancies and quickly learnt that they don’t “like our kind in town”.

    We re-engineered our main two networks first so they are fed directly from carrier neutral data centres, no middle man, no leased lines and in short no openreach!.

    Interestingly the old BT lines we used to use kept on having strange faults, outages for days etc.. with their new users.. eventually it must of filtered through that we no longer used them and all those “faults” stopped. don’t you just love “open” networks.

    If you manage to infiltrate the West Sussex County Council bunkers at any point then I would be interested in what they are cooking up as their “broadband plan” as it is eeerily quiet on that front and they won’t talk to me.

    cheers – Bill

    You may want to look up the recent Isfield (East Sussex) tender for broadband provision, it was raised by Wealden council to replace the inadequate and unreliable (512kb) and expensive wifi system they funded some years back that covers about 1/5th of the area. The residents can be seen on forums complaining about how bad the service they have is and that it hasn’t improved in ~6 years etc.. The company that currently provides this is a telephone service provider (BT partner) who dabbles in wireless.. The new tender for “broadband provision” specifically added the requirement for “telephone and broadband bundles” and as we didn’t offer such bundles (telephone method, BT or voip etc.. is the customers choice in our view) they added BT line rental to our figures, despite there being no dependence on these lines for our service. The punchline of this “joke” of course is the winner of the tender was….(drum roll) the very same company that provides the current P poor service …

    bill lewis

    2011/10/18 at 09:09

  7. To be fair (?) to BT Openreach, Rutland Telecom have nothing but praise for their service, providing the “Middle Mile”.

    AbuHisham

    2011/10/30 at 15:32

  8. Rutland probably daren’t say anything else, but if they could get a service from anyone else, other than the monopoly openreach they could provide a faster cheaper service?

    Chris Conder

    2011/10/30 at 15:47

    • If Rutland rely on Openreach then “stockholm syndrome” comes to mind. Of course they are going to say how wonderful they are if they have no other option due to the OR stranglehold surely..

      bill lewis

      2011/10/30 at 19:26

      • So why don’t VM or C&W etc. provide connections?

        Somerset

        2011/10/30 at 21:12

      • C&W had their “end customer” teeth pulled by BT some years ago when they used to ‘compete’ in the ADSL market.. I cannot see how they or VM could compete while the incumbent owns the copper cables that it has persuaded gov have to be used to provide a service.

        After all copper was a “Gov given right” in the first place 🙂

        bill lewis

        2011/11/01 at 13:41


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