Following the broadband money

Take a bow, BT

with 8 comments

If BT wants to blow it’s own trumpet, now is the time. It has faced a serious threat to its hegemony of the British communications market, and won.

This week Geo Networks became the latest competitor to exit the crucial middle mile market, following Vtesse back into the corporate market. Br0kenTeleph0n3 will have more to say on this later.

In addition, Cable & Wireless Worldwide wrote off more than £460m in goodwill, destroying its balance sheet and crippling its ability to fund a competitive offer to BT. Fujitsu, once so vociferous in condemning BT’s prices for physical infrastructure access, is now the first to use BT’s poles and ducts to fibre up homes.

Other competitors are small, weak, disorganised and scattered. With voice and broadband prices in decline, no bank in its right mind would lend to them. None has the weight to get useful deals with content providers. State, i.e. BDUK money will go to firms with turnovers of £50m a year.

Game, set and championship to BT.

But how was the match lost?

On the basis that we should look at what people do rather than what they say if we are to discover their true goals, the DCMS’s web page for press releases should offer some suggestions. These reveal that DCMS’s main preoccupations these days are the Olympics and to prevent the export of bits of art.

The most recent mention of long term matters is on 14 September, which is about using taxpayers’ money to extend “superfast” broadband in Suffolk and Rutland, both of which will depend on BT.

How does DCMS decide on the appropriate level of funding? From the release: “the Government has looked at the areas where the market will fail to deliver superfast broadband to enough premises on its own, and the cost of that.  It is not based on the number of people living or working in a county.”

Which begs the question, what is it based on?

Wherever BT has been threatened by competition (Erbistock, Ewhurst, Iwade, Cornwall…) it has responded with alacrity. The one exception has been with the cable tv network, but even there BT’s Infinity roll-out largely mirrors Virgin Media’s network for competitive reasons.

One could say the market, as expressed by the level of competition from, not to, BT, has worked extremely well. The more competition BT faces the more pro-active it is.

This lesson has been lost or hidden from DCMS.

It has been in BT’s interest to disguise or hide the lesson by tolerating weak competition where it cannot avoid it, and to be ruthless in destroying competition where it faces the loss of its monopoly. In this it has done a brilliant job.

The future of the national communications infrastructure is no longer on the DCMS agenda, or rather, it is safely in BT’s hands.


Written by Br0kenTeleph0n3

2011/11/19 at 12:33

Posted in Uncategorized

8 Responses

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  1. There are too many dinosaurs in government, too many BT old boys in ofcom, and the whole thing has been a farce. We are being held to ransom by this company who is protecting its golden goose, but its now quite obvious it has stopped laying golden eggs. Time is going to prove that the demise of our digital economy is down to government not seeing through the hype, and being brainwashed by vital vision propaganda.
    A lot of blame can also be put on so called ‘tech journalists’ who unlike the writer of this blog don’t bother investigating and just publish press releases which lend credence to the hype and spin.
    Well done for publishing this Ian, and one day when we are all dead and gone they can look back and say
    ‘by gum, that Ian Grant was right, all along’.
    Aye, well done BT, you have won this battle not because you were a better army delivering redemption, but because you have been aided and abetted by fools.

    Hopefully we will get another generation of MPs and civil servants soon who understand tech and can sort it all out again in another few years. Until then we jfdi ourselves and do the best we can in our own fields.

    Chris Conder

    2011/11/19 at 13:15

    • Chris, thank you for your kind comments. I hope that I will soon be proved wrong, and we can all look back on this as a moment of madness.

      Ian Grant

      2011/11/20 at 01:43

  2. Listen to Bill Murphy from BT on NextGen TV shot at NextGen11 on 15 November 2011 –


    2011/11/19 at 13:21

    • This is a BT advertisement. Cornwall is spending £50m of Europes’s money, plus around £82m of BT’s own money – or at least that’s what the press releases led us to believe. Perhaps Bill (lovely man, nothing personal here Bill) can tell us how much of BT’s earmarked £2.5bn broadband budget BT is actually spending in Cornwall, and whether this is new money or just money from cash flow.
      I am also struck by the lack of detail in Bill’s commnents – so what upload speeds, contention ratios, etc is BT going to deliver to “damn close to 100%” of the population? C’mon Bill – stick a peg in the ground, say what you mean.
      And yes, BT may well have “passed” six million homes – but only got 300,000 to sign up to Infinity. That’s not a great penetration rate. What is BT going to do about improving it and getting a return on its investment?

      Ian Grant

      2011/11/20 at 01:37

      • I thought exactly the same. Pure bullsh*t. Why didn’t the interviewer ask pertinent questions? Wasting all this public money on patching up the copper in this way is a terrible thing to do when £50 million could have put fibre into the rural areas and let others do innovative stuff with it. The final 10% stuck on ‘alternative technology’ and the millions on the end of cabinets are not going to thank Cornwall County Council in a few years time. They will soon realise they have been sold a donkey and the whole job will be to do again.

        What we need is some competition to up the ante, and Cornwall could have given that money to a firm like vitesse or someone who could have provided that competition. Homes passed says it all really. What a ridiculous video. I too think Bill is a lovely man, and again its nothing personal, but you can see why he has the job he has, he is very good at promoting isn’t he? You can see why councils fall for all this hype. If that is the level of videos Next Gen are doing then its no wonder they don’t get support from the communities who can see through all this spin. Strikes me that the suits still don’t realise what real next generation internet access is all about. Promoting what is happening in Cornwall and giving them prizes is compounding the myth that we will be a world leader, when in reality we are going to end up as a third world country as far as our digital economy is concerned, and the digital divide opens even wider. Only those near to cabs will get ‘superfast’ and the rest will get the dregs. The rurals get naff all.

        Chris Conder

        2011/11/20 at 09:43

  3. Geo complained about what PIA covers but this is not news. It always was exchange to property.


    2011/11/20 at 09:23

  4. It seems to me, Ian, that BT needs a good wallop of EU laws:

    Today, the Treaty of Lisbon prohibits anti-competitive agreements in Article 101(1), including price fixing. According to Article 101(2) any such agreements are automatically void. Article 101(3) establishes exemptions, if the collusion is for distributional or technological innovation, gives consumers a “fair share” of the benefit and does not include unreasonable restraints that risk eliminating competition anywhere (or compliant with the general principle of European Union law of proportionality). Article 102 prohibits the abuse of dominant position, such as price discrimination and exclusive dealing. Article 102 allows the European Council to regulations to govern mergers between firms (the current regulation is the Regulation 139/2004/EC.[32] The general test is whether a concentration (i.e. merger or acquisition) with a community dimension (i.e. affects a number of EU member states) might significantly impede effective competition. Articles 106 and 107 provide that member state’s right to deliver public services may not be obstructed, but that otherwise public enterprises must adhere to the same competition principles as companies. Article 107 lays down a general rule that the state may not aid or subsidize private parties in distortion of free competition and provides exemptions for charities, regional development objectives and in the event of a natural disaster.

    It reminds me of the situation in the Computer Industry in the 70’s when IBM was known as Snow White and NCR, Univac, etc. as the seven dwarfs – The US Anit-Trust legislation was applied vigorously to stop IBM rolling over and squashing the competition – which is exactly what BT is doing.

    Mel Bryan

    2011/11/22 at 11:35

  5. In the majority of Devon, BT Group face no competition. The case of only being pro active when there is competition has been firmly proved here at least. Government funding for superfast fibre broadband is also limp and full of holes. BDUK means for this area at least – Broadband Delivery UnKnown…

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