Br0kenTeleph0n3

Following the broadband money

Invitation to Neelie Kroes – let’s see the colour of your money

with 40 comments

Kroes - put your money where your mouth is.

Here’s an Anglo-Saxon invitation to European Commission’s Digital Agenda champion Neelie Kroes – put your money where your mouth is.

Kroes is clearly frustrated by the lack of progress towards Europe’s  broadband targets – universal broadband access by 2013, and 30Mbps for all and 100Mbps for half of us by 2020.

Speaking in Italy this week, she virtually implored Italy’s geeks to apply for up to €7bn she is putting into the EU’s proposed broadband slush fund, aka the Connecting Europe Facility. She hopes this money will unlock €50bn in private sector funding for next generation broadband.

The facility is there because, she says, “sometimes the private sector seems unwilling to get involved in broadband projects. They see them as too risky, or too uncertain; especially in rural or suburban areas. Support from (the fund) could give that extra assurance that investing in high-speed broadband is safe and profitable.”

A couple of points here. Investment in telecoms is and always has been risky. It’s only a political idea that dial tone or internet access is a human right, and therefore deserving of taxpayer money.

When that idea became popular, governments nationalised the telcos. When it became unpopular, because the state monopoly telcos were expensive, bureaucratic, unresponsive and self-serving, governments sold them off.

Taxpayers seldom saw a penny of their money back directly. They are still saddled, by and large, with “incumbent telcos” whose attitudes and practices are unchanged. So, nationalisation and privatisation were not good investments from the taxpayers’ point of view.

The incumbents have every reason to fear challenger telcos or altnets. That is why they fight tooth and nail to make life difficult or impossible, i.e. risky, for altnets, and so deter investment.

As the German firm WiK Consult shows, only competition forces incumbents to behave better.

Investment in telecoms should stay risky. It keeps people (funders, suppliers and network operators) on their toes, makes them come up with new ideas, and compete for business. It’s Darwinian, but it works. Feather-bedding them with free or cheap money makes no sense.

Kroes says the fund would help reduce “perceived risk” and “crowd in private finance … from anyone who, like me, realises that broadband is a sound investment in tomorrow’s technology.”

So here’s the invitation to Kroes: there’s a brand new network company called B4RN that’s busy putting in a brand new fibre network that will provide rural subscribers with 1Gbps symmetric broadband for £30 a month. I don’t know of a better customer proposition in Europe or the US.

Details of the project, which is a highly tax-efficient investment, are on the web. Of course Kroes should do her own due diligence investigation, and the usual caveats about investments apply.

If Kroes finds B4RN too dodgy to risk a few euros, what chance do altnets have of tapping her fund?

And yes, I do have shares in B4RN.

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Written by Br0kenTeleph0n3

2012/04/13 at 08:05

40 Responses

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  1. Bravo!
    Neelie has already done a lot of good for B4RN by giving us a video of support. http://b4rn.org.uk/supporters
    Sometimes that sort of thing is worth more than money! A bit of money would be good as well, as we have an enormous task ahead, and thanks to the community and their commitment we are underway. Some funding would make our task much quicker, and its very strange why every pot is closed to us. It seems like there is a conspiracy to stop us accessing any, but that could just be me being paranoid. Even the funding for rural uplands (which b4rn is totally concentrating on) is not available. There is no reward for JFDI, but a local group has just got £100k for an arts project promoting witches. Its a mad old world.
    chris

    chrisconder

    2012/04/13 at 08:19

    • Perhaps you need to have a word with the witches and get them to cast a spell or two 😉

      Ian Grant

      2012/04/13 at 08:47

      • Will probably do far more good than trying to get any assistance from our county council or defra. 😉

        chrisconder

        2012/04/13 at 10:27

  2. Can we add a direct link to the share application form which is on the B4RN website ?

    Bruce Alexander

    2012/04/13 at 09:06

  3. ““sometimes the private sector seems unwilling to get involved in broadband projects. They see them as too risky, or too uncertain; especially in rural or suburban areas. Support from (the fund) could give that extra assurance that investing in high-speed broadband is safe and profitable.”

    Wow – sounds just like what the UK is doing with BDUK. Are we a model that the EU is following?

    The 100Mbps used by 50% will be interesting, will people be forced to buy a 100 Meg service? As many people even when they have 1Gbps available, opt for the cheaper 20 Meg services, look at Hyperoptic customer demographics

    Andrew Ferguson

    2012/04/13 at 09:21

    • Don’t think it is what the government is doing Andrew, they seem to be using the bduk money to make the old copper go a bit faster, there isn’t much evidence of them doing anything to prepare for the future deluge of data we all know is coming.

      As for choice when 1gig is available, most people don’t know what a gig is, and usually its only available when people already have a connection they consider adequate for their needs. People won’t change until they have to, and so it doesn’t make sense to replicate the footprint of others who were there first. It actually makes far more sense to build out in the sticks, where it sounds like people are ready to pay for a reliable fast service?

      aun2pb@gmail.com

      2012/04/29 at 19:20

      • Please give some links explaining what this deluge of data will be, other than HD TV, and giving actual numbers to move the discussion along.

        Somerset

        2012/05/03 at 23:05

      • The tendency here is to get too hung up on the speed.here. BT offer up to 40Mbs (or 80Mbs) down and up to 10Mbs (or 20Mbs) up. B4RN chose 1000Mbs up and down. It could have offered lower but there was very little difference in cost for the equipment which would provide 1000Mbs, so who wouldn’t go with the better one. It’s a no brainer. The network will be 100% fibre so there’s no part of the network that will restrict the speed.

        Are there any application that will use 1000Mbs? No. It’s unlikely there will be much hardware that would be able to produce data at that rate never mind applications, but that’s not the point.

        The point is this. To provide a network that is a future proof as possible, ie, won’t need to be dug up and upgraded in a few years.

        HDTV won’t take much of a chunk out of 1000Mbs, it will run quite happily on 8-10Mbs. Get 2 or 3 people watching HDTV, someone else taking part in an HD video call eyc and it soon starts to mount up.

        Just remember, not long ago we were more than happy after we were able to upgrade to a 56Kbs modem. “Who would need more than that?”, we thought at the time. It’s the same with B4RN.

        It’s called Forward Thinking.

        yorkie71

        2012/05/03 at 23:29

      • I agree, running fibre at 1G is the only option. You could though have a range of costs for different bandwidths, if there was any benefit, which there probably isn’t.

        Somerset

        2012/05/04 at 07:46

  4. Here here! Great article Ian.

    Motivated by B4RN, there is an embryo of a similar movement in Kent/Sussex under the B4RS (Broadband for the Rural South) nom de plume. As BDUK has effectively disqualified anything vaguely resembling “community altnet”, European assistance would be welcome and invited!

    RobL

    2012/04/13 at 10:24

  5. Excellent article Ian. You are correct. Risk needs to be there to ensure that whatever project is the subject of that risk are, as you say, “kept on their toes”.

    I was at the dig launch the other week and to be honest I’m still buzzing from the excitement of it. Seeing over 100 people spread across three generations turn up to the middle of a remote beauty spot was very reassuring that B4RN is doing the right thing. Also bear in mind that this is the hight of lambing season so many of the people that would have liked to attend could not.

    The support from the community is definitely there, enthusiasm and awareness are growing. Remember all of the team are volunteers and PR is not our thing, and neither do we have millions of pounds to throw at it. Media are now sitting up and taking note and so are BT (if the negative comments are anything to go by).

    The one area from where support is lacking, with the exception of Mayor Woodruff and local MP Eric Ollerenshaw, is from our politicians. Virtually no support support at all has come from City or County. Correction. No support at all has come from City and County which is very disappointing indeed.

    However B4RN continues regardless, and things are now physically happening. Soon people will be connected and this in itself will generate more interest.

    As has been said, the project is forging ahead with no public money currently. It does seem very odd that every funding door so far has been closed to B4RN considering what an excellent project this is. I have yet to read one bad report on it, with the exception of what has come from BT, (which in itself is a compliment) and many expert eyes have been cast over the plan. More funding would be great as it would enable B4RN to deliver the service quicker and potentially to a wider range of people, which can onlt be a good thing.

    So come on Neelie, we know you support B4RN, show us how much! Come and see what we are doing; there will be tea and cake provided of course!

    yorkie71

    2012/04/13 at 17:58

  6. Can B4RN apply for lottery funding? More benefit than some other projects…

    Somerset

    2012/04/14 at 07:34

    • I spoke to a Big Lottery Fund Rep. last year and he said you would, now, only get Funding if you could show a social need for very deprived locations and how your project would improve that sustainably (the current buzz-word).

      Mel Bryan

      2012/04/14 at 08:01

  7. Please Neelie – we nearly need £250,000 to install FTTC in our villages!!!

    Mel Bryan

    2012/04/14 at 07:57

    • 250k for FTTC? BT should pay that (in its own sweet time). But why so unambitious, Mel? Wouldn’t the village prefer FTTP?

      Ian Grant

      2012/04/14 at 14:10

      • “Wouldn’t the village prefer FTTP” – they may not if FTTC is cheaper and more familiar. Be an interesting research project.

        angelinn

        2012/04/15 at 09:05

      • From all the hints, nods and winks, we’ll see a real world test in the B4RN roll-out area as BT defends its monopoly.

        Ian Grant

        2012/04/15 at 10:41

      • I guess it would depend on what the village understood about physics, telco hype and how much they trusted their county plan to deliver. My guess is they would fall for FTTC, as there is so much advertising and spin about it – it sounds great. The problem is that as Peter Cochrane says, its like tying a knot in the feed, it won’t be futureproof, and that village will have the whole job to do again in a few years. Also the businesses and homes more than a kilometre from the cabinet will not get NGA. Does the village not care about them? Do the villages in question even have cabinets to start with?

        chrisconder

        2012/04/15 at 10:45

      • Absolutely Chris. Why hasn’t BT published actual statistics on distance from the cabinet and speed/QoS for VDSL2? Surely, if the numbers added up and didn’t detract from the spin, they would do so, as they’re asking BDUK for a LOT of money based on precisely that technology?

        I pondered whether we could FOI Jeremy Hunt and BDUK to provide the technical justification BT have provided (or have they?) to get the BDUK funds. Having seen Ian’s success to date relating to how much KPMG and others were paid for the procurement advice, with “non response”, I’m doubtful that would be fruitful. What penalties are in place for not providing said information? Worth kicking that off perhaps Ian?

        I would like to think, our government will wake up and realise that incumbent operators, privately owned, do not always provide the best deal. BTs track record to date for broadband speaks for itself – we’re 25th in Europe. They haven’t got the resources or financial motivation to do a good job. Please BDUK – let them off the hook. Ting, ting – next please?

        RobL

        2012/04/15 at 11:14

      • I think you are right. It’s time to the Information Commissioner’s Office to get involved in DCMS/BDUK’s refusal to say how much they’ve paid KMPG and Pinsent Mason. I think the reason they can’t say is because BDUK still has upwards of 20 KMPG people working there, so the bill hasn’t been finalised. Anyone know the day rate for KPMG public procurement experts?

        Ian Grant

        2012/04/15 at 11:51

      • Infineon produced a graph of how far signals travel over copper in the local loop here (http://bit.ly/y0aR4f), which explains very clearly why copper “ties a knot” in broadband speed. BT has admitted that its roll-out of fibre to the home has been delayed by blocked ducts (http://bit.ly/I2OGaA), with up to 25% of homes affected. This was in urban areas. Rural areas may be even more compromised. So an FTTP roll-out may cost more and take longer. Third parties who would like to run fibre to homes from street cabinets face the added cost of renting ducts from BT, assuming that they are in a serviceable condition, plus the costs of linking BT’s street cabinet to their own. This short video (http://bit.ly/HJCuBj) shows the problem.

        Ian Grant

        2012/04/15 at 11:39

      • Is it ‘BT defending its monopoly’ or Sky, Talktalk, Post Office, BT Retail and all the other ISPs and telcos that use the BT network trying to retain their customers? Strange this is never mentioned.

        This hype about redoing in the next years years is something Chris continues to mention with no justification. An FTTH Council video can only come up with fast video downloads resulting from very high speeds. Everything else works with speeds like 20M. Smart metering, for example, needs minimal speed links.

        Maybe Mel does not have the community involvement available and the district layout does not make a field based duct scheme possible.

        Discuss!

        Somerset

        2012/04/15 at 11:21

      • BT has a de facto monopoly on physical infrastructure. That is the monopoly it wants to protect. If BT were to sell off Openreach, which supplies and operates the physical network, you might have a point.

        Ian Grant

        2012/04/15 at 11:46

      • Is the 25th in Europe figure because 50% of the population are not buying 100M from VM or FTTC as soon as it is available?

        Somerset

        2012/04/15 at 11:28

      • No, it’s because BT, like other incumbents, is a slack, lazy monopolist that responds only to competition. Unfortunately VM’s ambitions, afaik, do not extend to the entire country.

        Ian Grant

        2012/04/15 at 11:55

      • In the link about ducts there is a comment ‘ Fibre to the copper is the way they get their bonuses, and instead of investing in their network they pay fatcats and shareholders whilst this country is held to ransom and is being left behind all the others.’

        Rational thought?

        Somerset

        2012/04/15 at 11:47

      • I think the WiK study for ECTA explains the incumbents’ attitude better than I can. http://bit.ly/mX52VT

        Ian Grant

        2012/04/15 at 11:59

      • Comments like ‘slack, lazy monopolist’ and ‘fatcats’ with no justification show the discussion has descended in quality!

        Any concrete proposals for the whole of the UK anyone?

        Somerset

        2012/04/16 at 11:14

      • Got any proposals yourself – like to point us towards them?

        It’s always easier to criticise the thoughts and ideas of others, than produce some of your own, and risk the same criticism.

        RobL

        2012/04/16 at 11:27

      • I stand corrected: BT has been exceptionally assiduous in protecting its monompoly against all-comers. It has worked tirelessly to protect the network that taxpayers and cusomters paid for and that it was given at privatisation, which which it has epxloited mercilessly for the benefit of its shareholders, to the detriment of UK citizens. BT’s privatisation has not been a good investment if you are a taxpayer.

        Ian Grant

        2012/04/16 at 12:20

      • RobL – Stage 1 – Identify £30b or more and justify in a similar way to HS2.

        Ian – the government privatised BT and BT wanted to fibre the UK and the government stopped it because we all needed cable TV! All before broadband and satellite TV were around.

        Somerset

        2012/04/16 at 18:42

      • Great! We’ve got the £30b (where did that number come from?) – it’s in the pockets of every person in the country. The folk that want it first, will produce the money first, then get their spades out and rally the local heroes who have the knowledge and capability to build a B4RN (http://www.b4rn.org.uk). With community fibre, we don’t have to justify anything other than the local community demand. No filtering of tax money through the government BDUK washing machine – hand to mouth stuff.

        RobL

        2012/04/16 at 18:52

      • Yes. I believe several people were surprising by Peter Cocharne’s assertion that the Thatcher government wanted the US cable companies in. Perhaps they thought that this was the way to get competition into the communications infrastructure market, as has since been shown by the WiK Consult report for ECTA. I think the point is that investing in a communications infrastructure is risky, and the incumbent does everything it can to make it even riskier. I’m sure if BT had wanted to, it could have gone ahead putting in fibre. It could have slashed the total cost of owning and running its network and secured its competition position probably forever. Why did it stop?

        Ian Grant

        2012/04/16 at 19:43

      • Blame Oftel/Ofcom. Start here http://stakeholders.ofcom.org.uk/consultations/fttc/?a=0

        Only 3 years ago.

        Note this refers to FTTC and not the extensive core network which has been fibre for many years. Also BT were putting fibre into businesses at least 20 years ago. Not a lot of people know that.

        Competition to BT came from Cable & Wireless etc. and they saw no money in connecting homes, unlike the cable companies who thought there was. And then Sky came along and now we have 50% of premises passed by VM, 50% of homes with Sky.

        Which is back to the lack of applications for more than 20M? to persuade people to change to anything faster.

        Somerset

        2012/04/16 at 20:07

      • You say C&W saw no money in connecting homes – but now Sky and VM are making money from doing just that. Did C&W get it wrong? What happened so that Sky and VM can now make money?

        Ian Grant

        2012/04/16 at 20:24

      • C&W focus on business. Do VM make money now they have given up on digging? Sky, Talktalk and others use LLU and bundle TV,voice and broadband together which gives them an advantage. They don’t dig either.

        Please explain how the measurement works for us to be 25th, is it based on actual live connections and therefore related to customers not signing up for the higher speeds from VM and Infinity etc.?

        Somerset

        2012/04/17 at 12:21

      • Let’s agree that C&W Worldwide’s recent history is an abberation caused by John Pluthero. One of the reasons Tata Communications is interested in buying is because it has 70 of the FTSE top 100 companies as customers plus a lot of government business. Sky and the rest use Openreach’s network because it is expensive to dig their own network. Moreover, the business rates tax they would pay on lit fibre would allow BT to undercut them unless they enjoyed the same valuation regime as BT. As you know well. Move on.

        Ian Grant

        2012/04/17 at 13:46

  8. Mel – isn’t Cambridgeshire getting BDUK money to start next year?

    Somerset

    2012/04/14 at 15:58

  9. Ian, the Infineon survey is good, and technical, but it doesn’t land the “reality” to people of what they actually get at the end of a VDSL2 bit of copper on their street. Various measures are used by telcos to estimate the length of a piece of copper from the switch or cabinet to the home. They add on a minimum of 10% to account for the corners, trees, subways and monuments that the copper winds around after leaving the cabinet. Alumimium replacement and water ingress take their toll also, on our aging copper in the ground.

    GoogleMaps suggests A to B distance of 1Km. It could be 2Km for the copper if it goes down one side of the street before going up the other, or diverts off round a park. All these “real life” things have far greater relevance to the would-be BT VDSL2 customers, than the theoretical graphs.

    So the classic “up to” rubbish will be used to sell a “100 Mbps” service which will only provide a maximum of 50Mbps to 75% of customers dependent on geography. All based upon assumption, but BT has the facts, and is sitting on them wearing the incumbent hat with its thumb in the pudding.

    Commercially sensitive … of course.

    RobL

    2012/04/16 at 12:14


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