Br0kenTeleph0n3

Following the broadband money

Comms policy in chaos, and/or UK govt abandons competition ethic

with 13 comments

David Harrington, spokesman on regulatory affairs at the Communications Management Association, was kind enough to respond to my invitation to give us a view from the business communications users’ perspective on the government’s plans and procesess to develop the next Communications Bill. This is what he says.

Either government policy on the communications sector is in chaos, or it’s founded on a deliberate, laissez faire approach that lets the industry slide into a state where infrastructure competition no longer has a role to play.

On the one hand there is an apparently disjointed programme of handing out taxpayers’ cash, in which several Whitehall departments are engaged against a backdrop of EU rules and (some) EU money, overshadowed by the fallout from Leveson.  On the other we are seeing Openreach extend its dominance in the provision of broadband access and the MNOs moving ever closer in sharing their physical infrastructure.  There are Ofcom-imposed restrictions on how BT’s physical infrastructure can be accessed and there is a marked reluctance to encourage (never mind support) the smaller players in the market for FTTC/FTTH.

Oddly enough, there’s a certain synergy between these seemingly binary positions: the chaos theory, while superficially politically embarrassing, is small beer in comparison to Leveson and the Euro crisis and is a convenient mask for laissez faire.

It seems likely, therefore, that the era of the “railtrack philosophy” is creeping up on us, driven not by regulatory intervention on a scale larger than that seen during functional separation, but by a realisation that there is only one company with the clout to fill the final third with fibre (of some sort or another).  Meanwhile the government’s limp-wristed approach to the 4G auction debacle encourages site sharing and wider cooperation in infrastructure between the MNOs.  It’s becoming ever clearer that the Commission’s (and hence the UK’s) devotion to infrastructure competition is at the end of the road.

While lack of competition in the provision of wireless, copper or fibre has been referred to historically as the “bit-pipe nightmare”, that was at another time and in different economic circumstances.  It’s entirely feasible to postulate that a national carrier would thrive on carriage fees charged to OTT players and would innovate and invest in response not only to regulatory pressure but also to demands from content providers and end users.  Competition would be fierce at the service and content level.  Current issues such as net neutrality and the lack of a broadband USO would be seen in an entirely different light against a regulatory policy refined for a utility sector that would be similar to, but rather different from, the other utilities.

Would a national ‘digital railtrack’ be good or bad news for business customers?  Would it improve UK’s position in the ECTA scorecard or in OECD league tables?  It’s not possible to be certain at this point, but UKplc is unlikely to be worse off.  The next five years are going to be exceptionally interesting.

Harrington adds that CMA will press for Ofcom be required to give business users as much attention as they do the citizen-consumer. On content competition it will press for a stronger “open access, carrier neutral” stance in regulatory policy.

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Written by Br0kenTeleph0n3

2012/06/11 at 20:33

13 Responses

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  1. Sounds like he believes there is a chance BT will put fibre in the final third. Hmm, only to their cabs, its not real fibre broadband if it still comes through a phone line now is it? So do I read it right, he thinks we’ve given up?

    Chris Conder

    2012/06/11 at 20:47

    • If “we” means DCMS, I think you are right – they’ve decided it’s all too hard and moved on to Leveson and the Olympics and the summer hols. We can come back in September when the reports from the seminars should be finished, and start roughing out the Green Paper, with or without Mr Hunt.

      Ian Grant

      2012/06/11 at 21:35

  2. Chris, get real, service is what matters, not method of delivery.

    Somerset

    2012/06/11 at 21:07

  3. What MikeH is saying makes a lot of sense from a business point of view i.e. if a national carrier can do the utility bit moving to an acceptable standard of service and coverage for others to use to provide OTT services to business customers then that is a good result for the economy overall.

    Except for this to actually work out efficiently then its structural separation time for BT

    I remember Aidan Paul at Vtesse observing several years ago that most folks would like Ferrari performance for the price of a Lada and that is the basic problem for most of the Third Quarter of the population where the real future UK slowlane will emerge

    No Virgin Media cable, limited benefit from FTTC yet still something serviceable that takes away the need and will eat into the economics of B4RN type initiatives.

    Guy Jarvis

    2012/06/11 at 22:07

  4. An interesting summary and a single “wires” company regulated in a similar way to other utilities may yet be a way forward. Full separation rather than functional separation. RDAs suggested that this was considered some years ago in response to Ofcom consultations. Ironically, we are now drifting towards a single open infrastructure provider, so perhaps we will see a repeat of 1926 when, for similar reasons of loss of international competiveness and too many technical standards, the electricity supply industry was effectively nationalised by a Conservative government (http://www.bbc.co.uk/news/uk-politics-11619751).

    David Cooper

    2012/06/11 at 22:19

    • Indeed. I believe the CMA has made just that point in the recent past. Now that BT seems to have its pension fund problem more or less in hand, perhaps the government will feel freer to move to that view.
      I would still argue that the country would likely be better off encouraging competition based on free and fair access to fully amortised infrastructure, and for a standard access platform to unamortised fibre.

      Ian Grant

      2012/06/11 at 22:28

  5. Somerset

    2012/06/12 at 19:19

    • “The City of Birmingham will work with a private sector partner to build and operate the open
      access fibre network. A range of national and local service providers will sell retail services to the
      end user market. Retail service providers will be able to procure the following wholesale services to
      deliver retail services across the Open Access Network:
      ‐ Dark fibre
      ‐ Wavelength services (40 Gbps, 10 Gbps, 2.5 Gbps)
      ‐ Ethernet services (1 Gbps, 100 Mbps) pt‐pt, VLA
      ‐ Co‐location services to enable service providers to locate equipment appropriately e.g.
      ADMs, wireless equipment/base station.
      “We will do this in phases:
      ‐ an initial FTTP (Fibre to the Premises) project, known as Phase 1, compromising a ducting
      network of 37km in Jewellery Quarter and Digbeth/Eastside passing approximately 5000
      businesses, with later expansion in Phase 2 to other Digital Districts and areas of
      regeneration highlighted in the Big City Plan, notably in the Eastern Corridor.”
      For £10m.
      Can’t wait to see who gets the contract.

      Ian Grant

      2012/06/12 at 20:35

  6. There will be no level playing field until BT is removed entirely from the Retail sector – BT sold off their Mobile interests so they can do the same for the Retail Telecomms market.

    I’m surprised industry Gurus Peter Cochrane and Lorne Mitchell did not present this in their evidence to the HOL Committee on Superfast Broadband
    http://www.parliament.uk/business/committees/committees-a-z/lords-select/communications-committee/Publications/previous-sessions/Session-2010-12/

    BT Openreach should be absorbed into BT Wholesale to form a “not for Dividend” keeper of the national telecomms assets as Network Rail does for the Railways and then Companies can be licensed to operate services in phone, data and video, etc. as the Rail Cos are franchised to operate passenger services, but obviously not on a geographic basis.

    Mel Bryan

    2012/06/13 at 09:02

    • Mel – would this new organisation take over the assets of C&W, VM, in fact all licenced operators?

      Somerset

      2012/06/13 at 09:49


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