Following the broadband money

Posts Tagged ‘European Commission

How Maria Miller can save British broadband

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Miller - talks are not just about saving face, we hope

Miller – talks are not just about saving face, we hope

If tomorrow’s meeting to get a grip on the provision of next generation broadband access (NGA) in the “Final 10%” is not to produce a damp squib, the government needs to commit itself to true competition in telecoms market.

Culture minister Maria Miller called the meeting between her, communications minister Ed Vaizey, and representatives from BT, BDUK and six would-be alternative network operators (altnets) who are looking for money from the Rural Community Broadband Fund (RCBF) in the wake of the highly critical National Audit Office report into value for money from the rural broadband process overseen by BDUK.

Some of the six altnets have been waiting more than a year because the fund won’t release the money until it knows for sure that the areas the altnets plan to cover won’t be over-built by BT’s BDUK-funded roll-out.

BT claims commercial confidentiality in the terms and conditions of its contracts with local councils, especially the speed and coverage details of its roll-out, Besides, they are subject to change following a survey of its local assets, it claims.

BT may claim, but the claim does not stand up. In the appeal of Derry vs the Information Commissioner, the Information Tribunal “upheld the ICO view that a written agreement between two parties did not constitute information provided by one of them to the other, and that therefore, a concluded contract between a public authority and a third party does not fall within section 41(1)(a) of the (Freedom of Information) Act.”

S41 is the bit about commercial confidentiality.

The tribunal went on to say, “We are aware that the effect of our conclusion is that the whole of any contract with a public authority may be available to the public, no matter how confidential the content or how clearly expressed the confidentiality provisions incorporated in it, unless another exemption applies.” (Emphasis mine.)

It also noted that depending on the circumstances, some information obtained from a third party may count as confidential. This was information regarding a pre-contractual negotiating position, and “technical information” either contained within the body of a contract or provided as a separate schedule.

Regarding prior negotiating positions: as noted by reader Mike Phillips, the councils last year ran their open market consultations to identify the so-called ‘white areas’, i.e. locations that require subsidy as well as the ‘no-build’ areas that BT would not consider for three years.

It is not clear why BT should be granted the latitude of service delivery promises being “subject to survey” when it is not available to other suppliers, nor that end users should be denied a higher degree of certainty about where, when and what kind of service they might receive from BT.

BT and the local authorities with whom it has contracts might like to argue that the speed and coverage templates (SCTs) falls into the “technical information” category.

BT is not using secret technology to fulfill its BDUK contracts . It is hard to see why it should keep the SCT secret. However, it does stop altnets from identifying and working in the remaining white areas. This cannot in the public interest, and one could argue that for local authorities to think and act otherwise would be in dereliction of their fiduciary duties.

Having sought and received legal opinion on publishing the SCT details, it is inconceivable that BDUK is not aware of these issues. Moreover, in response to a Freedom of Information request, it has indicated that it expects the SCT details to come out in due course.

One need not wonder whether BT will defend its carefully-orchestrated position and resist the disclosure of SCTs. It has form. The FOI trail on Liverpool Direct (BT’s controversial joint venture with the Liverpool City Council) and here and here shows how hard it will fight (but lose) to keep its contracts secret.

Just who will fight BT’s corner has been subject to change. However, it was revealed on Friday that BT had dropped Sean Williams, its head of strategy, who spoke for the telco when the House of Lords was interested in broadband. BT will now be represented by Openreach CEO Liv Garfield and NGA roll-out boss Bill Murphy, who were the original choices.

Had Williams stayed on, Miller would be been within her rights to question his deal-making authority. This is because Ofcom has required BT to run Openreach “functionally separate” from its other operating companies, even though Williams admitted to the lords that Openreach contributes to and shares the same capital pool as the other BT operating companies.

Because of “functional separation” Williams would be have been hard-pressed to commit Openreach to anything. If he could, it would reveal functional separation as a myth and possibly expose Ofcom for improper application of its own regulation.

Whether this matters is moot. At the annual seminar of INCA, the Independent Networks Co-operative Association, last week, Frank Mather, the DG Connect official who looks after the UK broadband issues, said the European view was that Britain has forsaken competition for transparency as a way of regulating and achieving its broadband goals.

The NAO showed how successful that strategy has been with respect to the £1.2bn BDUK process. In fact, both MPs and civil service have done even worse trying to govern using transparency – the banking crisis, Libor, crime statistics, even MPs’ pay, to name some more serious incidents.

In a recent blog, the well-connected Philip Virgo paraphrases economist Michael Beesley’s insight that “it is impossible for officials or regulators to understand that cost bases of the industries they seek to plan or control. Therefore they should not try. They should instead focus on quality of service, price and barriers to competition (particularly those blocking innovative new entrants), leaving those regulated to work out how to exploit opportunities to make more money by using innovation to deliver better services at lower cost. ”

Part of Beesley’s heritage is due his exposure to the privatisation of British Telecom in the 1980s. In an obituary, Christopher Foster wrote of Beesley, “Sir Keith Joseph asked him to look into the possibility of liberalising British Telecom. Though not all his recommendations were accepted, he argued for more competition than the government was ready for (it would have been better if he had been listened to). Nonetheless, his views were influential on the form of that privatisation – and all subsequent privatisations, and their regulation.”

Beesley’s ideas were later incorporated in the monopoly price governing formula “Retail Price Index-x%”, which Ofcom modified to “Consumer Price Index-x%” in its latest proposals governing Openreach’s monopoly over wholesale broadband and landline services.

So what can Miller get from tomorrow’s meeting? Clearly BT must give her a bone to throw to the Public Accounts Committee, which meets to discuss the NAO report, to save her face. The (leaked) Pennell report that BDUK “lacks commercial nous” suggests she now has the power to bend her civil servants to her will or to ignore them.

Malcolm Corbett, INCA’s executive director, who will be at the meeting, says altnets will be seeking the following:

  • that the six projects in the room get their money and protection against BT overbuilding them for a period
  • that BT publishes its actual costs, ie invoices and payslips, for state-aided NGA roll-outs
  • that Miller re-opens negotiations on Open Access with respect to BT (and other networks) poles and ducts and even fibre
  • that the government allows the introduction of alternative models to gap funding and sources for future roll-outs. (The INCA seminar revealed that the only public money in Stockholm’s highly successful Stokab dark fibre to the premises network was SEK50,000 spent on the feasibility study; the rest came from government and bank loans and re-invested profits.)
Fed-up farmers dig for B4RN

Fed-up farmers dig for B4RN

One more thing Miller might get. The INCA meeting heard that there is apparently a consultants’ report doing the rounds in BDUK that cross-matches business premises against postcodes and BT’s NGA roll-out. The relationship is inversely proportional, ie the more densely businesses cluster the less likely they are to be passed by BT fibre. This is because BT doesn’t want to swop relatively lucrative leased lines for cheaper broadband connections.

There is plenty of evidence:

  • the legal challenge to BDUK’s original Superconnected Cities project
  • Virgo’s reportage of BT’s preference to build fibre to the home in sparsely-populated rural Lancashire in competition to B4RN rather than crowded EC1
  • former BDUK-community linkman Mike Kiely’s frustrated attempts to get fibre into a Shoreditch co-op that houses 89 mainly high tech start-ups
  • a new proposal from BT to Lorne Mitchell’s Goudhurst NGA project, just as they are about to award a contracts, among others.

If true, it shows two things. One is that BT responds only to competition. Secondly, it appears BT is sabotaging Miller’s efforts to build Britain’s economic renaissance on the networked creative, innovative, entrepreneurial sector. Four hundred years ago the heads of those responsible would have decorated London Bridge.


NAO report on BDUK: blame game starts now

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The government’s rural broadband programme will transfer £1.2bn to BT, finish two years late, and rely on civil servants to establish whether it has received value for money.

“The rural broadband project is moving forward late and without the benefit of strong competition to protect public value. For this we will have to rely on the department’s (culture media & sport – DCMS) active use of the controls it has negotiated and strong supervision by Ofcom,” said Amyas Morse, head of the National Audit Office.

The NAO has been investigating whether Broadband Delivery UK, the quango set up in DCMS, will deliver value for money.

It was expected to be critical; the Cabinet Office National Project report recently judged the BDUK project amber/red, meaning it is in danger of missing its targets. Few will have guessed how bad things are.

In the very baldest terms, the NAO said there is £1.2bn available to provide high speed (>24Mbps download) to areas outside BT’s commercial roll-out to two-thirds of the country. All of it will go to BT.

Central government’s contribution is £530m; the balance comes from local authorities’ budgets which are funded by the taxpayer, and BT. BT’s contribution will be 23%, way down on the 36% estimated in 2011.

There are 44 projects that call for 4.6 million houses to have access to ‘next generation’ broadband; BT has already won 26, and it has no competitors.

The original completion date for 90% of homes was May 2015. Last week DCMS increased the coverage target to 95%, and extended the deadline to 2017.

BT said in response, “BT’s fibre programme has been one of the most efficient in the world with the company going further and faster than industry experts thought possible. BT has applied these cost efficiencies to its BDUK work and so the company is delivering excellent value for money.‬‪”

It argues there was strong competition when prices were set at the start of the process. “That ensured counties have benefited from the best possible terms.
“Deploying fibre broadband is an expensive long-term business and so it no surprise that others dropped out as the going got tough,” it said.

On the specific claim that BT is likely to contribute 23% of the total funding or some £356m, BT said, “We would like to highlight we have committed more than £500m to date. With more than a third of the contracts yet to be signed, including a very large one in Scotland. We believe we will contribute around 38% of the total funds by the end of the programme, which is well above the 23% claimed in the report.”‬‪‬

Asked why, when the state aid issue delayed things for six months, the deadline is now two years later, BT said, “The timescales for when individual contracts are signed are out of our hands as these are dictated by the individual councils. Our commercial fibre roll out is at least 18 months ahead of schedule so we have proved we can roll out fibre at great pace.”

Few Br0kenTeleph0n3 readers will be surprised by the NAO’s findings. But some might be taken aback by the NAO’s plain-spoken statements of fact. It is rare, given that ‘superfast broadband’ has been such an iconic target for this government, and the vested interest in BT’s on-going attempts to rubbish criticism of the project, that the circumstances have been set out so plainly.

Indeed, the NAO has merely scratched the surface. It could have explored and said much more about why the BDUK Framework process attracted just two bidders from nine invited. These were BT and Fujitsu, which pulled out in March.

It could have said much more about the reasons for the six month delay before the European Commission swallowed its reservations and passed the Framework as fit for purpose. The commission spent weeks waiting for information from BDUK.

However, these would have placed responsibility squarely with individuals, and the tradition here is to apportion responsibility collectively, except in the most egregious circumstances.

That said, some people will have a chance to explain what they have been doing for the past three years. They include Colette Bowe and Ed Richardson, chairman and CEO respectively of Ofcom, the regulatory watchdog that became BT’s lapdog. They will face MPs on the culture, media and sport committee on Tuesday 9 July.

Next up on Monday 15 July are believed to be BT Openreach CEO Liv Garfield and Bill Murphy, MD of BT’s NGA project. They have been invited by culture secretary Maria Miller to face representatives from six alt-nets, including B4RN CEO Barry Forde, who are trying to get the go-ahead to build in the ‘Final 10%’ that BT won’t cover. The trouble is, BT won’t say what it’ll cover and when, leaving the alt-net vulnerable to state-funded competition from BT.

If that meeting agrees that BT is not allowed to overbuild where the alt-nets run, the alt-nets might say it was worth the trip.

Finally the Public Accounts Committee, chaired by Labour leader Margaret Hodge, is likely to want to explore why the Conservatives scrapped Labour’s plan for a national 50Mbps broadband network by 2013, funded by a 50p ‘broadband tax’ on fixed phone lines. But who shall be the victims? Will it be communications minister Ed Vaizey, who has presided over BDUK for the duration. What about BDUK head Rob Sullivan, or Matt Agar, who has been the lynchpin in the BDUK works? Or BT CEO Ian Livingston, who in September is destined for the lords and a job as investment minister at the department of business, innovation and skills? Or his successor, the former Procter & Gamble soap and nappy salesman Gavin Patterson?

Entertaining as such spectacles might be, there is serious work to be done. Ofcom’s role may be crucial. But it may need a shake up. It refuses to accept its decision to allow BT to refuse the use of its physical poles and ducts for third party leased lines had any effect on the BDUK process. Yet this was the main reason why everyone except BT and Fujitsu dropped out of the BDUK framework bid. Geo CEO Chris Smedley was particularly forthright in his comments.

Ofcom suggests he should have gone through proper channels rather than ‘have a slanging match’ in the press. Asked why, if it was aware of the problem BT’s terms and conditions for access to its physical infrastructure (PIA) were causing, it did not consult further, an Ofcom spokesman said it believed its feedback process was clear and transparent and should have been used.

The spokesman felt there may be “a new role” for PIA in future. This might also involve Active Line Access, a standard way for fibre carriers to connect that was developed but not enforced by Ofcom.

(There is more to be said about PIA because it is addressed in detail in Ofcom’s Fixed Access Market Review consultation published the day before the NAO report. But that is for another time.)

Just ahead of the NAO report Ofcom set out a consultation that makes it easier and cheaper for firms that rent fibre from BT to switch.

In a more formal statement referring to the Office of Fair Trading investigation into competition in public sector procurements, which include rural broadband and the still-born £150m Superconnected Cities project, Ofcom said it doesn’t regulate public service procurement or contracts. “Rather, we regulate competition in the private telecoms sector. Likewise, the BDUK programmes are entirely matters for DCMS,” it said.

Whether it can persuade others that is the case remains to be seen.

Questions the NAO might prefer to ignore

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Conservative Technology Forum CEO Philip Virgo has posted a number of questions the National Audit Office may prefer to ignore in its investigation of whether the BDUK process will deliver value for the £1.8bn at risk.

I suspect that Virgo’s questions are slightly misdirected; the Public Accounts Committee is, I believe, the right forum to raise these issues.

Culture secretary Maria Miller is already apparently fighting for her political life, given the number of strenuously denied reports that DCMS is going be shut. She may be seeking an elegant way out of the swamp her civil servants have landed her in.

If so, she could ask the European Commission’s DG Competition to take an urgent look at the BDUK guidance to local authorities on how to deal with RCBF bids. She could confidently expect a verdict that finds the guidelines might lead to an uncompetitive market in the Final 10%.

That would give her an excuse to clean house, get BT to say what it will deliver openly and upfront in its taxpayer funded roll-out, provide a stick with which to beat BT if it doesn’t deliver on time and on budget, and garner some credibility to get fresh investors into the market, and pin the blame for any delays on Europe.

Best of all, it could save her and communications minister Ed Vaizey’s face, although Ed’s will have egg all over it.

Written by Br0kenTeleph0n3

2013/06/15 at 18:20

Kroes dodges tough questions over UK broadband

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The European Commission faces tough questions over its role and commitment to an open, transparent and competitive market for next generation broadband.

News that the Valuation Office Agency is assessing how it plans to tax wireless broadband infrastructure prompted one Br0kenTeleph0n3 reader to ask the European Commission what it thinks of the move.

Mike Phillips of West Chiltington, West Sussex, has been battling to get high speed broadband into his village for years. He wrote to Neelie Kroes, the commission’s Digital Agenda champion, to question the apparent growing bias against fixed wireless broadband. He also asked Ms Kroes what she thought of Fujitsu’s decision not to bid for BDUK contracts, leaving BT with uncontested access to BDUK’s treasure, when EU state aid rules require a competitive process.

The reply came from DG Connect. It noted that nine firms had expressed an interest in BDUK’s money, but “seven of them withdrew during the selection process due to e.g. financial difficulties, change in strategy or preference for different intervention model than investment gap funding”. Fujitsu’s withdrawal would be “unfortunate”.

DG Connect went on to say that local councils can step outside the BDUK framework but still have access to state aid, including BDUK money. “In such cases the local authorities shall comply with the conditions of openness, transparency and non-discrimination when conducting the tender procedure in line with the principles of the national and EU public procurement rules,” it said.

Phillips is not leaving the matter there. He has written back to DG Connect to ask, “Does the EU agree with the principal of state aid being given to an incumbent telco to provide, at best, an overall maximum of 24Mbps, and often less, whilst an established fixed wireless NGA network is available and can be expanded at far less cost?

“Why has the Commission given the fixed wireless industry in the UK a far greater challenge than that given to BT, namely to provide a minimum of 30Mbps and to revisit served premises to upgrade then to fibre when available? BT have publicly stated they will not undertake the latter and cannot provide the former under FTTC.”

There are other questions one should ask. DG Connect’s reply does not mention the main reason BT is the only recipient of BDUK largesse: the game was rigged. Geo’s Chris Smedley, Vtesse’s Aidan Paul and others have been explicit and public on this: the Ofcom-approved terms and conditions attached to third party access to BT’s poles and ducts in rural areas make it impossible to compete against BT. Why does DG Connect ignore this?

In practice BT has made its NGA proposals to local councils subject to non-disclosure agreements. This has hidden the terms and conditions under which BT could receive up to £1.3bn of taxpayers’ money. Is this what DG Connect means by open and transparent?

Written by Br0kenTeleph0n3

2013/04/09 at 06:56

Rates threat scuppers wireless broadband in royal town

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Vfast, a wireless broadband provider, has withdrawn a proposal to supply Royal Tunbridge Wells because the Valuation Office Agency has told it such as service will attract business rates, making Vfast’s offer commercially unviable.

In a letter to Hilary Smith, the Tunbridge Wells’ economic development officer, Sean Doherty, Vfast’s strategy and business manager, said,”I am very sorry to say that we are unable to continue with the tender for Tunbridge Wells.  We had a very exiting (sic) package put together and are really keen to do this however after our meeting today with the head of the telecoms team at the VOA it means that it will not be viable for us.

“We have been told quite clearly that the Tunbridge Wells project will incur Business Rates.  The cost of this added to the cost of the franchise added to the share of revenue added to the start-up costs mean that we have regrettable (sic) decided not to proceed.”

Tunbridge Wells is not short of broadband. SamKnows says some parts can get Virgin Media and FTTC, not to mention Sky, Tiscali, TalkTalk, C&W, O2/Be and AOL.

Why does the town feel the need for a wireless option? Will BT offer the town a wireless service based on its new 2.6MHz mobile licence? If so, what business rates will BT’s new service attract?

Smith and Doherty did not respond to requests to comment. Nor did HM Revenue & Customs, which speaks for the VOA.

This is not the first time Vfast has been denied wireless business in Kent. It was gazumped by BT in Iwade when the incumbent unexpectedly offered to upgrade three of the four cabinets that serve the village for free. This let parish councillors spend £13,000 to upgrade the remaining one, rather than the £49,000 originally promised by Kent County Council for the whole village.

INCA CEO Malcolm Corbett, who attended the Vfast meeting with the VOA, described it as “exploratory”.

“The meeting was exploratory in the sense that VOA are trying to work out where FWA (fixed wireless access) providers fit in their scheme of things. If you read the VOA practice notes they either cover mobile operators where masts/towers form part of the hereditament or fixed line NGA providers charged either per user connected or under a receipts and expenditures regime. FWA doesn’t fit neatly into either category. Essentially the VOA are going to think about what it all means…”

Given that the European Commission permitted wireless access for state aided next generation projects last year, and that in February BDUK issued guidance to local authorities regarding the use of wireless, the VOA’s unsettled position is inexcusable.

Br0kenTeleph0n3 has already highlighted the double standard BDUK is applying to wireless broadband operators. BDUK asks them to meet higher performance targets than BT for NGA and to commit to a fibre to the home roll-out at some point in the future, unlike BT. Further uncertainty due to VOA prevarication begs the question, what is the game here?

Many existing wireless broadband operations are run by volunteers for their communities at cost or less, solely because it is the only way to provide a more or less acceptable and affordable broadband service in those areas. Adding a tax burden would immediately kill most of them.

The few remaining commercial wireless operators would be hard-pressed too, and likely forced to raise prices. If they went out of business, taxpayers would have to give more money to BT’s rural roll-out to resupply the service. It is unlikely that the money raised by taxing wireless access would cover the cost of rolling out FTTC to areas currently being served by wireless.

The only party that stands to benefit from a tax on wireless broadband access is BT.

Is that what this government means by a competitive market in telecommunications?

Written by Br0kenTeleph0n3

2013/04/03 at 07:53

Music piracy drives legal sales (a bit)

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For light relief I sometimes follow copyright issues, especially music piracy. So it was with great interest I came across this little tidbit from the European Commission’s institute for prospective technological studies.

The good guys there analysed the clickstreams from 16,000 digital music consumers and concluded that a 10% increase in clicks on pirate music download sites leads to a corresponding 0.2% rise in clicks on legal download sites.

Conversely, a 10% increase in clicks on legal streaming websites leads to up to a 0.7% increase in clicks on legal digital purchase websites.  The difference in effect between legal and illegal sources on music sales is basically zero, they found.

“Our results suggest that internet users do not view illegal downloading as a substitute for legal digital music,” say the researchers.

“Our fi ndings indicate that digital music piracy does not displace legal music purchases in digital format. This means that although there is trespassing of private property  rights (copyrights), there is unlikely to be much harm done on digital music revenues.”

Bottom line? The Pirate Bay, Megaupload etc were doing the music companies’ marketing for them. For free.

It’s time to repeal the misbegotten Digital Economy Act, and lift the useless court-imposed ISP blocks on content.

Written by Br0kenTeleph0n3

2013/03/19 at 22:25

More broadband farce, this time it’s BDUK

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The Financial Times has come to the belated view that the BDUK procurement of next generation access to broadband is a farce.

The trigger appears to have been Fujitsu’s decision not to compete for any of the contracts available under the BDUK procurement framework, a process that has cost taxpayers £10m to create and left BT as the sole supplier.

The formal announcement has been a long time coming, but has been anticipated ever since the Cabinet Office effectively blacklisted the company by describing it as a “high risk” supplier of government IT systems.

That description did not preclude Fujitsu, with BT the only qualified suppliers under the BDUK framework, from bidding for business.The final straw for Fujitsu appears to be BDUK’s absurd requirements for wireless suppliers of NGA broadband to rural areas.

These were published on 18 February in response to the European Commission’s sensible relaxation of the ban on wireless as a means delivering next generation broadband.

Much of Fujitsu’s business plan, at least in Cumbria, relied on wireless to get around the need to access BT’s poles and ducts. When this was ruled inadmissible, Fujitsu withdrew, leaving BT as the sole bidder in Cumbria.

The commission then rethought the ban and raised it. However, it still appears to believe that fibre to the home is the end game, but it is willing to acknowledge that high speed broadband delivered by cellular technologies such as LTE are the way to go.

This is making life hard or impossible for fixed wireless broadband providers. In its guidance to local councils regarding the use of fixed wireless in their coverage plans BDUK asks for service levels that not even fixed line suppliers have to meet.

For example, wireless providers must show that their system is capable of providing access speeds in excess of 30Mbps download,  with at least ~15Mbps download speed to end-users for 95% of the time during peak times in the target intervention area.

Then it says the wireless operator must put in a fibre to the home network . “The subsidised solution must be an interim solution chosen where a fibre-based solution is not yet economically viable, and there shall be a commitment to replace non-wired connections with fibre at a later stage.”

Kijoma Broadband, which supplies high speed wireless connectivity in the south of England, says, “There is no such guarantee (on download speed) for FTTC for example. FTTC starts at 15 Mbps sync speed  and as previously reported, 5 Mbps orders will be accepted via wholesale providers,” he says.

BT has doubled its original offer of 15Mbps download speeds to “up to” 30Mbps. Ofcom this week reported that the average national download speed is 12Mbps, due largely to Virgin Media’s largely urban roll-out of high speed broadband over cable TV channels.

FTTC connection (speeds) will be lower in practice due to line length, crosstalk, ISP contention, traffic management policies, and other issues, Lewis adds.

Regarding the commitment to install fibre, Lewis says, “If fibre in a low density area is viable in around five years, then it is viable now. The only time it would improve is if the rural area in question gained a large new housing estate.”

Fibre is going into rural homes and businesses, but it is due to community-based efforts such as B4RN and Gigaclear. Both face hostile responses from BT, which has consistently failed to publish precise coverage plans for both its £2.5bn “commercial roll-out” of FTTC to two-thirds of UK homes, and its BDUK-funded roll-outs in “not spots”.

As Ewhurst resident Walter Willcox notes elsewhere on the blog, even having a fibred-up street cabinet in your street doesn’t guarantee access to a high speed service because the cabinet’s capacity may already be taken up.

This should raise questions regarding the percentage of “homes passed” that can actually be served by the cabinets BT has installed so far. BT has said in the past that it would add more street cabinets if the newly installed ones reach capacity. Ewhurst’s experience is to the contrary.

Written by Br0kenTeleph0n3

2013/03/16 at 15:24