Br0kenTeleph0n3

Following the broadband money

Posts Tagged ‘Geo

Questions raised over double-funding of Welsh broadband networks

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Fibrespeed's potential coverage area back in 2012. Source: WAG.

Fibrespeed’s potential coverage area back in 2012. Source: WAG.

Maps showing that the Welsh Assembly Government’s (WAG) publicly-funded Superfast Cymru project supplied by BT will overbuild an existing publicly-funded network have led to questions about the legality of the £425m next generation broadband project.

Using post code data obtained under the Freedom of Information Act with the help of the Information Commissioner’s Office, broadband consultant Richard Brown has identified post codes included in the Superfast Cymru roll-out that are already covered by the £30m Fibrespeed network. He has asked the European Commission to investigate whether there has been a breach of the regulations.

Where BT plans to roll out Superfast Cymru.

Where BT plans to roll out Superfast Cymru. Source: WAG

BrokenTelephone reported in November last year that the WAG was seeking ways to overbuild Fibrespeed. At the time business, science and transport minister Edwina Hart said a change in the guidelines governing state aid for broadband might allow the overbuild, and promised to report back to WAG members.

Fibrespeed is owned by the WAG but supplied and operated under a 15 year contract by independent dark fibre network operator Geo (sold last week to US-based Zayo). It was to service 14 business parks in north Wales with an optical fibre trunk network at prices equivalent to London and the UK South-East, according to assembly member Lesley Griffiths, speaking in 2008. Local ISPs tapped spare capacity in the network to provide local residents with wireless connections starting from 2Mbps, providing a service BT could not match.

Brown asked Hart a year ago if Superfast Cymru would overbuild Fibrespeed. “At that time I received a statement from the business minister that she was satisfied that there was no overbuild, and the EU Commission received a similar reassurance that there was no overbuild and so chose not to pursue the matter any further,” he wrote to the commission.

On receiving the post code data for Superfast Cymru coverage areas, he tested them against those covered by Fibrespeed (see table).

“The original statement issued to me by the business minister, and subsequently affirmed by the EU Commission, was that the Fibrespeed project was specifically targeted at business parks in the north of Wales and, whilst resellers of the Fibrespeed capacity may have extended this network using alternative connection methods (wireless appears to be prevalent), no business park was to be covered by Superfast Cymru, and so no overbuild of the original public funded project would take place,” he said.
“LL17 OLJ is St Asaph Business Park. It is where Fibrespeed have their principal office of operations.”

Brown said, “It is clear that a deliberate attempt appears to have been made to misrepresent both the Fibrespeed and Superfast Cymru projects to the EU Commission for the purposes of securing additional (duplicated in part) public funding.
“Whilst the declared outcome sought (increased access of citizens to superfast broadband speeds) is of course laudable, the Superfast Cymru project itself is under scrutiny as to whether it can indeed deliver on this.”

Postcode Served by Fibrespeed Served by Superfast Cymru
LL77 7UR Yes (case study) Yes – released postcodes*
LL65 4RW Yes (case study) Yes – released postcodes*
LL12 0PG Yes (case study) Yes – released postcodes*
LL13 9XT Yes (case study) Yes – released postcodes*
CH5 2NR Yes (case study) Yes – released postcodes*
CH7 6HB Yes (case study) Yes – released postcodes*
LL57 4YH Yes (case study) Yes – released postcodes*
LL17 0LJ Yes (case study) Yes – released postcodes*

*released postcodes refer to a document which is the 54k (approx) postcodes that the Information Commissioner compelled the Welsh Government department to release to Brown that detail the target intervention areas of the Superfast Cymru project.

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Written by Br0kenTeleph0n3

2014/06/03 at 06:55

UK faces Comms Bill disaster because DCMS doesn’t get it

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The government has released a schedule of seminars designed to gather information that will inform the Green Paper that will lead to a new Communications Bill in 2015. The supporting rationale suggests it is bent on solving last century’s issues, not those of a fully digital, hypernetworked, globally competitive economy. In short the department of culture, media and sport (DCMS) just doesn’t get it.

Starting in July delegates will address

Fundamental to the debate is the broadband market in the UK, which underpins everything DCMS would like to happen. The government appears to think this job is done. It is wrong.

It says it “is already investing a total of £830 million by 2015 into improving broadband connectivity in poorly served, mainly rural areas, upgrading mobile infrastructure and establishing some of Europe’s best connected cities. Government must now also consider the other crucial building block of digital infrastructure: spectrum.”

In fact, there is not yet a single live line in the country that has come through the BDUK procurement framework process, which governs the £830m. The nine firms invited to pitch for the business resulted in two  suppliers – BT and Fujitsu – hardly a rampantly competitive scenario.

Furthermore, the European Commission has stalled the release of BDUK’s funds because none of the UK proposals put forward so far meet its target of a universal 30Mbps broadband service by 2020. There has been some movement on this; existing contracts such as Cornwall, which offer “up to” 24Mbps, will be allowed to go ahead, but new ones must meet the 30Mbps target.

Why now?

The timing of the seminars is curious. Not only is DCMS distracted by the Olympics, but the House of Lords communications committee is looking at the broadband issue. It has heard evidence that the fibre to the cabinet solution proposed by both BT and Virgin Media is a technological dead-end, unlikely to meet Europe’s secondary target of 50% of users receiving a 100Mbps service. The committee’s findings and recommendations are unlikely to inform the seminars, but may be out in time for the Green Paper DCMS hopes to publish early in 2013.

Similarly with Ofcom’s business connectivity review. This three-yearly review of the network services available to businesses, such as leased lines and backhaul, will not start before July, an Ofcom spokesman says. Its conclusions, which will assess issues such as competition levels and barriers to entry in this £2bn/y market, are unlikely to be available much before year-end. This leaves little time to absorb and debate them before they are incorporated, or not, in the Green Paper.

Fit for purpose?

It is true that DCMS has some important issues to put to bed. These include online copyright, content creation and protection, and access to content. However, these issues derive from rather than drive the physical networks.

The government appears to believe that the UK has a network infrastructure fit for purpose for the networked age. There is plenty of evidence that this not the case.

At the consumer level there are just two physical networks, BT’s and Virgin Media’s. They presently overlap, duplicating coverage for about 50% of the UK’s houses. It is unlikely that VM will go much further than this for fear of being forced to provide third parties like BT with physical access to its ducts or wholesale access to its fibres and cables.

This is likely to leave BT with an effective fixed network monopoly in the two-thirds of the country where the “Final Third” of the people live. Of course, there are other fixed networks, such as those of Geo, of Cable&Wireless Worldwide, of Vtesse Networks, that criss-cross the country. But they do not offer connections to residential customers. Some, such as Gigaclear, do. But they are very small and their business models fragile.

BT has a product, PIA or physical infrastructure access, that allows third parties access to its poles and ducts. So far only Andy Conibere’s CallFlow Solutions has taken it up. Matthew Hare, CEO of Gigaclear, says CallFlow can do it because it gets its money upfront from customers. Hare has looked at PIA and rejected it. He’s put off not so much by the price (which Fujitsu and Virgin Media say is way higher than cost) but by the terms and conditions.

“You can use PIA only for residential customers,” he says. “BT knows that any viable business plan to service rural areas relies on being able to go to all customers, including businesses,” he says.

That’s not all. Hare says, among other things, you have to disclose your entire roll-out plan, and pay BT to survey the ducts you want to use. “They should know what’s available and what condition it’s in,” he says.

Other firms, such as TalkTalk and Sky, simply rent BT’s local access networks to deliver TV, broadband and voice services to customers. The rent they pay BT, or rather Openreach, ensures that BT still profits from the transaction. This is common practice throughout Europe

Wireless worlds

Then there are the wireless network operators, led by the mobile phone companies (MNOs and MVNOs like Virgin Mobile who rent their entire network infrastructure from Vodafone, Orange, O2 or Three). They are increasingly interested in serving data products to consumers, but preferably only in towns. Besides, they have to rent space on fixed networks to hook up with the UK’s core networks and internet peering points.

This is why Vodafone’s mooted takeover of CWW is a possible game-changer; it gives the mobile operator instant access to a fixed network whose backbone is probably as extensive as BT’s and which could backhaul wireless local access links in competition to BT. It also responds to the £100m, eight year backhaul deal between Virgin Media Business and MBNL, the network company for Everything Everywhere (O2 and Orange) and Three, signed in September 2011.

The only wireless network operator with coverage comparable to BT is Arqiva, whose main job is distributing TV and radio broadcasts. BT and Arqiva are in a joint venture with Detica to compete for the network for the smart meter project that will connect the UK’s 28 million homes and offices.

Content competition

The UK has the world’s second largest independent television production sector, is the second biggest exporter of music, the largest video games industry in Europe, and the fourth largest film market. That suggests the UK’s content businesses are doing all right.

DCMS says the “creative industries” including publishing, contribute 2.5% of GVA (gross value added), about £36bn, and employ 1.5 million people. Ofcom’s Communications Market report for 2011 largely corroborates it. It says TV revenue was up 5.7% to £11.8bn, radio was up 2.8% to £1.1bn, recorded music was down 8.6% to £1.2bn (but legal downloads were up 5% to 24% of sales), advertising was £16bn, 24% of it online, about the same as TV.

But that hides some problems. Publishers and other rights holders worldwide have been stunned by the proliferation and fragmentation of media. Facebook, Twitter, YouTube, Huffington Post, Google, Amazon etc have made mincemeat of business models that depend on high-priced access to exclusive content.

Even so, it is staggering to find DCMS wants to debate “whether convergence in the content market should require a degree of convergence in the telecoms/broadcast competition regimes”. It is hard to know what this actually means. It makes no sense unless it is a veiled threat to the ability of the likes of Google, Amazon, Apple and Sky to do deals that aggregate content and deliver it to customers for a price they are willing to pay.

These firms provide platforms for ordinary people to create and distribute their own content, without bothering cartel-like middlemen like record companies and book publishers.

There are things to be said about excessive market power and abuse of personal information, whose disclosure is often the price paid. But that is a different issue to one that should inform a Communications Bill.

By ignoring the issue of competition at the network infrastructure level, the government is in danger of condemning the UK to a sclerotic digital infrastructure that is not fit for purpose in the 21st century.

By missing or ignoring the fact that the future networks are as much about uploading and sharing as downloading and consuming, the government risks duplicating the content distribution cartels of the previous century.

Let the debate begin.

Geo’s exit from NGA leaves questions for Ofcom

with 10 comments

Geo Networks and earlier, Vtesse Networks, abandoned plans to provide high speed broadband to rural communities and other not-spots because they faced a break-even period twice that of BT’s.

This is due to restrictions tolerated by communications regulator Ofcom on BT’s Physical Infrastructure Access (PIA) product, expected to be formally launched this month, that exclude at least half the potential revenue from would-be tenants.

Despite trials with Fujitsu to provide fibre to the home in Wales via BT’s poles and ducts, the restrictions are expected to leave BT’s monopoly in some two-thirds of the geographic UK intact, and to ensure that few if any residents receive broadband speeds greater than 24Mbps.

The restrictions are a ban on traffic aggregation, which excludes the village ‘digital pump’ idea, a ban on selling leased lines, which excludes local businesses and public sector customers, and a ban on selling backhaul, which excludes customers such as mobile and satellite network operators.

These bans restrict PIA tenants to providing services to residential customers for the part of the network between the local exchange or street cabinet and the home.

Geo Networks’ CEO Chris Smedley estimates that these restrictions exclude tenants from 50% and 60% of the potential revenue stream in rural areas while allowing BT access to the entire stream.

This reduction pushes tenants’ potential break-even period to 20 to 25 years. This is double BT’s expected break-even period for its Infinity fibre to the cabinet programme.

BT has none of these restrictions. According to Bill Murphy, the man in charge of BT’s next generation access programme, Infinity will break even in 10 to 12 years, while Openreach’s general manager for next generation roll-out Kevin McNulty says BT can break even in 12 to 14 years  with just a 20% uptake.

Smedley says he has patient shareholders and capital lenders. But none is prepared to wait 25 years for a return, especially when BT can fund a competitive offer from cashflow in a market where in many cases it is already the monopoly supplier.

Geo Networks was a credible competitor to BT, and would remain so if the PIA restrictions were removed. Smedley says it has the country’s newest national fibre network, and carries two-thirds of the country’s internet traffic, thanks to deals with banks, mobile operators and ISPs.

Extending the Geo network into rural communities could be done at marginal cost, if Ofcom removes the restrictions.

We don’t know what persuaded Ofcom that allowing the restrictions was the right thing to do. However, if it was to protect BT in fulfilling its universal service obligation, Ofcom may have acted against BT’s wishes.

In its comments to government concerning the implementation of the European Commission’s electronic communications directive, BT said, “Given the increasing number of technological options for communications service delivery in different areas, we are disappointed that BIS did not take the opportunity when amending the Universal Service Order to remove the presumption of uniform national pricing which was never a strict requirement in the old Directives.”

If that was BT saying it was prepared to compete on a level playing field, then Ofcom has questions to answer on one of its main roles, which is to promote competition in communications markets.

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Many who read this blog may feel that they have been left in the dark over decisions related to the procurement of high speed broadband in Britain, if only because some of the announced decisions appear to fly in the face of common sense.

The Information Commissioner’s Office is now inviting the public to tell it what information public authorities should release proactively.

The survey is intended as a supplement to Freedom of Information Act requests, and to short-circuit the time-consuming rigmarole of the FOIA process.

Written by Br0kenTeleph0n3

2011/11/26 at 18:55