Following the broadband money

Posts Tagged ‘Kroes

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

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

Do Not Track, Kroes warns (M)ad men

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Europe’s Digital Agenda champion Neelie Kroes will condemn efforts to allow companies to stalk users online.

Kroes – Do Not Track

In a breakfast meeting of the Centre for European Policy Studies this morning Kroes will say, “Privacy is a fundamental right; if your idea doesn’t work with that, it won’t work at all. Because people won’t use what they don’t trust. And they will stop using what they learn to distrust. If that happens, online businesses miss out on a huge opportunity of new and bigger markets.”

Kroes believes delegates at the Web standards setting body W3C are in danger of kowtowing to mainly US lobbyists who say their cookies will refuse to acknowledge default Do Not Track (DNT) messages from browsers.

The US-based Digital Advertising Alliance, which includes the Direct Marketing Association, said recently, “The DAA does not require companies to honour DNT signals fixed by the browser manufacturers and set by them in browsers.”

The DAA went on to complain about Microsoft setting DNT as the default in Internet Explorer v10. It said its members would not abide by such instructions, and such a default was not “an appropriate standard for providing consumer choice.”

UK users will disagree. They forced BT to abandon plans to use the Phorm ad-serving software after it was revealed to have conducted secret tests on users.

Kroes is worried that consumers will start shopping off-line or find ways to hide their online movements rather than allow anonymous companies to track them through cyberspace. This could jeopardise the development of a single e-commerce market in Europe, one of the European Commission’s primary goals.

In a December 2011 presentation Cisco said global retail e-commerce would be worth $1.4tr by 2015. The B2B market is already at least 50% bigger than retail, according to US Census figures quoted by Oracle earlier this year. But much of this is done on private networks with strong authentication with contractual obligations that create a climate of trust between parties.

The DNT standard is meant to stop firms from installing third party tracking cookies without users’ explicit permission. At present firms can do this without telling users what data they collect or what they use it for, nor are users easily able to discover and delete what companies may find out or predict about them.

This information is especially valuable to firms like Google and Facebook. They collate this data, compile a profile of users’ interests and therefore possible real world situation, and sell those profiles to advertisers who develop products (semi-)customised for individuals who fit that profile.

The DAA claims this stops you from receiving unwanted marketing messages; critics say this would end up restricting all the information you would get to see and the product and service choices presented to you.

The new provisions in Europe’s e-Privacy directive, the so-called “cookie rules”, require informed consent before information is stored or accessed on a user’s device, their computer or smartphone. This includes cookies for advertising or other tracking purposes.

“All providers need to respect and implement these rules,” Kroes will insist.

The Atlantic had a good piece on the prevalence of tracking in its February issue, and PCPro had a piece recently on how to avoid being tracked online.

Written by Br0kenTeleph0n3

2012/10/10 at 23:44

And then there was one

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A Cabinet Office decision to rank “Fujitsu” as “high risk” has effectively reduced the number of companies eligible to bid for more than £1bn of BDUK-funded next generation access projects to one – BT.

Internal government documents seen by Br0kenTeleph0n3 suggest that the government will consider Fujitsu Telecom as “high risk” and that any bids from such companies will be “scrutinised particularly carefully” before being given more work. Local authorities responsible for rolling out new broadband as well as public service networks in their patches are likely to prefer the low risk option.

Yesterday news broke that BT had won NGA bids in Cumbria, Norfolk and Surrey. Twitter conversations suggested no-one is prepared to bet against BT making a clean sweep of BDUK contracts.

Although Fujitsu’s troubles are believed to be related to a failed project at the NHS, the blacklisting completes the humiliating BDUK framework procurement process for which it paid almost £3m to consultants at KPMG and Pinsent Mason.

After starting with nine invited candidates, BDUK ended up with just BT and Fujitsu signing up. In practical terms, only BT is left, despite Fujitsu claiming it’s business as usual.

That’s not all. The European Commission’s DG Competition has still not approved BDUK’s procurement framework as a vehicle for distributing state aid. BDUK CEO Robert Sullivan told a Westminster e-Forum conference this week that he was confident approval would come in autumn.

There is no indication yet how Fujitsu’s blacklisting might affect BDUK’s negotiations with Brussels. The sticking point, Sullivan said earlier, is wholesale access to the new networks. European Digital Agenda chief Neelie Kroes wants regulators to force incumbents to offer dark fibre to increase competitive access to physical infrastructure. BT has said it won’t offer dark fibre.

If DG Competition hangs tough because of BT’s imminent monopoly on BDUK’s money, BT may have to concede on dark fibre. Or BT might just tell the government it’ll stick to the two-thirds of the UK’s commercially viable communities.

That could destroy any chance of the government meeting its goal to have the best and fastest broadband network in Europe by 2015. But through Ofcom it could also make BT provide dark fibre and a standard interface such as Ofcom’s Active Line Access, and spend the BDUK money with network operators who are prepared to work in rural areas.

We live in interesting times.

Written by Br0kenTeleph0n3

2012/09/14 at 11:39

Cumbria broadband rejection exposes BDUK chaos

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There are now serious doubts over the government’s programme to get “the best broadband network in Europe by 2015” following Cumbria County Council’s decision to reject bids from BT and Fujitsu for a £40m next generation broadband network.

In a statement this afternoon, the council said it would enter fresh talks with the two firms to get the network Cumbria has been looking for all along. A decision is expected in September.

“Neither of the final tenders had completely fulfilled the original, and full, requirements of the procurement process,” it said. Despite extensive talks between Cumbria and the suppliers, the bids met neither the technical specification nor the funding terms Cumbria had called for.

To be fair, BT has been upgrading its copper network in Cumbria at its own cost. But its capabilities fall far short of what the council expects from a next generation network.

Fujitsu has still to build a public access network in the UK, and was widely expected to get the nod in Cumbria. This is said to be to keep BT on its toes and to preserve the semblance of competition for most of the £830m the government has earmarked for next generation broadband.

 How we got here

The government set up Broadband Delivery UK shortly after took power to set up the procurement and disbursement process. Following Vince Cable’s faux pas over the BSkyB bid, responsibility for BDUK shifted to Jeremy Hunt’s culture media and sport department (DCMS), whose first priority has been the London Olympics.

Public procurement specialists, believed to be as many as 20, from the audit firm KPMG were drafted in via a Treasury framework procurement deal to help BDUK. According to insiders, none of the KPMG secondees had ever procured a large communications network. However, the rate for their junior staff is reputed to be more than £1000 a day. DCMS has refused to answer Br0kenTeleph0n3’s Freedom of Information Act request to provide details of the consultants’ qualifications and day rates.

The disparity in pay and the lack of technical expertise is believed to have led to friction between the permanent and drafted technical experts and the KPMG staff. Several DCMS reorganisations have seen staff with telecoms experience moved or or out.

BDUK set up a procurement framework that was guaranteed to exclude all but the biggest supply companies. Nine were invited; two, BT and Fujitsu, are still in the running. The rest say among other things, the Ofcom-approved terms and condition that govern access to BT’s poles and ducts made for a ‘incontestable’ environment.

Neither BT nor Fujitsu has signed up formally to the BDUK framework because the European Commission’s DG Competition, which rules over state aid disbursements, has so far refused to approve it. It is believed DG Competition is doing so because BDUK’s proposed procurements would lead to taxpayers’ money going into networks that would fall short of Europe’s Digital Agenda targets. These are for a universal 30Mbps service with 50% of citizens using a 100Mbps broadband service by 2020.

This has delayed local procurements, which are to be led by county councils. Cumbria felt it could no longer wait, and set off on its own, as it is entitled to do.

The present delay is not the first. Cumbria was meant to have picked a winner in January. But it may be the last.

 What’s next

It is less clear what will happen with councils that stay with the BDUK procurements, and the money. There are some clues. DG Competition quickly gave the nod to Birmingham’s plan for a state-aided, £10m, wholesale-only, open access, fibre to the home network that will supply everything from dark fibre down to anyone who wants to resell it.

It is understood that both the UK and European authorities are less anxious about broadband network procurements in cities, where there is usually a choice of network operators, than they are about what happens in rural areas, where BT has a regulated monopoly. However, the speed with which DG Competition approved Birmingham points to a preference for the features included in its proposal.

In addition, the European Commission’s vice president and Digital Agenda champion Neelie Kroes is on record saying national regulators have to make incumbents open their networks and to sell dark fibre.

That gives BT a massive problem. Having to sell dark fibre would destroy the business case for a fibre roll-out, BT’s director of strategy Sean Williams told the House of Lords communications committee. Installing fibre is five times more expensive than copper, he said.

Williams did not provide evidence to back this assertion, but if it is the case, it is hard to understand why Ofcom has not investigated why BT is selling its copper broadband for the same price as its fibre broadband. Or perhaps it knows. After all, Williams worked for Ofcom and was, he told their lordships, responsible for Ofcom’s broadband strategy.

So it seems the UK has a stand-off. BT is religious in its determination not to sell dark fibre; BDUK can’t disburse taxpayers’ money, so a lot of voters can’t get next generation (or even first generation) broadband.

It is hard to see how this will resolve itself. In the meantime, potential investors go elsewhere, talent follows them, and the UK grows a little less competitive every day. The only winners are BT’s shareholders, but for how much longer?

The blame for this must fall on BDUK, DCMS and ultimately, the culture secretary. If Hunt could escape the sack over Sky, he is definitely sackable for this cock-up.

Written by Br0kenTeleph0n3

2012/06/14 at 22:26

BT to duplicate B4RN fibre footprint

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The Lancashire County Council’s next generation broadband plan  allows BT, its business partner, to duplicate large areas where community-owned network operator B4RN is building a fibre to the home network, driven by frustration with BT and LCC delays.

Green = B4RN; Red = BT; Flesh = Duplicated coverage

A LCC target calls for “A pilot project covering seven Lancaster rural parishes offering fibre based SFBB to a minimum of 73% of premises with viable options to increase coverage to close to 100%.” The LCC website does not disclose the lucky parishes. However, sources say they are, by and large, the same as those B4RN intends to cover.

This is of course entirely predictable and expected. BT responds only to competition. Its fibre footprint mirrors Virgin Media’s cable TV footprint, and where competitors have raised their heads, whether with wireless or fibre, BT has been ruthless in eliminating the opposition (see West Sussex, Ewhurst, and others).

B4RN plans to give about 1500 homes and farms a 1000Mbps symmetric service via a fibre to the home link from July. The LCC expects BT to deliver an asymmetric service of more than 30Mbps to 97% of all businesses and homes, 647,000 premises. They are still “exploring options” about how to get “SFBB” to the remaining 3%, which is where B4RN operates.

B4RN co-founder Chris Conder says BT’s deal with LCC deal is actually quite subtle. The LCC plan misses Tatham, which is hard to service as it is difficult upland terrain. Population density is very low, and there’s very little copper cable. “Most of them are on DACS (digital to analogue converters) up there,” she says. “The exchange is in Yorkshire.” Any high speed broadband service to Tatham is likely to be via satellite.

BT may duplicate around 90% of B4RN’s footprint. However, LCC’s inclusion of Caton skews the “homes  passed” figure for the area. Conder says Caton, a low-land area with an exchange and two street cabinets, adds around 1400 homes to BT’s figures, apparently halving the duplication rate.

Conder says B4RN left Caton out of its plan because it had an exchange. “All our area is too far from exchanges to get a decent connection,” she says.

She disputes LCC’s classification of Caton as “rural upland”.  “That end of the parish is in the valley with cabinets anyway.”

Be that as it may, the LCC plan contains an implicit assumption that Lancashire farms are not businesses. If they were so considered, BT would be committed to provide prioritised “fibre based SFBB (superfast broadband) at speeds of up to 80Mbs to 100Mbs” to 90% of businesses. Faced with the same issue, North Yorkshire councils refused to accept a report on how to next generation broadband in their area.

BT played a lead role in creating the tipping point that led to B4RN’s formation. Now it may be forced to work with instead of against it. The LCC’s plan injuncts “potential partners” to design a solution that they “design a sustainable solution” for rural communities the LCC sees as “the vanguard rural communities” for early rollout.

Source: Lancashire County Council

The LCC pitched against B4RN for funding from the Defra Rural Development Fund, so it may not think B4RN, which has the public support of the EU’s Digital Agenda boss Nellie Kroes, is part of the “vanguard”.

There is a question whether BT will qualify under state aid rules to use taxpayers’ money in B4RN areas. If it can’t, it’s going to be expensive. An LCC graph of the costs of providing nextgen broadband to the “Final Third” shows that the per connection cost rises from around £450 to £1750.

That puts BT’s bill for competing with B4RN at a minimum of £3.0m. B4RN says it can provide a far superior service for £2m.

Written by Br0kenTeleph0n3

2012/06/02 at 21:31

Incumbent telcos leech cash from altnets, starve broadband market

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Europe’s incumbent telcos are sucking all the cash out of what is meant to be a competitive market in telecommunications infrastructure, endangering the chance that the union will meet its Digital Agenda targets of 30Mbps for all and 50% of citizens using 100Mbps broadband by 2020.

Members of ECTA, the association of “challenger” or altnet telcos, have asked Digital Agenda champion Neelie Kroes to force incumbents to cut the price of renting incumbents’ copper lines.

“At the prices charged for copper, all the cash flows have gone to the incumbent, and entrants have been persistently cashflow negative. In Portugal, we understand there are now no active competitors using unbundling, whilst in Poland there is only one remaining altnet,” ECTA director Ilsa Godlovitch told Br0kenTeleph0n3.

While local loop unbundling appears to have been a disaster in Europe, the same may become true for fibre access.

Incumbents argued previously that they need high prices for copper lines to fund fibre roll-outs. ECTA told Kroes yesterday most incumbents are not installing fibre to households, but are only installing fibre to cabinets (VDSL). This cost relatively little and could undermine competition by limiting altnets’ ability to unbundle the incumbent’s access network, they told Kroes.

“Many incumbents installing VDSL have been able to retain nearly 100% market share of these (local) lines, a position which would strengthen their dominant position even further in years to come,” they said.

Share of unbundled sub-loops and VDSL WBA lines of total number of FTTN/VDSL lines of the SMP operator (in %). Mid 2011
Access to the unbundled sub-loop Wholesale broadband access to VDSL connections Total
AT 0.00% Partially no access 0.00%
BE No access No data available 1.00%
CH 0.00% No access 0.00%
DE No data available No data available 8.10%
DK No data available No data available No data available
ES 0.00% No data available 44.70%
FR No FTTN/VDSL roll-out No FTTN/VDSL roll-out No FTTN/VDSL roll-out
HU 0.00% No data available No data available
IE No access No access 0.00%
IT No FTTN/VDSL roll-out No FTTN/VDSL roll-out No FTTN/VDSL roll-out
NL 0.00% 0-5% 0-5%
PL 0.00% No data available No data available
PT 0.00% No data available No data available
RO 0.00% No access 0.00%
SE 0.00% No data available No data available
TR 0.00% 0.50% 0.50%
UK <1% Partially no access No data available
Source: WiK Consult

ECTA chairman Tom Ruhan said, “The liberalisation experiment which Europe began in the late 1990s is close to failing.”

Regulations do not help even leading telecoms competitors. Without change Europe might go back to monopolies and duopolies for broadband services within five years. “This will not deliver more investment in broadband and will have a negative impact on the services and prices consumers receive,” he said.

The European Commission is redeveloping its ideas on wholesale charges and competition in the telecoms sector. Incumbents have challenged proposals that would compel them to invest in fibre to homes in exchange for retaining higher charges on their legacy copper infrastructure.

CEOs of altnets, which according to the FTTH Council, currently operate 55% of Europe’s FTTH lines, argue that incumbents have been receiving subsidies for years, and have drained competitors of capital, yet have failed to modernise their networks.

ECTA said these views did not represent those of ECTA members who are also incumbents, such as BT and Danish telco TDC. It is unlikely this difference can or will be resolved.

All ECTA members generally support the principle of open wholesale access to incumbents’ networks at home and abroad.

Now, if they can just get beyond their cosy gentlemen’s agreement not to rock the boat in each other’s home markets, Kroes might see her dream fulfilled.

Written by Br0kenTeleph0n3

2012/05/22 at 07:02