Ofcom must tackle 'monopolistic' provider BT, says shadow digital minister Chi Onwurah Shadow digital economy minister and former Ofcom head Chi Onwurah has called on the communications regulator to tackle BT’s hold on the broadband market, ahead of its major sector review next week. Speaking to The Register, Onwurah said it is imperative that the once-in-a-decade review addresses the nationwide lack of …
This is the same party that when in government seemed to prefer to support BT in their efforts at illegal mass interception of communications (you need look only as far as emails released under FoI or the efforts they went to in order to defend 'implied consent' when challenged by the EU commission for evidence of this).
If you're unlucky enough to be a journalist you get arrested for those sorts of allegations. If you're a large multinational state supported corporation then all that seems to happen is that some police officer gets wined and dined by those accused and the case gets closed without the accused ever being formally interviewed.
https://nodpi.org/forum/index.php/topic,4785.msg46058.html#msg46058
And now we're really supposed to believe that they want to 'tackle' BT when they spent all that time supporting them in the past? Seriously?
Openreach needs to be split from BT as the latter is using the former to subsidise it's TV and sport plans to the detriment of everyone else. The money being sucked out of Openreach could be ploughed back in to providing better download speeds, better fault repair and better backhaul to improve latency and congestion. No good throwing all this bandwidth intensive content if the network is an ancient crock of shit that is collapsing under the strain of data packets.
Openreach needs to be split from BT as the latter is using the former to subsidise it's TV and sport plans to the detriment of everyone else
We don't know that, even though most of us suspect that. That's why strong regulation of Openreach could be a suitable answer. If BT shareholders want to own a content aggregator and a utility, that's fine by me. But the two businesses need to operate as separate legal entities and at arms length. Any "cheap debt" advantage of a regulated Openreach needs to be firewalled from BT's other businesses. And the regulatory risk of a potentially capricious, interventionist and incompetent regulator (a big shout out to OFEGM in this respect) would be kept away from the non-regulated operations.
Given that BT's only position is that the status quo is the best and only answer tells us only one thing: That the answer is almost anything but.
BT have been paid a shitload of public cash to do what they are reluctant to.
True but most (possibly all) of the councils were offered a choice. They chose BT presumably because the other offers weren't as good. As it happens take up has been so high that in a lot of cases claw back clauses are coming into effect and projects are being extended.
VM etc are still in debt for their fibre rollouts.
Indeed. A salutary warning to everyone contemplating major network roll-outs.
Part of the problem is that BT/Openreach are using their monopoly to kill competition.
There have been various innovative projects to bring good broadband to areas neglected by Openreach. What tends to happen is that, as soon as it is up and running, Openreach change their minds, deploy FTTC in the area, undercut them, and drive them out of business.
I had ideas of building out a broadband provider in a small area. Openreach had said they didn't plan to roll out there for several years. I'm glad I didn't: A few months later they started their roll out and my own business would have been dead in the water.
So competition in this market is nearly impossible. Openreach have an effective monopoly in most areas, and can easily undercut any startup. I don't know what the cure would be, but something should be done to "rebalance the market".
"or the "others" e.g. Virgin media, no bothering to invest?"
When you have a rapacious monopoly which can (and does) react to competition in the marketplace (ie, people running their own cables or setting up RF links) by lowering circuit prices to below those of the new competition, 3rd parties don't see much point in investing.
Look to what happened in New Zealand when they forced the split of Telecom NZ(Spark) and its lines company (Chorus) - it's worth noting that it's the former incumbent dialtone company which is looking sick now, despite screaming from the rooftops that a split would be the death knell of the lines company.
Openreach's pricing is regulated. They don't get to set their own prices.
Maybe not. But as Openreach is not a separate legal entity, and the bunglers at OFCOM have to rely on management accounts, that's hardly much of a challenge, is it? I've worked extensively in regulated businesses and with (indeed even within) their finance teams. Management accounts have no veracity whatsoever, they tell you purely what management wish to be seen. I've seen at first hand multi-million pound regulatory fraud through management accounts in action.
If you think that Openreach prices are openly and fairly regulated, then that's because you don't know enough about the matter.
" But as Openreach is not a separate legal entity, and the bunglers at OFCOM have to rely on management accounts, that's hardly much of a challenge, is it?"
Indeed - but it can't work both ways.
Normally a regulated business would attempt to inflate its costs to be allowed to set a higher price. In this case the OP claims that Openreach is undercutting new entrants. The other telcos complain Openreach is pricing too high and reducing their profits while favouring BT Group.
Both can't be true at the same time for the same products sold under the same pricing regime.
Openreach can undercut new entrants due to economies of scale, a massive existing infrastructure, and favourable terms with government (e.g. business rates on fibre).
If a new entrant wanted to provide internet access to a small area, they have large setup costs. Their product will probably be more expensive than BTs, especially as BT can use profitable areas to subsidise unprofitable ones.
However, BT won't roll out to all unprofitable areas. There are not-spots. These are the best areas for a new entrant to wire up. However, as soon as the new entrant is up and running, BT suddenly decide they do want to roll out there, so undercut the new entrant and wipe them out. This is abuse of their effective monopoly to keep new players out of the sector.
* I've used BT, when many times it was probably Openreach, but it makes no difference for the point I am making so I can't be bothered correcting it now...
I'm really intrigued by this issue and how it might be resolved.
Any action by Ofcom / CMA to make Openreach better/faster/cheaper harms your position. For new entrants like Gigaclear or Hyperoptic to flourish the last thing they need is Openreach in public ownership or handed a USO mandating rural broadband to anyone who wants it.
The problem that Sky and TalkTalk and so on complain about is the exact opposite of your problem. They want Openreach to reduce prices and roll out to more places so that they can make more profit by having lower costs and a larger potential customer base. You want them to, in effect, butt out and keep their prices high so that you can have a chance to get established.
If Openreach did a gentleman's agreement with you and promised to not step on your toes for 3 years, that's a non-compete or Cartel arrangement and you'd both be going to prison. The opposite behaviour, where they compete vigorously with you (which is expected free-functioning market behaviour) feels like being stamped on by a monopoly.
Maybe the answer is some kind of regulatory adjustment? If you decide to launch in, say, Fulking in Sussex, BT (and Virgin?) are prevented from doing FTTx for a set period - say 3 years? After those 3 years a decision could be taken. BT could decide to roll out FTTx in direct competition, they could decide you've got the market sewn up and choose not to, or you could choose to sell all or some of your business to BT. If you're struggling to cover the cost of your loans or the locals are angry at your higher than BT prices, or you're experiencing both of those things simultaneously you might welcome that. Heck, you could even have a regulation that requires BT to buy it if you want to sell. Maybe in exchange for all that you have to agree to build it to a certain standard so that it could be transferred and maintained?
That would remove your set up risk, it would provide a firmer footing for financing your business, but it doesn't punish you if you succeed.
Anyone got Ofcom's number? I think I've cracked it!
All the "other" majors had sufficient clout with government to have influenced the structure of the BDUK project. I t was notable that they didn't and gave various excuses for their action, which basically said they didn't want to make an investment that was likely to take a few decades before it would return a profit...
'But we should have looked more at the investment path for super fast broadband and fibre to the home.'
True. But then she'd have no excuse for magical thinking where all you need is a plan and not money: 'Digital connectivity must be a priority, with a proper plan to roll out networks, according to Onwurah. "I think we should be looking at fibre to the home, although that doesn’t seem to be BT’s view.”'
We have pretty much only one provider here outside cities and they too have been bunged cash.
My local exchange took loads of money to be FTTC - and my cabinet moved several miles back to the exchange so I'm no better off and those near the exchange can now get 70Mb instead of the paltry 17Mb they got before
my cabinet moved several miles back to the exchange
That sounds unlikely. BT would not go to the expense of re-routing telephones from one cabinet to another. I think what's more likely is that you were on an EO (Exchange Only) line which meant you couldn't get FTTC at all (VDSL equipment is not currently allowed within exchange buildings). To resolve this BT had to install a new cabinet then move the EO lines over to it. Network topology meant that the best place for the cabinet was nearer the exchange where it could provide the most improvement to the most people.
Another possibility is that yours was a a number of distant cabinets that were connected to a secondary cabinet closer to the exchange (a kind of mothercabinet/daughter cabinet arrangement). I can see the 'mother' cabinet being upgraded to help those directly connected to it but the daughter cabinets might not themselves be viable.
It's a sucky situation either way but hope is on the horizon. BT are looking at something called G.FAST and that should improve the economics of small cabinets.
G.Fast has nothing to do with the economics of small cabinets. The average G.Fast node is going to have to be up the pole (where lines are distributed aerially) or buried every 4-5 houses.
Once you get to that level of complexity you may as well run fibre and use GPON. It'll be cheaper than the work needed for G.Fast.
G.Fast has nothing to do with the economics of small cabinets.
Well of course its primary reason is to push the DSLAM closer to the end user premises to boost speed, that should go without saying. But there are going to be something like ten times as many G.FAST nodes as cabinets. BT have to bring the cost of a G.FAST node down. That inevitably improves the economics of smaller installations.
Exactly where the break-even point will be is anyone's guess. But I think it possible that a small cabinet that isn't viable for FTTC could be covered by four or five G.FAST nodes for less cost. Of course getting the fibre to the nodes still won't be cheap but it's an improvement.
Whether or not BT actually choose to use this to extend the footprint of xDSL is another matter. But they may think that a village currently struggling on ADSL will give a higher takeup of G.FAST than a large cabinet in a town that already has FTTC.
Where is exists. The real problem is the outlying / rural areas where BT own all the infrastructure and they know no one else can afford to compete due to the high installation costs.
I've no problem with BT owning and operating in these areas, but they need to be forced to either upgrade them at the same time as (or before) they roll out new technology to the area where they will make profit, or to provide free, unfettered access to the ducts and poles - especially as they have an effective monopoly after being "gifted" state-built infrastructure.
I totally agree, but where is the value, sorry I mean profit?
My sub-exchange caters for 500 homes. If they upgraded the kit when would they see a return on the investment. Likewise why would another provider ask for some rack space when they are unlikely to see a return in any time soon.
And here is the great issue, having been given a state funded infrastructure, they don't want to invite the new kids round to play with "their" toys.
Virgin etc still have to pay BT for the bits between the new installations and the existing structure, they don't run a new fibre from their Manchester hub to the latest housing project every time one is cabled up.
BT are not breaking any real laws here (but not obeying the spirit either), but they do drag their feet along the line of "just enough to keep it legal" route when opening up new area's to "rivals" and not many have the funding to take on the goliath in the court arena as it would drag on for years and quickly bankrupt the newcomers
", or to provide free, unfettered access to the ducts and poles - especially as they have an effective monopoly after being "gifted" state-built infrastructure."
The government sold those assets to shareholders 30 years ago. They weren't given away, they were sold. Should Citroen be allowed to use BMW's Mini factory for free? Surely that was given away for free when Rover was privatized?
I don't think there's a monopoly either, effective or otherwise, Virgin reach most UK homes with their network.
If you're going to play the pendantry game...
IMO 'most' people would consider 'most' to refer to a significant majority rather than a simple majority, something like >75% vs >50%. If you're in the region of 43-57%, then 'most' people would call that 'half'.
There are, of course, contexts where this breaks down, such as winning an election, but I think they're exceptions to the general understanding of the term.
"or to provide free, unfettered access to the ducts and poles"
And the RoI for this will be exactly the same for the competitor as for BT. Or would they have some other advantage which would enable them to do better? Do they have a huge army of fibre layers chomping at the bit that are somehow unavailable to Openreach?
It's partly material costs and partly man*-hours. Both cost money and the rate of supply of man-hours is governed by the number of available men. You could, of course, increase the supply of men but to do that you'd probably have to pull some of the workforce out of the field to act as trainers, then the trainees have to get up to speed.
DAMMIT!!! It's 40 years - FORTY WHOLE YEARS - since Brookes published TMMM and we still have people who don't get it.
*Where "man" signifies a human of any gender.
Digital connectivity must be a priority, with a proper plan to roll out networks, according to Onwurah. "I think we should be looking at fibre to the home, although that doesn’t seem to be BT’s view.”
As a former Ofcom bod, she is presumably aware of how much of the current network is actually fibre to the home and how much is copper. As she seems to think that the current network should be discarded and replaced wholesale, she will presumably call for Virgin and others to be compelled to cable up areas that are less populous than central London, Manchester, Glasgow etc.
I'd quite like to have choices in the smaller villages
Seems like another easy cheap shot - policy by sound-bite.
"As she seems to think that the current network should be discarded and replaced wholesale, she will presumably call for Virgin and others to be compelled to cable up areas that are less populous than central London, Manchester, Glasgow etc."
Look to what happened in New Zealand.
As soon as the dead hand of the incumbent was removed from the lines company it was free to sell to anyone and promptly did so, including leasing duct space and dark fibre to the NZ-equivalent of Virgin.
Once that happens, VM rollouts are trivial by comparison with tearing up streets.
"Look to what happened in New Zealand."
Yes. The government had to hand the new last mile company £1000 for every home in the country and even then when the regulator tried to reduce pricing they threatened to default on their loans.
Akamai's most recent State of the Internet report gives an average speed in New Zealand of 8.7Mbps versus 13Mbps in the UK.
Have you got any examples where splitting up the former incumbent has resulted in things being better than in the UK?
The issue in rural areas isn't with Virgin (an urban provider) but with small community initiatives or niche suppliers like Gigaclear, who often find that BT waits until they have proven a local demand for higher speeds, gone fundraising, and even begun their rollouts.
Then BT jumps in and drops an FTTC service which isn't as fast and suffers poor contention ratios, but it's relatively cheap, it's available now, and has a range of competing ISPs like Sky and TalkTalk which can offer value-add services like TV or mobile. The smaller local operator can't compete and loses the critical mass of customers it needs to survive the startup phase.
Then BT jumps in and drops an FTTC service
In my area they lightly 'peppered' the rural area with FTTC. It was enough to effectively inhibit or block niche suppliers from bidding for BDUK funding and also to massively increase their costs because effectively now they would in effect be bidding for single standalone cabinet deployments rather than entire villages and/or areas.
Yes FTTC arrived in 2015, but without BDUK we would of probably had something with a similar or better performance up and running in 2009...
If the Openreach arm of the business was taken back into public ownership (i.e. a public service) then no, it won't have shareholders.
I don't mind a monopoly as long as it delivers what it promises - the problem is that they are stripping out profit to give to the shareholders; not ploughing monies back into the national infrastructure in a way we would all like.
How would Virgin, Hyperoptic, Gigaclear and so on be able to compete with a not-for-profit, publically owned Openreach? BT's shareholders would be compensated for the full value of their holdings, and Virgin would go bust. There'd be quite a lot of court action between the first and last acts in that play.
"If the Openreach arm of the business was taken back into public ownership (i.e. a public service) then no, it won't have shareholders."
And if the GPO days are anything to go by it wouldn't have much in the way of investment either. Why do you think BT was privatised? Big clue - HMGs of all hues had fought shy of putting money into it at anything like the required rate. Nationalised GPO was the black telephone rationing company.
I have one on my desk at home. Can't see incoming numbers and the nice classic dial has been replaced by push buttons, but it chirrups like it used to and has that beautiful, Noel Edmunds Swap Shop style about it.
If they at least upgraded the aged copper, that might be something to cheer about; optics aren't much good in a domestic power cut. Or forced more customer access to back end performance figures, like the load on our pods, etc. so that a customer stands a chance of knowing if they're being told porkie pies. And also Ofcom technicians to go in and check on equipment configuration.
But sure, some of that public money should have gone to VM and others, in order to even out the playing field.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
