For the past few weeks the news has been full of reports with regards to rural broadband and the Broadband Delivery group (BDUK) which was setup by government to help feed funds into providing fast broadband for all. This work along with the need to deploy next generation of connectivity services to urban areas has seen a cluster of new start-ups work on solutions to meet this requirement. Whether it is wireless from churches, digging up fields and roads to lay fibre or deploying satellite there doesn’t appear to be a shortage of enthusiastic companies to provide services to people who want it.
Ironically most of these businesses are managing to do so with little or no public subsidy as most of that is currently being directed to BT, who without sufficient competition, is clearing up the opportunities for government money. It is therefore surprising that even though we have a number of companies trying to tackle the digital divide their ability to do so is being thwarted by BT trying to maintain market share – even in areas they are not planning to build to.
While I have been aware of this action I didn’t realise it was so prevalent until I went to an industry event last week where a number of small network operators are represented. The problems is the ‘overbuild’ risk, i.e. BT building a network in a particular area when the other network has been built (and only then), seems to be one of protectionalism rather than one of delivering connectivity for all. This process seriously undermines the new network and hence BT are managing to use government subsidy to stifle the very competition and access for all the country desperately needs.
The problem is BT are not providing connectivity everywhere and there is a good 10% of the country that, in BT’s eyes, is uneconomical and hence the need for small niche players and groups to come up with alternative solutions. The problem is that as soon as these networks start to be built BT suddenly either announces with great fanfare that they are going to be enabling this particular area or go to great lengths to notify local residents that they will at some future point. What surprised me as well was the relative understanding by the group of providers that BT might want to build to an area and that this might in some cases be the best option for the resident. The issue however is that BT state they will not build to a particular area and then, and only then, offer a solution as soon as there is a possibility or demonstration of competition.
Ironically BT’s standard offering is Fibre to the Cabinet (FTTC) and not Fibre to the Home (FTTP) which the majority of the players in this market deploy, and so BT has to use considerable marketing might to persuade residents that actually they would be better off waiting for a 40 Mb/s copper service rather than a potentially blistering 1 Gb/s (1,000 Mb/s). And as Philip Virgo so eloquently puts it this doesn’t just relate to rural areas but also urban ones.
So what is to be done? Well it seems government are listening and a number of high profile conversations are being had to ensure that a level playing field is maintained, especially when a lot of the solutions being delivered by communities and small operators are protected from overbuild when the incumbent has expressly said they will not build to a particular area. Also more work needs to be done by Ofcom to deliver support and stand up for the small and developing networks rather than just represent the interests of BT.
Who would have thought we would be in the position where government money is being used to help maintain a monopoly and stifle choice rather than being used to actually provide services to the last 10% which are ‘uneconomic’ apparently.
It all seems to have hit the press today http://www.thetimes.co.uk/tto/business/industries/telecoms/article3818986.ece
One of the areas we having been providing a wireless solution to has this year been upgraded to FTTC. We are now starting to see the expected slow migration of customers over to that platform. What we have found very interesting though is that the reason some of them are giving is not that they can now get 50 Mbps compared to the 10 Mbps or so we can provide BUT that they can then get BT Sport for free!
I have to admit it does annoy me a lot that BT, on the one hand, pleads poverty over rural areas but on the other hand gives £700 million pounds or so to the Premier League (or whoever got the money) and then provides the service for free to their own customers. It is not hard to imagine that the main reason BT can afford to do this is that they have been handed well over £1 billion pounds by the UK Government (in all its shapes and forms) to roll out FTTC into areas it claimed it could not otherwise afford to do so.
Or am I just a cynic? 🙂
I think it is really a very valid point Peter. Obviously they need to compete with the likes of Virgin and SKY but then also owning the infrastructure as well probably isn’t such a good idea, especially when they have to deliver wholesale access.