UPD BT CEO Claims ISP Rivals Don’t Want the UK to Get Fibre Broadband

The seemingly endless tit-for-tat row between BT and TalkTalk over competition in the growing market for fibre optic based superfast broadband (FTTC and FTTP) services took another hostile turn over the weekend after BT’s CEO, Ian Livingston, accused rival ISPs of “trying to stop the fibre programme so they can sweat their own copper assets“.

The argument, which seems to get repeated at least once every three months or so (the last one occurred in January 2013), typically centres around TalkTalk’s concern at the alleged lack of competition and regulation in the United Kingdom’s relatively new market for fibre optic based superfast broadband services (e.g. up to 80Mbps capable Fibre-to-the-Cabinet).

Over the past two years TalkTalk has repeatedly called for Ofcom to intervene with new rules that could “ensure that the Government’s investment delivers value for money rather than just funding a monopoly provider [BT]“. In particular it wants the telecoms regulator to “oversee and assess the wholesale price that BT is able to charge for access to the superfast broadband network“.

The ISP is unhappy because most of the government’s state aid funding will go to BT (all its rivals in the Broadband Delivery UK framework have withdrawn over largely economic concerns), while the “superfast fibre” products that BT sells on to its ISP customers generally aren’t as flexible as the copper based fully unbundled (LLU) ADSL/ADSL2+ (up to 8-24Mbps) solutions of old (i.e. it’s harder for an ISP to offer something different from BT’s product, especially in terms of price).

Ian Livingston, BT’s CEO, said (The Telegraph):

“These criticisms are coming from people I can only describe as copper Luddites. They don’t’ want to see the UK getting fibre. BT fibre is open to any provider in the UK on the same terms as BT – there are 50 or 60 of them, that’s not what I call a monopoly.

[BT’s rivals] are trying to stop the fibre programme so they can sweat their own copper assets. They are not prepared to invest in fibre. It’s a shame they want to hobble the UK economy for their own commercial reasons.”

Ironically it’s usually rivals that accuse BT of trying to “sweat” its copper assets by shunning the national deployment of a true fibre optic infrastructure (FTTH) in favour of their current hybrid-fibre (FTTC) approach, which still uses a “last mile” run of old copper wire into homes for considerably slower and more variable speeds.

However BT’s new FTTP-on-Demand (FoD / FTTPoD), which offers stable speeds of up to 330Mbps, does make true fibre connectivity available to all FTTC capable lines. But this is more of a “premium” business product and is generally far too expensive for most home users (unless you consider it a viable long-term investment to boost house value).

Undoubtedly TalkTalk’s concern is being equally fuelled by the fact that BT tends to pick-up most of the markets new FTTC customer adds, although in fairness TalkTalk probably hasn’t put enough effort into promoting its own superfast package. In particular TalkTalk might benefit from offering an FTTC product that isn’t merely promoted as a separate “boost” for existing packages (this is confusing for new customers).

But the concerns are not unique to TalkTalk. Others, such as Sky Broadband, have in the past expressed similar sentiment. It is also not realistic to expect rivals, which are fundamentally dependent upon BT’s infrastructure, to spend billions on construction of their own alternative infrastructure. It would be a massive gamble (e.g. Digital Region, Fujitsu UK) and most simply don’t have that kind of money to spend.

Meanwhile Ofcom are being mindful of the situation and have various ideas, such as wavelength unbundling for true fibre optic lines (FTTP), which could eventually become viable. Back in 2010 the regulator effectively gave BT a period of around 5 years regulatory grace with which to build out its FTTx platform, after which it may return to consider the need for changes. As it stands today there are no firm plans for any regulatory changes but we might see some adjustment after 2015.. “might” being the operative word.

UPDATE 12:53pm

TalkTalk’s CEO, Dido Harding, has now hit back at BT for the above comments by helping them to understand the meaning of “monopoly“.

Dido Harding, CEO of TalkTalk, said:

“Mr Livingstone objects to his organisation being called a monopoly and argues that BT Openreach is not a monopoly provider of superfast broadband because multiple companies buy and sell his wholesale superfast broadband. By definition monopolists have multiple customers.

The reason they are a monopoly is because their multiple customers can only buy the product from one company. And there is no one else that TalkTalk, or any of BT’s other wholesale customers, could buy superfast broadband from. That’s a monopoly and is why we must ensure that superfast broadband is regulated, just as copper broadband has been so successfully, to ensure that pricing is fair and transparent.

As one of BT’s biggest customers we welcome their expertise in building and maintaining networks and the investment they are making in rolling out superfast broadband which they should absolutely make the return on, but not to the detriment of competition.”