By: MarkJ - 7 December, 2010 (7:12 AM)
broadband ISP opinionsThe governments new plan to bring faster broadband internet access to almost every community in the UK by 2015 ('Britain's Superfast Broadband Future'), which was released yesterday morning, has today been broadly well received by the vast majority of ISPs, albeit not without some extremely harsh criticism of particular points (e.g. Fibre Taxation).

Several critical issues, such as the controversially unbalanced tax on new fibre optic lines (Fibre Tax) and the minimum download speed commitment (USC) of 2Mbps, remain key stumbling blocks for some providers. Vtesse Broadband has even decided to stall further rural deployment projects until the regulatory issues can be fully resolved.

An ISPA Spokesperson said:

"ISPA welcomes Government's announcement making clear its vision, commitment and investment to bring the UK's broadband future to everyone. We welcome the aim of tackling the digital divide by bringing superfast broadband to rural areas and support cooperative work between industry and other stakeholders to help the roll out of broadband within the right regulatory and policy framework.

It is important to stress that there have been significant developments in superfast broadband by ISPs in the UK which is set to continue. ISPA would like to see any Government investment used for places where it is not viable for the market to reach to ensure that no-one is excluded from super-fast broadband and the opportunities it offers.

ISPA would also like Government to ensure that there is a level playing field when it comes to companies having access to backhaul networks when building their network. Currently 'fibre taxes' are considered by many to be hindering small scale network developments and slowing down the roll out of super-fast broadband across the country. The importance of sensible terms for open access to poles, ducts and cabinets is also
key."

Clodagh Murphy, director of Eclipse Internet UK, commented:

"It is important that the government recognise that internet connectivity should be the lifeblood of our local communities. Superfast fibre optic broadband will allow local businesses to operate on a wider basis, and enable us to be a more productive society.

We will continue to work closely with the pressure interest groups to ensure not only that the UK Government stands by its promises, but that it also commits to increased investment that will lead to greater services for local businesses and communities."

David Palmer, Senior Product Manager at business ISP Star UK, said:

"As a provider of broadband to businesses, our customers will always select the fastest service they can get. 24Mbps broadband if it’s available; if not they’ll go for 8Mbps; failing that, they will reluctantly settle for 2Mbps. In five years time, no business is going to accept the 2Mbps option. 40Mbps and 100Mbps broadband are now emerging and this is what the business community is already starting to request.

The move to Cloud Computing is gathering pace and will only drive demand for more and more bandwidth. Application content is getting richer and people are working remotely often from home, where broadband is the only viable connectivity option. 2Mbps may be sufficient today but before long, working efficiently and productively on a 2Mbps connection will become near impossible.

In contrast, in Australia they are proposing 100Mbps to 90% of their population by 2018. If this goes ahead this will make the UK proposal look exceedingly un-ambitious and may put us at an economic disadvantage. Should we be at least aiming for 10Mbps?"

The CTO of Business ISP Timico UK, Trefor Davies, said:

"It seems fairly clear to me that BT will probably win the majority of tenders. For one thing today’s strategy document effectively hands it to them because the government has said that it does not see any reason to change the way fibre rates are calculated. This means that only BT is likely to be able to submit a competitive bid – all other network operators will be required to pay rates on their connectivity.

If, as it appears, that BT is being lined up to take most of the cash available for NGA I can understand why the government is taking this approach. Let us not however delude ourselves into thinking that this is the best long term strategy for UK plc. This strategy is not an example of innovation and risk taking. It is anti competitive and is likely to be a step backwards from the progress of recent years. FTTP and true open access are the only sensible long term solutions."

A Vtesse Broadband Statement:

"In support of the Government’s vision for the “Big Society”, Vtesse applauds the concept of a ‘digital hub’ – or Digital Village Pump – in every community, which will act as a collection point for the provision of local super-fast broadband services for a mix of access technologies. Pioneered originally by the community-based activity of NextGenus, together with activists in Cumbria and elsewhere, Vtesse’s own pilots in Cornwall and Hertfordshire have identified that the most significant commercial barrier to delivering these type of super-fast broadband service hubs are “middle mile” fibre costs (known as “backhaul”). Without better access to lower cost backhaul, many community based solutions are simply not economically feasible.

With respect to investment of public funds in support of Final Third super-fast broadband services, Vtesse strongly believes that the way in which public money should be deployed should be through and by the communities set to benefit from it. Vtesse proposes that instead of centralised procurement, individual members of Final Third communities should be given vouchers (or some form of credits) for spending on the technology and operators of their choice – a real broadband Quid Pro Quo. This would put communities at the centre of the decision making process, in line with the concepts of the Big Society, and its aim of pushing government into the community and away from the centre.

Vtesse has demonstrated through operational evidence from its recent pilot projects in Final Third communities in Cornwall, Wiltshire, Hertfordshire and Warwickshire that there are no real technical obstacles to deploying superfast broadband services. There are, however, some very real regulatory and economic issues to be overcome. Vtesse looks forward to rapid progress on all fronts to remove the unnecessary regulatory barriers outlined in Chapter 5 of the Report, supported by Government (see notes to editors below).

As a result of these barriers, Vtesse Networks has suspended deployment of its own residential superfast broadband services to any more Final Third communities, pending material progress on all these issues in the New Year."

However not all the comments we've recieved have been from ISPs. Tony Ballard, a digital media specialist (lawyer) at law firm Harbottle & Lewis, warned that the Governments plan for superfast broadband "fail adequately to address" a distorting tax regime.

Ballard claims that BT has a particular advantage in the system which determines business rates for optical fibre in the UK. Its rates are calculated on the basis of its receipts and expenditure whilst other operators' rates are calculated by the length of their fibres.

This means that installing new fibre may mean a smaller bill for BT but will always mean a larger bill for its competitor. Even when all other things are equal, a smaller operator pays at a much higher rate than BT. In the past, operators have calculated that, when they were paying £750/km, BT was in effect paying around £19/km on a fully allocated basis.

Tony Ballard, a Harbottle & Lewis lawyer, said:

"It is a highly complex system, and although some attempts have been made recently to reduce the disparity, the net effect of the rating system is that smaller companies competing with BT in laying fibre optic cable to provide superfast broadband in outlying areas (or indeed elsewhere), must carry an enormous handicap. Inevitably, this makes it hard for them to come forward with competitive quotes, thereby leaving BT as preferred bidder and creating conditions conducive to a monopoly position. This cannot be healthy for a developing market.

The strategy document dismisses such concerns out of hand. It says that business rating of telecoms networks is a complex issue and often misunderstood by the industry and commentators.

Industry, however, at least those parts of it that are not advantaged by the distortionary nature of the system, might well say with more than usual vigour that the boot is on the other foot and that it is the government that has failed to understand that investment is unattractive if the playing field is tilted against you. Funds will be invested elsewhere if the rules of the game are not even-handed."

Additional comments and reactions to yesterday's news are still coming in and we expect to add more to this article over the next few days. BT , TalkTalk and Virgin Media have all promised us a statement and we hope to have those soon.

It's worth pointing out that the government was originally due to hold a crucial debate about the Fibre Tax with several ISPs on 2nd December 2010. Sadly this was delayed due to the harsh weather conditions last week and as yet there has been no sign of a new date for the meeting.

UPDATE 8th December 2010

The Satellite ISP BeyonDSL has offered its reaction.

BeyonDSL Statement

BeyonDSL welcomes the inclusion of satellite as part of the government's vision of world-class connectivity. As one of the UK's specialist satellite ISPs, we can only agree with the report. We have been supplying satellite broadband to remote and not-so-remote locations for years. Our customers know that satellite is a viable option for them and it's great to see that reflected in the report.

Satellite has unbeatable advantages in achieving universal coverage at a reasonable cost. In fact, since our service already offers up to 4Mbps to anywhere in the UK, the Universal Service Commitment target of 2Mbps (the basic minimum level of "acceptable" service) could be said to have been reached today.

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