Q6 - The coalition government recently abandoned pre-election Conservative party plans to conduct a review of the controversial Fibre Tax (tax applied to newly activated fibre optic broadband lines) and instead issued new guidance that still appears to penalise smaller ISPs and benefit larger ones. What is your opinion on this, did the new guidance offer any benefit at all?

Answer:
This abandonment of the pre election promise has been extremely unhelpful particularly considering that the government is trying to create the environment for everyone to have 100Mbps by 2015.

I understand that Ed Vaizey is looking at this and is planning to host a summit on the subject before Christmas.

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Big Versus Small

Q7 - How is it that a major operator like BT can quote huge sums of money to bring basic broadband into small rural 'not spot' villages and yet a tiny niche ISP can often deliver a "super-fast" solution to the same place for a similar amount or significantly less. Practically speaking, what makes the difference in cost, why are smaller operators able to do such costly things for less than the big boys?

Answer:
This is a very interesting question. The Caio Report into Next Generation Access quotes a figure of £29Bn to roll fibre connectivity to everyone in the UK, of which £24Bn was “the cost of digging up the roads”.

It is a safe bet that much of the data used by Caio was gathered from the incumbent operators.  It comes as no surprise therefore when BT are seen to quote impractically large amounts of money for the provision of internet access to not spots.  Coming from the monopolistic background it is not in BTs DNA to attempt to be cost effective here. I am sure that any business opportunity like this will be seen by someone in the corporate sales area as an easy way of meeting his or her target.  Also there is no incentive for BT to go in with a low cost.

The main problem comes in the very size of BT.  Large companies have to run to standard processes and procedures.  In the case of a notspot this will almost certainly costing up a team of men with diggers at an expensive rate per metre.  There will have been no effort to see whether there is a more cost effective alternative .  BT could not function if everything had to be bespoke.

A smaller operator will be able to think creatively about the right solution and implement it without the huge overheads of a BT.

Q8 - Given that smaller operators can often appear to deploy "super-fast" broadband for less than their larger rivals, do you feel that the UK government risks wasting public money by potentially ploughing it into subsidising larger operators who could end up costing more and delivering less to broadband 'slow spots' and rural areas?

Answer:
First of all I don’t believe in a subsidy other than perhaps for the initial set up – a network has to be viable as an ongoing proposition.

I’m sure that BT would argue that it is one of the few organisations with sufficient scale to be able to deliver on some of these projects.  I might also simply answer by saying whoever offers the best bid should get the business. 

However I’m also sure that giving contracts to large operators with bloated overheads is not likely to offer “best value” for taxpayer’s money. Certainly that is what the track record suggests.

There are a number of start-up companies specializing in broadband enabling local communities.  I’m sure that as their business model is seen to be successful their numbers will grow. Perhaps the government might encourage such companies with tax breaks etc.