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UPD2 BT Claim Ofcom Rules Hamper UK Superfast Broadband Investment

Wednesday, June 13th, 2012 (9:57 am) - Score 1,116

BT has told the Lords Select Committee Inquiry into the UK governments superfast broadband strategy that its new fibre optic based network (FTTC , FTTP) will need more freedom from Ofcom’s changing regulation and price controls if it is to make a bigger “long-term investment” in related services.

By contrast many of BT’s rivals feel that Ofcom has actually not gone far enough, with Virgin Media’s Chief Operating Officer (COO), Andrew Barron, most recently accusing BT of effectively being subsidised by government policy and thus “freezing out new entrants” from the market (here).

Certainly it’s true that fewer controls would give BT greater ability to invest, although this in turn could risk making the market even less competitive and is unlikely to be taken too seriously be the committee (although you never know). Meanwhile Ofcom has been slow to react but they are looking towards third party ISPs gaining more flexibility and control within BT’s new fibre infrastructure, whether or not that will come too late is another matter.

Sean Williams, BT’s Strategy Director, told the Committee:

It’s very difficult for us to make a long-term investment if the regulatory regime changes every three years. If there’s one thing I could ask it’s not to regulate the price over an extended period of time so that there is a balance of risk.”

BT’s current rollout of superfast broadband to 66% of the UK by 2014 is costing the operator £2.5bn and a further £1bn has been planned for match-funding with any future government investment (most of which already looks set to go BT’s way), although BT claims that it could take 20 years to recoup unless there are fewer price controls.

Separately The Guardian states that BT also told the committee how it was working “with [rural] communities” but warned that at the same time it’s still “trying to deliver a mass-market, industrial-scale solution to as many people as possible as fast as possible.” Interestingly BT claims to be exploring a number of options, such as asking communities to dig their own trenches or buy and install their own fibre and ducts. That’s called taking a leaf right out of B4RN’s book (other altnets have also used similar community-supported approaches).

The operator also took time out to complain about BSkyB’s (Sky Broadband) dominance of the pay TV and Films market, which has allegedly hampered its ability to launch a successful IPTV service into the UK market with BTVision. On this point we suspect that a lot of other ISPs would agree with BT.

UPDATE 12:39pm

The Guardian got the £4.5bn figure wrong, corrected above.

UPDATE 14th June 2012

The folks over at ZDNet have also chimed in to another one of Sean Williams comments, which talks about FTTC (up to 80Mbps) being all that most consumers will need for the “medium and long term“.

Sean Williams added:

FTTP costs five times as much as FTTC and furthermore there is no business case to support it, and technological developments mean there is no need for it. FTTC is a good solution for medium and long term. [FTTC] is far from being at its limit. We will be able to deliver far higher speeds over FTTC.

Once you put an 80Mbps FTTC service into the premises the broadband network is no longer the speed bottleneck. The home Wi-Fi or devices can’t cope with the speeds, or at the other end, the servers serving communications can’t deliver the speed.”

Most of our more technically minded readers would perhaps point out that this might be true if FTTC could deliver its top speed to everybody. However the service is still distance limited and those who live furthest from their local street cabinet can find themselves experiencing ADSL2+ like performance with sub-24Mbps speeds.

On the other hand BT’s forthcoming FTTP-on-Demand (Spring 2013) solution could make 330Mbps speeds available to almost any line that can currently get an FTTC service, although there will be some caveats to this (e.g. high prices). Similarly a number of factors mean that not all FTTC lines will be able to handle the service. Exact details are still to be determined.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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