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Analyst Warns UK Cities Must Pick BT for Superfast Broadband or Risk Failure

Tuesday, September 25th, 2012 (8:47 am) - Score 713

The director of Informa Telecoms & Media’s global broadband and TV research, Rob Gallagher, has warned that any UK cities which win State Aid to boost their superfast broadband availability must pick “safe betBT to do the job or risk being left with no ISPs and “networks based on technologies that failed to keep pace with the wider market“.

Gallagher’s comments follow last week’s award of £114.1 million (Urban Broadband Fund) to help turn 10 of the country’s largest cities into “super-connected cities” that can deliver “ultrafast” (80-100Mbps+) broadband ISP speeds and “high speed public wi-fi” (here). The money is intended to only be used for upgrading internet access services in areas “not served by the private sector“.

However Gallagher points out that similar projects, specifically those that didn’t choose BT, often ended up being unable to attract big UK ISPs (e.g. TalkTalk and Sky Broadband) to their networks and were thus left struggling to survive.

Rob Gallagher explained:

During the first wave of broadband rollouts, much of the government and EU funding to aid the spread of coverage ended up one way or another in the pockets of BT. Many local authorities and community bodies that choose alternative options ended up with networks based on technologies that failed to keep pace with the wider market or devoid of popular service providers, such as Talk Talk and Sky. The question for the cities is whether they want to take a similar risk on alternative players this time round or go for the safe bet of BT.

Alternative players are likely to bid with business models and technologies that promise consumers, businesses and service providers more flexibility in speeds, costs and other features than BT. But many alternative superfast broadband network operators elsewhere in the world have struggled to attract major service providers, which see working with these outfits as an unnecessary source of cost and complexity compared to working with incumbents like BT.”

This is perhaps a veiled reference to the endlessly troubled Digital Region network in South Yorkshire (related news). In fairness the Digital Region project was established by the public sector, which is hardly ideal (politicians rarely make good ISPs), and didn’t start out life as a fully-fledged telecoms provider. Meanwhile the country is home to plenty of generally smaller providers that have made some success out of delivering services in areas which BT itself has often neglected (e.g. Rutland Telecom, VFast, Hyperoptic etc.).

Gallagher also specifically references the example of KC in Hull. Some big ISPs, such as TalkTalk, have in the recent past complained that KC’s dominance of Hull effectively turned the area into a “digital island” because of its inability to offer a fully-fledged wholesale broadband and phone solution that rival ISPs would find attractive. By comparison BT is able to offer this through unbundled (LLU) lines, albeit only for the older generation of broadband services. But at least KC, unlike Digital Region, can turn a profit.

The analyst also notes that Sky Broadband and TalkTalk, much like other ISPs, remain far from happy with the “limitations and compromises that BT’s next-generation access network will impose on their costs and features they can offer“. Indeed at present it’s not possible to offer a fully unbundled fibre optic based FTTC or FTTP broadband solution, although Ofcom are known to be conducting investigations for the future. This is one area where BT’s rivals can often offer something more attractive but making the economics work isn’t an easy task.

Ultimately BT is considered a “safe bet” by many councils because it can actually deliver, even if the solution provided might not always be ideal. Some believe that the only real way to solve this is through tougher regulation or possibly even the complete removal of BTOpenreach, which manages access to BT’s network, from the control of its parent. So far Ofcom has preferred not to take such a rout and believes that the solution rests with less invasive regulation of existing services.

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Mark Jackson
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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8 Responses
  1. Avatar Kyle says:

    BT’s FTTC product is predominantly a network “based on technologies that failed to keep pace with the wider market.”

    I don’t have the will to dig further but I would guess in the darkest depths that this is a disguised BT link.

  2. Avatar Sledgehammer says:

    All this would do is create a BT MONOPLY. NO thanks.

  3. Avatar nicknick says:

    Is his nick on this site New_Londoner??????

  4. Avatar Bob says:

    Does he do consultancy work for BT?

    Does he seriously expect us to belive only BT can do this work? The first flaw in his argument is that most of the equipment is manufactured and supplied and installed by private contractors most of who are experts in Networks as well

  5. Avatar PhilT says:

    I can see where he’s coming from, success requires retailing expertise and a network like SYDR or H2O or others with “retailers you have never heard of” just don’t cut it. You need a Talk Talk or a Sky on board as a retail partner so they can move a block of customers over easily as well as attract new ones.

    Public funding should only go to networks seeking residential / SME business that can demonstrate a formal agreement in place with at least three significant retailers. Otherwise you have a subsidised wholesale network with a retail monopoly that probably won’t end well.

    1. Avatar Bob says:

      The problemis the BDUK approach of slicing the UK up into tiny little contacts being run by local councils. What was needed was a UK wide strategy giving contracts on a Regional basis of even Higher level so for Example Eastern England could have been one contract being put in by one of the major teleco competitors to BT.

  6. Avatar DTMark says:

    “networks based on technologies that failed to keep pace with the wider market”

    What market? This is what makes me giggle the most when I see articles like this.

    That, and, BT is still using ADSL down phone lines in 2012 purporting that to be “broadband” – which to be fair, it sometimes can be, just about – and is rolling out its first widespread semi-fibre option a very long time after Virgin media. In what way has BT ever “kept up?”

    1. Avatar FibreFred says:

      To be fair Virgin media didn’t roll out anything they bought a patchwork of cable companies and those cables companies were allowed to (at the time) roll out what they wanted but BT were prevented from rolling out fibre to allow those companies to establish and create competition. Didn’t really work though and cause more problems to be hoenst

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