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

Monday, April 8th, 2013 (9:42 am) - Score 1,422

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most of the government’s state aid funding will go to BT (all its rivals in the Broadband Delivery UK framework have withdrawn over largely economic concerns), while the “superfast fibre” products that BT sells on to its ISP customers generally aren’t as flexible as the copper based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.”

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45 Responses
  1. Avatar TheFacts says:

    So not as simple as some might think.

    Let’s wait for the usual comments…

  2. Avatar DTMark says:

    Mr. Livingstone – Talk Talk doesn’t have any copper assets.

    The problem is that OFCOM are supposed to engender competition, but you can’t have true competition in a vertical monopoly like this.

    BDUK doesn’t want competition, it wants the monopoly, so in effect BDUK and OFCOM goals are at odds with each other. Nicely joined-up thinking there.

    BT sits and waits until the begging bowl is on offer to invest a single penny in their street level network. And, to be fair, why shouldn’t they – it’s a private company with a stranglehold on provision in half the country, it’s not their fault we put them in that position in the dash for cash in the Thatcher years and then sought to “regulate”. “Gaming the taxpayer” is the correct position for a monopoly.

    ISPs moan about unfairness and profiteering from BT. I don’t see how those aspects can really exist. Not really. It’s a private company. If it “played fair” it would be in breach of its obligations to its shareholders.

    Regulation in this case is simply to counter market failure. The goal should be the disbanding of all regulation, which would be when there is a market and competition bringing with it the fundamentals required for futureproofing.

    Here, Talk Talk simply don’t have the appetite for selling the FTTC product. It just doesn’t make enough money, and they don’t have the benefit of being in receipt of a billion pounds of free money nor the advantage of owning any of the infrastructure.

    BT wants the big players on board to help its ROI. Sky has decided to “play” because it can cross-subsidise more effectively, Talk Talk cannot and so will not play.

    In the future the only ISPs will be BT, Talk Talk, Virgin and Sky.

    And I’d go so far as to project slightly further that this will eventually consolidate to BT and Sky.

    All so very predictable given the path BDUK embarked upon.

    Time to decide whether BT is a private company that can do what it likes with its assets, or a State entity. It cannot be a “hybrid”.

    1. Avatar FibreFred says:

      What about you on about DTMark? 🙂

      “BT sits and waits until the begging bowl is on offer to invest a single penny in their street level network”

      You sure? You sure they didn’t start a £1.5 billion programme of their own 4yrs ago without any taxpayer money and they up their money by a further billion?

      The only taxpayer money comes from BDUK to cover areas where BT will no go and in reality doesn’t amount of much, BT also have to match the money themselves. You seem to be putting lots of things into a pot (some things made up) and coming up with a wicked brew.

      I do find it funny the term sweating the copper assets those, it might have been better to say sweating existing products.

    2. Avatar DTMark says:

      BT does not have what we might call a history of investing for the future. Things like mucking around with ADSL2+ in pursuit of headline speeds when other countries didn’t even bother and the sale of their mobile network are classics.

      So given it invested absolutely nothing in the delivery network since 1984 (was it?) I’m not convinced that 2.5bn over 30 years is a massive amount of money.

      And I find it far too coincidental that one of BT’s top bods joins the Government as an advisor, and for the first time elects to spend some cash on the network (the threat of 4G is pertinent) with no knowledge whatsoever that BDUK would come together and throw all the taxpayer money their way. Believing that strains credibility too far.

    3. Avatar FibreFred says:

      So you are of the belief that BT haven’t made any investments, done any changes to “the network” apart from the 2.5bill for the last 30yrs 😮

    4. Avatar DTMark says:

      In the period from 1984 thru 2009…

      What enhancements were made to the “delivery network”, e.g. last mile?

      As far as I can see it’s still the same old collection of ducts, poles and thin old copper wires the taxpayer put in place originally and it’s not getting any “fresher”.

      What work was done to the last mile to “prep” it for future services (e.g. broadband), at what level of spend?

      How many old aluminimum lines and knackered old copper lines were replaced with fresh copper suited to services other than just voice?

      How many ducts had been unblocked in preparation for new circuits and fibre?

      Just examples… I think the spend is zero, but I could be wrong.

    5. Avatar FibreFred says:

      Depends what you call the delivery network, you are stating last mile that to me is totally different.

      If you were referring to last mile why not say last mile 🙂

      Delivery network to me is end to end

      “Just examples… I think the spend is zero, but I could be wrong.”

      You could 🙂 , I’ve no idea on the last mile , I would have thought there were new builds etc, but as for replacing updating the existing last mile stretch no idea. Maybe telecom engineer knows I assume he works for them

  3. Avatar FibreFred says:

    So it sounds like TalkTalk don’t want to spend any money but want to be an ISP in the future, nothing new there then, such is the policy of most ISP’s in the UK, to leech.

    1. Mark Jackson Mark Jackson says:

      All well and good saying that if you’re happy to live in a market with only one operator but I for one am thankful for the competition. Leeching is somewhat of a narrow viewpoint to have.

    2. Avatar FibreFred says:

      As I am Mark don’t get me wrong.

      But it does sound like TT are not willing to invest so what choice does that leave them with, they either stick on ADSL, or move to FTTC or invest in wires themselves

    3. Mark Jackson Mark Jackson says:

      In fairness TalkTalk have invested a lot into their own unbundled network and from our discussions with them they’d really like to see a similarly flexible product for FTTC, which is admittedly a technical and regulatory challenge to say the least.

      But like most ISPs they have nowhere near enough money to build a true alternative infrastructure level network to BT, which by contrast has an established customer base and platform that everybody uses.

      The established guy with economics of scale holds all the cards. Digital Region took that risk and developed a reasonable product (technically speaking) but in the end they were left with crippling debts.

      In my opinion TalkTalk and BT both have some fair points to make and ultimately the question comes back to one of regulation, which is what shapes our market. Ofcom will eventually have to make a call but without doing something unfair. I don’t envy them. It might eventually seem easier to have gone for full structural separation instead, just to avoid the mass of complicated rules :).

    4. Avatar FibreFred says:

      They have, both Sky and TT (and BE) have invested a lot in LLU, nothing wrong with getting their money back on that, but they also need new products. ADSL LLU won’t last forever as you know.

      As for making an exact LLU equivalent to what they have now but on FTTC/P well its just not possible as they know, so I’m not sure what they are expecting.

      The only way they can do that is to use PIA. They can’t make BT create something that isn’t possible. If they want the sort of control and flexibility they enjoy with LLU then PIA is the answer, but they won’t use that as they don’t want to put that sort of money in, so who’s fault is that?

    5. Avatar FibreFred says:

      They could also go sub loop unbundling but obviously there’s a cost in that as well, waste of time in my opinion like ADSL LLU its not a long term investment.

      Fibre is the future there’s no question about that, if ISP’s want a long term future they need to get on board and there’s going to be money to pay, you either piggy back on someone elses network and take a smaller slice of the pie or you start to create something yourself and make more money and pay less to BT.

      People talk about splitting off Openreach etc, even if that happened Talk Talk would still need to pay money to create and sell a product.

      You are right though DTMark, the list of big ISP’s will dwindle and you can blame BDUK and BT and Ofcom but for me the real blame lies with the pricing of broadband in the UK in general and ISP’s unwilling to invest (I know Sky and TT have invested but I just wonder if their LLU gamble was too late and wonder if they will actually make their money back)

  4. Avatar keith says:

    “[BT’s rivals] are trying to stop the fibre programme so they can sweat their own copper assets.”

    What on earth is the lunatic on about?
    Who are these “rivals” with “copper assets”?
    Oh and since when did FTTC not rely on “copper” also??

    Sounds like he had a bump on the head over the weekend and has become delusional.

    No wonder BT are considered poor by so many nowadays, if its not Indians script reading its a loon thinking other ISPs are hoarding “copper assets”.

    1. Avatar FibreFred says:

      Deduction

      Its obvious that he is referring to TalkTalk’s LLU product which TT will have invested a lot in, so you can see why they would want to sweat that, and that’s fine it makes perfect sense. But they must also introduce new products to compliment it if they want to stay in the ISP game.

      They should start making FTTC/P available so their own customers can migrate to faster products (like Sky and BT have), otherwise they will migrate to ISP’s that can offer what Talk Talk cannot

    2. Avatar keith says:

      A. I am not Deduction though you seem to think anyone that realises you are stupid is.
      B. Talk Talk own no “copper assets” everything from the lines to exchange space is rented from BT
      C. Talk Talk already do FTTC products so no idea what you mean with the “They should start making FTTC/P available so their own customers can migrate to faster products (like Sky and BT have), otherwise they will migrate to ISP’s that can offer what Talk Talk cannot” quote
      D. As usual you are sat at your computer all day with no life, talking complete garbage.

    3. Avatar FibreFred says:

      Hopefully Mark will remove the sustained personal attacks

  5. Avatar Michael says:

    Given that the FTTC roll-out is happening perhaps a renewed focus on both the technical and commercial aspects of “Virtual Unbundled Local Access” and how close to the definition of the NICC “Active Line Access” it really is would be worthwhile.

    If ISPs want to get closer to the freedom of raw copper wires, enabling them to innovate at the service level then minimising the “active layers” running as standard in FTTC would seem to be a laudable goal.

  6. Avatar NGA for all says:

    BT’s rivals which also happen to be very large customers do not wish to see £1.4bn being spent in rural areas without the appropriate controls, including visibility of the cost of the compoents being deployed.

    Talking up the cost of rural, be it Openreach’s £100k cabinet or millions per exchange referenced in December by them, suggests BT will do all they can to keep GEA wholesale prices under their control. You would expect no less.

    The £1.4bn justifies an ammendment to BT’s Undertakings, to allow an independent assessment of incremental costs of NGA where state aid is present.

    1. Avatar FibreFred says:

      I understand what you are saying NGA For All, we need transparency and value for money, but what has that got to do with Talk Talk

      Surely that is between the funder BDUK and fundee (BT, or whoever wins)

    2. Avatar NGA for all says:

      Fibrefred If BT have used a year long dialogue with weak or no competition to possibly inflate costs, then it is everyones interests to get this addressed through increased transparency. Talk Talk will want cheaper wholesale rates and can use BT utterances on £100k cabinets and millions per exchange to make its case.

      The case for transparency should also be supported by BT shareholders who will not want a quick buck if it puts at risk more public investment in fibre transition activity in urban areas.

    3. Avatar FibreFred says:

      Ok so you are saying that BT should make available its costs to the wider public not just the BDUK where BDUK cash has been used?

      How does that help TalkTalk? They cannot negotiate down a wholesale price on specific cabinets?

    4. Avatar NGA for all says:

      FibreFred – only indirectly. By having more transparecncy on the incrmental costs, you can more informed debate on wholesale GEA pricing.

      For those looking at best practice worldwide and wishing the same for the UK, then an improved transparency on the incrmental costs would I think lead to more of the £1.4bn being spent on going 100% fibre at least in a number of exchange areas, so the underlying legacy costs could be removed in their entirety – a few Deddingtons per county. This again would help budget for the next phase and create a practice of openess which is lacking today.

    5. Avatar FibreFred says:

      Well as the costs vary from exchange to exchange and cab to cab I don’t see how showing the figures for some will help bring down the wholesale price.

      Plus you need to remember that BT only agreed to start on its fibre rollout in 2009 when Ofcom said that they would be able to get good returns on its investment, the rollout isn’t complete and people are already looking to drive down the price.

      Driving down the price of broadband is the major problem we are having. If TT cannot compete in the next phase of broadband they’ll have to do better or fall by the wayside

    6. Avatar NGA for all says:

      Most of the components are the same, fully equipped cabs cab be confirmed £6k, labour rates can be confirmed, ethernet swicthes, racking and OLT, fibre and its installation are known quanties. Even duct repairs should average out per path. They had done 35k cab installs so averages will have emerged leaving the exceptions to be managed in the final 10%.

      BT have also reported being 18 months and comfortably under the £2.5bn. FTTC is an overlay. Commercial rollouts are $80 per customer passed.

      Too big a gap to ignore.

      Fair point on the GEA pricing, but all the more reason to go for scutiny on the public funded invested.

  7. Avatar Karen says:

    If we are now moving to a Fibre world, shouldn’t new builds all come with FTTP rather than copper and then expect the household to then pay openreach to replace it all via the FTTP-on-demand program? BT still install copper!

    1. Avatar Bob says:

      At the very least it would be sensible to put fibre in even if it is not used. The cost of the fibre is insignificant compared to the cost of pulling fibre in afterwards

    2. Avatar keith says:

      Exactly if anyone is a copper hoarder its BT who decided to go the FTTC and not FTTP route.
      (Waits for idiot boy to drone on about FTTPoD which is paid for in full by the consumer not BT).

    3. Avatar FibreFred says:

      More personal attacks Deduction?

    4. Avatar Tom says:

      Whoever you are.. you are making this news item comment section very tedious.

    5. Avatar keith says:

      I guess everyone should thank you and him for your indefatigable yet totally extraneous antiphon then.

    6. Avatar Tom says:

      “But Mum! He started it!”

  8. Avatar Telecom Engineer says:

    Well how much control would i get as an llu wholesale customer of talk talk? Would I get access to line cards or tinker with their dslam setups? I think not. Bar allowing isps to set a target snr and do dlm resets I cant see what BT are expected to do? Either build you own via slu or go with bt, just as they could wholesale or build llu. The fingure pointing game doesnt change the economics.. as fibrd gets closer and closer to peoples homes thd build cost goes up. If you cant make a return on the build thats because SOMEBODY made a huge business driving down the price and quality of services and now people are hooked on almost free broadband. At thd end of thd day it costs what? 7 quid a month extra to use bts fibre cabs? Surely a premium product could market to absorb such a small cost. There will be roughly 3billion BT need to earn in the next 15 years to pay fod the build, you are not going to see an adsl level of cost during this time. TV, CPE and customer services will have to be the battleground for isps.
    Also iam sure bt would love to scrap a lot of the copper on esides and even close exchanges which would pay for additional fttc or fttp, they have made the investment in fva for example, buf guess who would be complaining about that… the llu firms whos kit relies on copper connections for dsl and voice, that is the copper assets livingston is refering to i suspect.

  9. Avatar Bob says:

    One possible interesting development is their are rumours that EE is up for sale. Sky may have an interest in the Broadband side but probably not the mobile. The mobile side though may fit well with O2

    So if Sky takes EE Broadband it start getting real scale on Broadband and could start looking at the potential of full FTTP particularly as it has a strong presence in the TV market

    Sky is more like to be able to see the potential of HS broadband and would be far better at marketing it

    A key issue though may be the impact on the relative costs between the two

    1. Avatar FibreFred says:

      Sky already has real scale on Broadband, they are number 2 in terms of customers now aren’t they?

  10. Avatar Bob says:

    WE are still left currently with Zero competition outside of the cabled areas. All we have are a few companies repackaging and reselling the BT product. There is little scope for innovation there

    I suspect eventually OFCOM will act but as usual it will be too little and too late

    We have BT with pretty much total market domination outside of the cabled areas and very light tough regulation of BT

    In this position it is not viable for a competetor to start up. The competion is in the market already and has a 100% of the market share and controls a key element of the network. The local loop

    WE badly need a second wholesale player in the market

    1. Avatar FibreFred says:

      Sky and TalkTalk LLU are not competition? I think you’ll find they are. Who is going to come in and spend the money to be a second wholesale player?

    2. Avatar FibreFred says:

      What happened to the Open Network Consortium Bob has its PR machine run out of steam?

  11. Avatar Sledgehammer says:

    “We badly need a second wholesale player in the market.”

    I am sorry to say that we will NOT see any new competitor in the market for the provision of FTTH on a commercial level to equal BT. The only change we may see is IF the new owners of VIRGIN expand their footprint to cover more of the UK. Otherwise it’s STATUS QUO for the next 3 years.

    I will wait until 4G is fully established then jump ship and ditch my BT landline, no FTTC or expensive FTTH on demand. Freedom.

    1. Avatar FibreFred says:

      Good point Sledgehammer, there’s your extra competition right that and good competition it will be for quite a few years 4G.

      So why don’t TalkTalk invest in that, no ducts to the home to worry about, they don’t have to use BT.

      Oh but they will have to build a national network of masts and that will cost money, unless they use someone elses network of course but then they’ll no doubt moan their wholesale costs are too high.

      Or they could buy EE if it comes up

    2. Avatar TheFacts says:

      Talk Mobile use the Vodaphone network.

    3. Avatar FibreFred says:

      There you go then they can grieve Vodaphone to lower their prices for access to the 4G network 🙂

  12. Avatar Bob says:

    The key to unlocking HS Broadband competition in the UK is to prize the Local loop off of BT. the Local loop should be set up as separate company. Once you break the link to BT real competition becomes possible. No one is going to compete with BT at present. The dice are heavily loaded in favour of BT
    With the local loop owned by BT it is in their interest to do their best to keep competition out as BT is a Vertical player. If the Local loop is removed from BT and the Local loop operated is not permitted to provide end users services the whole ball game changes. The local loop company has it in its best interest to get as much revenue from the local loop unlike BT it does not have to worry about losing revenue from other parts of its business
    With a local loop company it becomes in there interest to get as many players using the local loop as possible and it becomes a lot more viable to put in FTTP. It could for instance to a deal with Virgin to help them expand their network at a lower cost than going it alone
    At the moment what little competition there is declining as ADSL is replaced by FTTC. With FTTC they can do little more than resell the BT product

    1. Avatar New_Londoner says:

      What end user services does Openreach provide now? My money is on none – we cannot buy anything from it directly.

      And as for separating it from BT, who pays? And who funds any future investment? You need answers to both for that to be a credible suggestion.

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