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Prospect Union Slams Ofcom UK Probe of BT Superfast Broadband Prices

Friday, May 3rd, 2013 (1:53 pm) - Score 1,477

Prospect, which claims to be an independent union for professionals like engineers, scientists and managers, has warned that Ofcom’s new TalkTalk supported investigation into BT’s “alleged margin squeeze in superfast broadband pricing” could damage investment in the UK telecoms network.

Budget ISP TalkTalk adamantly believes that BT is behaving unfairly and in an ideal world it would like more control to differentiate its own superfast broadband (FTTC/P) services and prices from the standard BTWholesale based mould. Meanwhile BT claims that its fibre optic based internet access products are offered on a “level playing field” to all ISPs.

A quick look at the wider price difference between FTTC services from BT, Sky Broadband and TalkTalk for similar “unlimited” packages suggests a more mixed picture where BT’s rivals are sometimes cheaper, depending on how you balance the costs, special offers and value-added features. Never the less Ofcom has now agreed to investigate the concerns (here).

Dai Hudd, Prospect’s Deputy General Secretary, said (Mobile Today):

Ofcom’s primary task should be to ensure that we get [investment in superfast broadband]. This investigation won’t move us any closer to achieving the superfast broadband infrastructure that we need, so there is no purpose in conducting it. Furthermore, there is no case to answer.

We welcome investment in network supply. But instead of complaining about the perceived shortcomings of the only significant investor we have, perhaps TalkTalk should consider building its own network – and, of course, open it up to all retail service providers as BT is compelled to.”

Some of the comments above could just as easily have been written by BT itself but it’s ultimately for Ofcom to decide whether or not there’s really a case to answer and perhaps their investigation will finally bring some clarity, which is arguable purpose enough for conducting it.

In any case if Ofcom does agree that there’s enough evidence to pursue BT more vigorously, which is likely to be decided before the end of 2013, then there’s every chance that a wider investigation could drag on for years. It’s difficult to know whether this would have any tangible impact on BT’s commercial plans or the government’s related Broadband Delivery UK (BDUK) ambitions (so far BT has won all of the BDUK contracts).

The union itself claims to work with BT “at every level, from local reps talking over issues in one building to negotiating teams working at the top level of the company“. Most recently a Prospect rep helped BT to identify and resolve a mistake it made in calculating pension contributions for 1,500 female staff, which resulted in the operator “underpaying the employer contribution to the women’s pension funds while they were on maternity leave” (here).

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21 Responses
  1. Avatar Martin Pitt - Aquiss says:

    I think the following is an interesting start by someone at exploring things about margin squeeze. http://forums.thinkbroadband.com/fibre/t/4235277-margin-squeeze.html

  2. Avatar on this planet says:

    appears Mr Hudd hasn’t checked what Ofcom’s role which is to promote competition. For example, “It shall be the principal duty of OFCOM… to further the interests of consumers in relevant markets, where appropriate by promoting competition” [s3 Communications Act] and Ofcom is a Competition Authority that enforces the Competition Act. Perhaps Hr Hudd would be well advised to focus on protecting the rights of his members rather than being a parrot for BT’s PR machine!

    1. Avatar MikeW says:

      Interestingly, in the very small portion that you quote, it can be seen that Ofcom’s role isn’t only about low prices or competition for consumers. It is the whole range of “interests” for the citizens.

      You even quote that the part of “promoting competition” is only “where appropriate”.

      One of Ofcom’s specific duties includes “Ensuring that a wide range of electronic communications services – including high speed data services – is available throughout the UK”.

      Here, then, their duties collide. Safeguarding the interests of citizens (in having a high-speed internet access for the next 10-20 years, nationwide) requires that it allows an environment that investments can be made with risk levels under control. It may well be that safeguarding that interest requires competition (and especially bottom-feeding, low-price competition) to become secondary (ie NOT appropriate to intervene in).

      I’d rather that Ofcom realise that we, as a country, need this kind of investment. That the interests of tomorrow’s citizens needs a widespread, ubiquitous, high-speed fibre network.

      If TT want to offer a mega-low-price service, let them do so on yesterday’s network, without screwing up the investment in tomorrow’s.

  3. Avatar dragoneast says:

    I think Ofcom is right to investigate properly, though I’m not sure about those who try to second guess the regulator without access to the full information. There are always a lot of would-be ch(i)efs in the broadband kitchen. I’m just surprised though that with all those who profess hatred of BT Retail and Sky, TalkTalk aren’t just easily hoovering up all the disaffected.

  4. Avatar JNeuhoff says:

    These problems wouldn’t be there had the BT Group been properly split up, with one of them purely being a network infrastructure company, completely independent of BT. Then every ISP and/or services provider would have been on equal footage as regards access and pricing of the network.

    1. Avatar FibreFred says:

      I thought they already are on an equal footing isn’t that what Ofcom are there for? Also who would buy Openreach even if it was for sale 🙂

    2. Avatar gadget says:

      Which part of the Undertakings (http://stakeholders.ofcom.org.uk/telecoms/policy/bt-undertakings/) do you consider not working or not appropriate to qualify as being “properly split up”?

    3. Avatar MikeW says:

      I guess you intend that this independent company would take over Virgin’s cable infrastructure too?

  5. Avatar Steve says:

    How about Ofcom force through broadband only lines allowing millions of people to save money every month.

    1. Avatar Somerset says:

      At the same price as line + broadband is now…

    2. Avatar Ignitionnet says:

      Dry loop services would indeed be good.

  6. Avatar telecom engineer says:

    Naked dsl has been available ( worked on some years ago) cant say much for the price but without voltage or dialtone your line will be getting pinched all the time by undertrained engineers. Luckily not an increased chance of contractors taking it though, they’l knowingly steal a line to get their 25quid dialtone or not. Ah… the joys of an industry racing to bottom… Such drives to reduce costs at any measure only hurts consumers in the end. Does anyone think we wouldnt all still be stuck on adsl if mobile tech hadnt started to race ahead? If ofcom do hamper BTs payback plans on this we can all wave goodbye to any hope of an fttp future unless you want to cough up a few grand. Personally i’d rather have a quality network at £30 a month than locked into adsl with an array of nearly no cost no service providers. Personally I find SKYs monopoly on TV far more damaging and offensive, their recent spat with BT advertising shows how real monopolies behave. TT complaining of the new fibre link prices? bet its pennies compared to per user wholesale costs of sky movies and sports….

    1. Avatar MikeW says:

      I agree with almost everything in here.

      Ofcom perhaps works well for consumers when the service is ubiquitous, and the investment has already been made and recovered. Telephony and TT’s style of broadband fit there.

      But when a network need serious investment to roll out, and even more serious commitment to do so on a near-fully-national basis, it needs to be treated differently.

      TT bottom-feed on what the masses need today (and then barely provides it), while the government (and the national economy) need Openreach to be installing a network fit for purpose decades ahead. That takes commitment, dedication, risk and money.

      Openreach (and by extension BT group) have been making that commitment, and taking that risk. It seems grossly unfair for TT to come along and piggy-back on top without taking any of the risk on for themselves.

      I hope Ofcom have the bottle to realise that serving the consumer isn’t just about the lowest prices NOW, but also about the best-fit network infrastructure in the future – and that investing in such a network (an ever-changing network) needs financial breathing room.

  7. Avatar zemadeiran says:

    IMHO,

    We should have many more companies like Kingston Communications covering their particular patch around the country.

    This of course could be facilitated by an ip only network with 2G/3G backup for emergency calls etc.

    Why not have broadband only lines at £5 a pop? At least you could use the full frequency supported without allocation for voice no?

    1. Avatar TheFacts says:

      Kingston don’t LLU so keep all the cash.

    2. Avatar Gadget says:

      According to Kcom they do have a reference offer for LLU http://www.kcomplc.com/regulatory-information/reference-offers/kc-local-loop-unbundling/

      Just I’ve never heard of anyone taking it up….unless anyone out there knows differently.

    3. Avatar MikeW says:

      KC worked well back in the eighties – calls were cheap, and they upgraded to digital exchanges well before BT. Very good on voice, and very good as a monopoly within Hull when compared to the monopoly outside Hull.

      But things have turned out to be not so rosy once competition hit the industry. There are no LLU operators offering service, and there is no choice of ISP. Lightstream is a long way behind FTTC/P in deployment terms.

      KC are effectively the monopoly that BT is no longer.

      Is this what you want? Every area has a single operator, with no choice of ISP, no choice of service?

  8. Avatar cyclope says:

    Talk Talk are crying like a spoilt brat who didn’t get their own way for once,What have TalkTalk done for thew industry? Their buisness model sucks ,When they acualty start provide poper support via the telephone I may actually acknowlage their bleating, Why should the other isp’s have to increase prices to shut that crap isp talktalk up ?

  9. Avatar Robert says:

    Agree Talk Talk are crying like a spoilt brat. However at the same time maybe BTs union should be concentrating on other things like how BT employ cheap slave labour in Indian call centres. Otherwise it just looks to me like they want media headlines and are nothing more than a media mouthpiece.

  10. Avatar MikeW says:

    The laughable thing about the TT report is that, while purporting to be a “cost” report, it seems to miss out on so much of the essence of providing serious national infrastructure.

    Serious infrastructure goes to tremendous effort to ensure that service is kept, even if most of the network has failed. Things such as dual-parenting of the cabinet back to multiple exchanges. Multiple routes for fibre. Battery backup.

    Unfortunately, taking a service from 99.9% available to 99.999999% is difficult, and costs a whole lot more. It certainly takes more thought.

    The report, unfortunately, seems to fit with TT’s “cheap as chips” service, where “we don’t really care if it is broken”.

    For example, they just cost the “feeder fibre” back to the exchange based on distance to the one location, rather like a business taking an Ethernet connection to a single point. It rather misses the fact that there is a whole distribution network required. And that this distribution network will become the core of the FTTP network as a replacement for copper (and voice too), and so needs to inherit (for example) the uptime requirements for emergency services calls.

    In fact, it seems to entirely miss out on FTTP as a portion of the roll-out entirely.

    In effect, TT have produced a report telling us how badly they would deploy the nation’s infrastructure. I’m kinda glad they aren’t part of it!

    1. Avatar keith says:

      ‘Unfortunately, taking a service from 99.9% available to 99.999999% is difficult, and costs a whole lot more. It certainly takes more thought.’

      Unfortunately BTs figures are not that detailed so nobody knows if that is true.

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