XLN Telecom CEO Lambasts BT Monopoly over UK Superfast Broadband

The CEO of Business ISP XLN Telecom, Christian Nellemann, has said that the national rollout of superfast broadband technology is “crucial” to the United Kingdom’s small and medium sized businesses but called for the government to stop helping BT “maintain a monopoly on fibre services“.

Nellemann, whom accuses BT of being “as far removed from [the needs of SMEs] as it possibly could be“, believes that the interests of small businesses are being “lost in the increasingly complex national superfast broadband project” (i.e. Broadband Delivery UK).

The government has so far awarded every single related local authority / BDUK broadband contract to BT, which was the only viable bidder left standing in a somewhat questionable tender process and framework that effectively excluded smaller rivals (unless they all agreed to form a highly complex consortium that never sounded very feasible).

On the other hand it was always going to be an uphill struggle for even the likes of bigger operators like Fujitsu UK and GEO, which both eventually dropped out of the BDUK process due to financial and competition concerns, to make the economics work against an existing incumbent (especially in sparse towns and villages).

It of course didn’t help that BT would only allow access to its cable ducts (PIA) for residential services, which meant no lucrative business alternatives at the infrastructure level and this made the case for connecting homes even harder to make.

Christian Nellemann said:

“SMEs are lifeblood of the UK economy. Our superfast broadband rollout should not be monopolised by one provider and the government needs to understand that opening it up to competition will provide a better level of service and make it more cost effective for SMEs.

BT doesn’t understand the needs of SMEs as it’s as far removed from them as it possibly could be. Other providers with records of supplying SMEs with quality broadband services should be tasked with providing superfast internet connectivity as that in turn will give the UK’s small and medium business sector the boost it so badly needs.”

The somewhat generalise remarks, which were part of a guest editorial for Small Business UK, will undoubtedly touch a nerve or two at BT and are likely to chime with the operators other critics. However, while some of the points are fair, it should be said that the article also contains a few inaccuracies.

For example, Nellemann states that the government’s original ambition was to “cover 100 per cent of the UK” with superfast broadband, which appears to stem from an equally erroneous remark made during the recent Public Accounts Committee event in July 2013 (here). In fact 90% was the current coalitions government’s first official target and prior to the 2010 General Election the Conservatives only talked very generally about delivering “100Mbps broadband across most of the population” by 2017 (here).

The previous Labour government was arguably even more ambiguous and made reference to an ambition of “making possible superfast broadband for the vast majority of Britain” (here). In fact the only firm commitment to 100% came in relation to the target for ensuring that 100% could access a download speed of at least 2Mbps (Universal Service Commitment), which was shared by both parties; albeit on different timescales.

Nellemann similarly blames BT exclusively for the “last 10%” issue, which occurred because smaller ISPs (altnets) were being left in limbo by the operators seeming refusal to release their planned coverage and speed details for each local authority area (i.e. altnets couldn’t get their own RCBF grants approved because nobody was sure if the public money would end up overbuilding BT). But the government has since pinned most of the responsibility for this on councils (here) and called for the data to be published.

It’s similarly worth considering that many altnet schemes do not offer open wholesale access like BT’s network, which is an issue that often gets overlooked but is the basis for a market with hundreds of ISPs to choose from. On the other hand it’s a different story at the raw infrastructure level where, outside of urban areas, BT remains the dominant network and the only viable choice for ISPs. This is perhaps arguably more the fault of Ofcom and past governments than BT alone, which is only doing what any commercial business would.