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Rival ISPs Attack BT’s “network monopoly position” and Demand Change

Monday, November 24th, 2014 (8:09 am) - Score 1,522

The UK Competitive Telecommunications Association, which aims to foster a more competitive fixed telecommunications market and counts most of BT’s major rivals among its ranks (e.g. Virgin Media, TalkTalk, Vodafone, Sky Broadband etc.), has called on Ofcom to improve competition by among other things opening up BT’s passive infrastructure to all providers and launching another market review; although one is already underway.

According to the UKCTA, more than 80% of companies are unable to obtain business phone and broadband services based on competitive access for anything other than “residential style broadband products” (e.g. ADSL2+ etc.) and these businesses are thus said to “exist in something of a postcode lottery where access can be obtained in some towns and cities but not in others“. In particular the UKCTA noted that access speeds also tended to be higher in town centres than on business parks.

A separate YouGov study of 1,332 adults, which was commissioned by the UKCTA, claims that awareness of the BTOpenreach name is “generally high” but there are allegedly “much lower levels of awareness” of what Openreach actually does (no specific figures are given in the PR). Openreach is typically responsible for maintaining and upgrading BT’s national broadband and phone network across the United Kingdom.

The study notes how more than a quarter of business customers believe that the services available to them are restricted by Openreach and many refer to the lack of competition in the market. A majority of customers also blame their ISP and not Openreach when problems occur with their service, which is an issue that was partly touch on by a recent episode of the BBC’s Watchdog TV show (here).

UKCTA’s Domhnall Dods said:

Thirty years ago we saw the start of a new era in the UK telecommunications market. Although increased competition now helps manage the issues of pricing and consumer protection in today’s broadband market, the greater issue of BT’s market dominance remains. We believe Ofcom and its new CEO should review its agenda and target the root causes of this remaining market power, including the way the core BT platform is regulated. The UK’s consumers and businesses cannot afford for Ofcom to ignore the problems identified in these reports.”

Overall the UKCTA said they wanted the telecoms regulator, Ofcom, to re-focus on improving competition and in order to help guide them in that endeavour the group has also issued a new report (.PDF 8MB) to highlight some of the improvements that could be made. Generally these boil down to three specific areas that the UKCTA want to see reviewed / changed.

The UKCTA’s Three Primary Requests

• Rebalance focus of Ofcom to prioritise the promotion of competition.

The regulator initially focused on forcing BT to reduce prices through a series of price caps. A period of promoting competition followed, which drove a range of innovations now seen as “the norm” by consumers and businesses alike. Ofcom’s focus has now moved from competition to intrusive sector-specific consumer protection measures, often duplicating general consumer protection measures. UKCTA calls on Ofcom to return its focus to championing competition, which will drive innovation and enhance choice and the protection of consumers.

• Improved service from Openreach will improve service quality and innovation.

Openreach, has control of the basic infrastructure which most other providers rely on to deliver their services. However, it has consistently failed to meet its own standards on delivery times, fault rates and fault repair times. This failure affects thousands of end-users of UK broadband and telephony services on a daily basis, and gives rise to substantial consumer detriment. The SPC reports outline six steps which are still needed to ensure a better service from Openreach, mitigating the effect of its effective monopoly position and creating a more competitive market which encourages innovation and quality service.

• Open up BT’s passive infrastructure to all providers.

While policymakers and regulator have focused on residential users, the needs of businesses have been left behind, with domestic areas often getting a better broadband service than their local business parks. As long as BT has control of the basic infrastructure, competition and innovation will be stifled. UKCTA calls on Ofcom to try and replicate its successful introduction of greater competition into the domestic market by allowing all providers to have regulated access to BT’s passive infrastructure.

It’s interesting to note that many of the gripes that the UKCTA raises have already been handled as part of Ofcom’s recent Fixed Access Market Reviews (FAMR), which among other things resulted in Ofcom imposing new Quality of Service requirements upon Openreach and that is a big part of the reason why they’ve recently had to hire several thousand additional engineers.

But the report suggests that Ofcom should have gone much further, such as by publishing more data about Openreach complaints, conducting another review of Openreach’s existing products to ensure fair prices and a request for Ofcom to make a commitment on using enforcement powers (including penalties) if Openreach falls short of their targets.

The UKCTA also wants greater control to prevent Openreach declaring a status of Matters Beyond Our Reasonable Control (MBORC) when not necessary. This is often used after a storm or flooding and reflects Openreach’s need to focus engineers on repairs over new provisions, which can impact their performance; allowances in the targets are made for this. Finally, the UKCTA wants Ofcom to set “clear and explicit guidance” on what constitutes a fair and reasonable Service Level Agreement (SLA) and Service Level Guarantee (SLG).

Elsewhere the demand that BT open up their passive infrastructure to all ISPs is already the subject of Ofcom’s latest Business Connectivity Market Review 2016 (here), although it should be said that the regulators previous reviews have tended to reject such ideas. Meanwhile BT itself has always rejected these demands as “unnecessary, intrusive and bad for customers“. In a canned statement a spokesperson for BT argued today that there is no need for change because the UK already has a “vibrant wholesale business connectivity market, with strong competition and innovation amongst a large number of providers.”

BT has also warned that some of the proposed changes would increase their costs, which would perhaps inevitably need to be passed on to ISPs and then consumers. Whether or not those increased costs would be outweighed by the benefit of a higher quality service and greater competition is a matter for Ofcom to judge.

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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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31 Responses
  1. Avatar DTMark says:

    The problem with having the State or the council do the telephony as a state-owned monopoly is that there is no real commercial incentive for those involved to actually perform well.

    The problem with having BT do the telephony as a state-backed monopoly is that there is no real commercial incentive for those involved to actually perform well.

    Without competition, little or nothing changes, because no market has been created.

    1. Avatar FibreFred says:

      To get proper competition rival’s need to build and own their own networks

      Competition works in areas covered by BT and Virgin, these other ISP’s need to step up and start building their own infrastructure.

    2. Avatar TheFacts says:

      Where, in detail, is it and is it not a monopoly?

    3. Avatar dave says:

      @fibrefred, you mean like how b4rn built their fibre network and bt purposely rolls out FTTP in the same area which would never have happened without b4rn in order to keep their monopoly?

    4. Avatar fastman2 says:

      FYI
      the deployment is as part of contract it has secured thas network to be delivered to —

    5. Avatar FibreFred says:

      Dave

      Two competing networks yes and I’m sure B4RN will compete very very well

      BT were contracted to deliver in that area, it would have happened

    6. Avatar Ignitionnet says:

      Obvious solution – separate BT’s retail arm off from the rest of the group.

      Given BT want to merge Openreach and Wholesale it’s just been made a lot more convenient. BT get to do that in return for spinning off their retail division.

    7. Avatar Bob says:

      The real answer in my view is to totally separate the Local Loop from BT at the moment whilst it remain a part of the BT Groups it is to easy to move costs around. It is a bit like Starbucks & Amazon do

      The other option is for better access to the BT ducts with the major ISP’s and Telcos forming a company to own an alternate local loop. I doubt the economics of it would work though as the incumbent operator BT has a 100% of the market outside of the cabled areas and it would take a very long time to gain significant market share

  2. Avatar Steve Jones says:

    Slightly ironic that VM are part of this when they don’t allow any form of wholesale access to their infrastructure.

    1. Avatar FibreFred says:

      Ironic, other words are available 😉

    2. Avatar FibreFred says:

      If VM really had customers at heart then to aid competition in 50% of the country (where most of the customers are) they could open up their access to other ISP’s and take the fight to BT.

      And just to cover future replies as we do like to go in circles on this site.

      – Why should VM open up access they paid for their network

      – So did BT

      – The taxpayers built the BT network

      – No they didn’t, they paid for the original ducting, poles and other assets, the network looks totally different now, the taxpayers sold it all, every bit of it regardless of who originally paid for it they don’t own in now, much like Virgin didn’t build/pay for the original cable networks, they bought it and built on it.

    3. Avatar DTMark says:

      The government has this great idea that after operators, mobile in this case, have paid for their own investments, the State should somehow be able to commandeer them and force the operators to share. The operators rightly point out that this will necessarily lead to a lack of investment in infrastructure, so in the end, the most likely result is that the customer loses because nobody has a case to invest in the tech.

      This is where fixed line has been for years. Pushing competition at a retail level with price controls means customers have a wide choice of operators all supplying the same tired old crap. In less than a decade most VDSL will be in that category.

      The EU seems to be coming around to this idea now – that operators may well need exclusivity over infra to make the case for ROI.

      The difference with BT is that it was sold to then be a regulated utility with certain restrictions imposed to stop everyone being fleeced by a monopolist. Of course the answer was not to create the monopolist in the first place. It was never going to work.

      The government will need to be more creative in solving this country’s needs that simply throwing its weight around or going for whichever option ticks this moment’s “box” most easily.

    4. Avatar Steve Jones says:

      Having said all that, BT might secretly be quite happy to see VM not offering wholesale services to other ISPs as if, say, Talk Talk started doing so, Openreach would lose line rental income. For the moment I can’t see it happening. VM probably think that having aggressive alternative operators on their network would cannibalise a lot of their retail revenue. Imagine if Sky had access.

    5. Avatar Steve Jones says:

      @DTMark

      Yes, BT was sold off with a particular regulatory regime and an expected competition framework. The cable franchise system was set up to provide infrastructure competition. They were granted local monopolies on fixed TV broadcast and allowed to offer telephone services as well. Another operator (Mercury) was also enabled as a parallel operator for telco and data services and there was carte blanche for other (mostly US) companies to install trunk systems. Further, there was a system that regulated retail and interconnect pricing.

      The regulatory arrangement now is wildly different to what was put in place in 1984. There was no concept or expectation of things like LLU. Ofcom was set up by the Blai government with a deliberate mandate to engineer down BT’s market share (the original competition framework having not worked). It was not what the original shareholders bought into.

      Now, fair enough, circumstances change, but to say the original shareholders bought into anything like the current regulatory environment is untrue. We are in a different landscape altogether. At the time of privatisation, BT was responsible for the vast majority of the Telco market in the UK, with only C&W around. Now, the telco market is much wider, with broadband, mobile, cable, managed services and much else. Mobile competes with fixed line (aided by deliberately discriminatory termination charges which are only now being unraveled). BT’s market share is now more like 1/3rd of the telco market (much of BT’s revenue is now in sectors outside the mainstream telco business).

      Things have changed. To argue that the extent of regulatory intervention was known in 1974 is ridiculous. Also, the core network bears no resemblence to that in 1984. It’s gone through complete renewal, and more than once.

  3. Avatar david says:

    BT is a shambles of a network run by cowboys with there dodgy copper wiring and there superfast shambles of vdsl .

    1. Avatar Gadget says:

      Well there’s always cable or wireless or operators, unless of course you live in one of the areas where they do not consider it commercially worthwhile, or even mobile if your data needs are modest.

    2. Avatar Steve Jones says:

      Well, in that case then why does anybody want access to it?

    3. Avatar fastman2 says:

      dave — so when you monving to not openreach area then

    4. Avatar No Clue says:

      “Well, in that case then why does anybody want access to it?”

      Looking at Wales nobody gives a crap about BTs FTTC

    5. Avatar Steve Jones says:

      @No Clue

      If you say so, but it does look rather like uptake reaches almost 20% in the first year of a cabinet being installed. I think it highly unlikely that it will suddenly stop increasing after a year.

      In any event, if you are right, then BT will making a big loss on both the subsidised and public supported roll-out. We’ll see.

    6. Avatar Raindrops says:

      The welsh figures show no such thing, its only 11% take up.

    7. Avatar TheFacts says:

      Near 20% after 1 year.

    8. Avatar No Clue says:

      12% no matter how many times you try to claim otherwise.

  4. Avatar TheManStan says:

    What’s wrong with PIA? Apart from the having to pay for the privilige!
    They can lease duct from Openreach as demanded by OFCOM.

    1. Avatar FibreFred says:

      Its the pay bit, for some reason other ISP’s think they should be able to use rival assets at no cost.

    2. Avatar Steve Jones says:

      I think the other issue is that the other service providers want a nice neat service where they don’t get hit with the costs of things like clearing ducts, roadworks, expanding capacity and all the other sort of things that drive up costs. They’d much rather somebody else took the risk and laid the fibre and so on so they could lease it at something close to long term incremental cost rates.

      In other words, it means the other SPs are passing on the risk. It’s a whole order more complex than LLU.

    3. Avatar Bob says:

      BT have managed to price it so high it is uneconomic. ISP’s have even looked at sharing the costs and it still does not work. The BT charges are so high it is almost cheaper to install new ducting

    4. Avatar Gadget says:

      priced so high that they are 15 percent below the average price across France, Spain, Portugal and Germany.
      http://www.techweekeurope.co.uk/workspace/bt-reveals-duct-and-pole-sharing-charges-18206#kmuTvlIUdI3W87kX.99

    5. Avatar TheManStan says:

      If they want a full risk related cost for duct lease then it has to be more expensive to cover all costs.
      Remember this is leased access to space to run their cables through and in no way should resemble LLU. Which means if there is a blockage which does not affect the existing services running through, then it is fit for purpose. If there was an issue for existing services then OR would have had it in their scheduled works for clearance (this aspect should be public or available to leasees).
      Clearing a blockage would be akin to having the builders in to remodel the interior of an unit for a leasees purpose as the existing state is not functional for the leasee’s purpose, this cost is wholey born by the leasee.

  5. Avatar Chris Evans says:

    Funny how Virgin Media’s infrastructure is not shared in the slightest and yet they are one of the ones behind the group who are trying to get BT to share more and more…

  6. Avatar alex says:

    we should get rid of BT altogether and all there telegraph poles and get some decent telecom gear instead of using old fashioned stuff what has been paid over and over id love it to be eventually be all satellite and get rid of the BT company and there mockery of bad structure .

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