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Call Flow Boss – Regulation Needed to Protect AltNet Broadband ISPs

Monday, November 21st, 2016 (1:37 am) - Score 3,717

3. As an alternative network builder yourself you’ll no doubt be aware that one of this year’s biggest talking points was Ofcom’s Strategic Review, which at the time of writing has still chosen not to split BT from control of their network access division (Openreach).

Instead Ofcom called for changes in the market (e.g. opening up BT’s Dark Fibre network and improving access to their Cable Duct/Pole infrastructure), which they hope will give rivals greater access to BT’s national infrastructure and thus boost alternative networks.

What are your thoughts on the Strategic Review (e.g. do you expect to benefit from the new approach), particularly in regards to what it got right and what it could have done better?

ANSWER:

Structural separation will take years to achieve and the benefits to be realised. Competition at a network level is essential if the UK is to see significantly faster broadband speeds across a high proportion of the UK – as demonstrated in Virgin service areas. For us, the absolute key is to ensure that the schemes mentioned of Dark Fibre and Enhanced Duct/Pole share (PIA) are implemented quickly and efficiently. We additionally believe that increased access to Openreach copper sub loop (beyond street cabinets) is essential to increase speeds and coverage beyond what BT are likely to do.

The biggest change, bar none, will be access to BT’s duct and pole infrastructure on an equivalent basis to that Openreach enjoy. To achieve this needs really clear targets to be set to demonstrate such equivalence has been achieved in practice. Having been the UK’s main player on PIA over the past five years, I remain to be convinced that this will be achieved in the near term based on current experience. Having worked for BT for 18 years, I fully understand the natural reservation to let anyone near their network and the temptation to drag their feet. As such, very clear and decisive leadership is needed to make this a success and achieve Ofcom’s stated goals.

4. Given the progress referenced above, what are your expectations for future contract wins and general network expansion into new areas over the next few years? Especially given that the Broadband Delivery UK programme and new EU State Aid agreement appear to be looking towards alternative networks.

ANSWER:

Alternative network providers have had their work cut out to get established and become credible alternatives. For alt-nets who have been able to demonstrate their capability on significant projects, the near future looks very bright.

In addition to EU State Aid changes, there are ongoing important changes to planning, regulation and availability of funding that mean we will be able to scale rapidly by leveraging the flexibility these changes offer. We are expecting to win further significant projects in the ‘final 5%’ as well as deploying some commercial networks. As such I anticipate, and am looking forward to, rapid network expansion.

Obviously it will be interesting to see if BT choose to participate in the upcoming procurements and compete with the alt-nets.

5. Another one of this year’s biggest events was the Brexit vote to leave the European Union. What are your thoughts on the outcome of the referendum and how leaving the EU in a couple of years’ time might impact your service, if at all?

ANSWER:

It is too early to say how Brexit is likely to impact our service and the broader UK broadband situation. My current guess, no more, is that there is unlikely to be any significant change and that supply will continue to lag slightly behind demand in broadband markets, especially in the hard to reach areas.

6. Virgin Media recently committed to ensure that 2 million UK premises are reached by their network using ultrafast Fibre-to-the-Premise (FTTP) technology and BT have similarly pledged to cover 2 million premises. On top of that both are also working to expand their 300Mbps capable DOCSIS and G.fast hybrid-fibre networks to many millions more.

Do you think that this is the right approach for the UK broadband market and, in respect to the growing roll-out of FTTP/H/B technologies, is it enough or does something else need to happen in the market to help improve connectivity further?

ANSWER:

It’s interesting to see that Virgin are once again building significant networks and I am sure they will come up against some interesting challenges as all civil engineering projects encounter. Sticking to circa £750/premise might prove a challenge in my opinion. It is totally understandable that both Virgin and BT will leverage their existing networks as much as they can to retain, or gain, market share. Anyone would do the same if it were their money. Ultimately the market has to be commercially lead like this.

This approach will, yet again, widen the ultrafast gulf between the ‘haves and have nots’, dependent on where you live in relation to either Virgin or a BT cabinet. I don’t see us doing a BDUK ‘round 2’ to lift the new low speed areas of say 10Mbps or 30Mbps to 300Mbps. However, now that viable alt-nets exist, I see them (us) building into this ‘demand created’ space – and that the technology used will increasingly be FTTP. If alt-nets do well with filling the current ‘final 5%’ with superfast broadband, they should be able to leverage their networks to fill in a lot of the newly created ultrafast gaps without recourse to public or community funding. This is PROVIDED they have a degree of certainty that they are not going to be overbuilt by a dominant player trying to squeeze them out as suggested has happened in some forums. As such, I favour some type of regulation around dominant providers stating their (lack of) expansion plans for the ‘difficult areas’ in the future.

I believe that, largely, there is only space for two competing network operators in one geography – three at a real push. This is a challenge for some of the current larger
content/mobile players in the market who do not have a significant network of their own, and I am curious how this will play out in the next few years.

So in short, I think that the two main suppliers leveraging their networks for ultrafast speeds is a good thing provided alt-nets are able to fill in the ‘ultrafast gaps’ created without being unfairly squeezed out by the dominant suppliers.

7. The Government has proposed a new 10Mbps Universal Service Obligation, which is likely to focus most of its effort upon the final 3% of UK premises that won’t be covered by a superfast broadband network via the Broadband Delivery UK programme.

At present it’s not known what sort of technology and performance criteria (e.g. latency, upload speeds, affordability, usage allowances etc.) will be set for the USO. If you could design the USO, what criteria would you set to ensure that a good quality connection is constantly maintained to all of those covered?

ANSWER:

I think I will pass on this question. I have no opinion.

8. The UK Advertising Standards Authority is taking another look at how broadband speeds are advertised by ISPs. The current guidelines require, among other things, that the headline speed being promoted must be achievable by at least 10% of an ISP’s customers and that all speed claims are preceded with an “up to” qualifier.

However the Government’s Digital Economy Minister, Ed Vaizey MP, and various other MPs have suggested that “at least 75% of people should be getting the speeds that the broadband providers are advertising.” A survey of our readers would seem to agree that a figure of 75% or 50% might be acceptable.

Speaking as an ISP, what are your thoughts on this proposal and how would you change the way that broadband speeds are advertised in order to make such promotions more accurate and reflective?

ANSWER:

I think the current advertising scheme is OK, BUT that prospective consumers should be able to easily access a postcode checker i.e. to give them an indication of what speeds they should expect for their premise before ordering – and possibly as part of the ordering process. Where the actual speeds are less than, say, 20% of the provided pre-order estimate, the customer should be able to switch without any quibble.

9. This year will most likely see the new Investigatory Powers Bill become an Act. The new law will force ISPs into logging a much bigger slice of your customers Internet activity, irrespective of whether or not you’re suspected of a crime. What are your views on this legislation?

ANSWER:

Any such legislation should be proportionate to the size of the ISP. Imagine the impact such legislation would have on a community ISP looking at kit cost of several or hundreds of thousands of pounds to comply with legislation. The cost to implement any regulated scheme should ultimately cost roughly the same per customer per ISP. This would obviously lead to tiered legislative requirements. Failure to do this will mean that smaller alt-nets/ISP will either become unviable (and hence impact innovation and broadband coverage), or they will have to pass the costs directly onto their customers.

10. Finally, the Government have hinted that some of those in the final 3% of the UK (i.e. the premises unlikely to be reached through the Broadband Delivery UK programme) may have to put up with a Satellite service or slow fixed line for the foreseeable future. What are your thoughts on Satellite connectivity as an option?

ANSWER:

The majority of feedback I have on satellite broadband is negatively biased i.e. users would prefer a fast fixed or terrestrial based solution if they had the choice. I think the market, especially alt-nets, will narrow the gap to less than 3% without direct funding from communities. However, this may require some differential pricing that is competitive with satellite services – similar to a community having no gas paying a premium for oil.

Again, flexible and efficient alt-nets operating in the final 5% through public subsidy will help narrow the gap in the medium term as commercial extensions to public schemes. The investment case for alt-nets is more compelling than for the dominant market players, who have less incentive to invest i.e. due to already having the customer revenue albeit at slow speeds.

As the new speed gap will soon be based on ultrafast rather than superfast speeds, satellite will remain an option of last resort. With the speed gap increasing, this is also likely to encourage very remote communities to fund their own ultrafast ‘future proofed’ networks – narrowing the 3% gap even further.

As such, I think the drivers in the market will narrow the gap to closer 1% in the medium term, with satellite remaining the choice of last resort.

We’d just like to say a big thankyou to Andy Conibere for both agreeing to take part in our interview and offering some very insightful answers.

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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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14 Responses
  1. Avatar bob says:

    Only coz they want to build their own monopoly…

    1. Mark Jackson Mark Jackson says:

      You can’t really build a true monopoly if, for example, BT already has infrastructure in the ground and yet finds it economically unviable to upgrade. Instead you build competition and choice at the infrastructure level where others have chosen not to go.

    2. Avatar TheFacts says:

      Others have been able to go anywhere for 30 years but have found it economically unviable therefore BT is not a monopoly…

    3. Mark Jackson Mark Jackson says:

      I believe the OP is referencing Call Flow as the monopoly as this article isn’t about BT.

  2. Avatar dragoneast says:

    All comes down to viability doesn’t it?

    As with everything if we want better broadband we’re going to have to pay more for it. And that’s the rub in the UK. It always is. We’re an idiosyncratic country and doing things is always harder here (for which you can read more convoluted, takes longer and costs more). Nobody’s fault particularly, just the way it is with our traditional ad hoc-ery and antipathy to planning. Perhaps the mistake Europe made (again): they tried to organise us.

    1. Avatar DTMark says:

      Yes, it does come to down to viability.

      The areas that Call Flow have enabled have now become financially viable for BT. Because there is now competition where before there was none.

      Call Flow have built the “white elephant” that makes that happen.

    2. Avatar dragoneast says:

      I guess we all see BT (indeed everything) through the prism of our own experience. I live in a residential commuter village with a traditionally hapless (underground) local loop; though I blame the Developer that just slung the cables in the ground rather than the old GPO. But BT’s local engineers plugged away with repairs bit by bit as and when; and for some reason I know not, apart from that it was practicable (and perhaps lucky as the Council were building a cycletrack into which may be BT could place their ducts back towards the exchange), we got FTTC early on in the commercial roll-out. Locals found we could do what we wanted to just about with ADSL, and then more comfortably with VDSL though we are far from optimum speeds apparently, so we are mildly content with BT. If those things hadn’t been the case perhaps we’d have seen BT as the national bogeyman too. No Virgin or Altnets in sight, by the way.

  3. Avatar Mike C says:

    Company name sounds like software for a call centre, to be honest

    1. Avatar Data Analysis says:

      “Company name sounds like software for a call centre, to be honest”

      Could sound like a lot worse…
      http://tinyurl.com/ha8qsek

  4. Avatar FibreFred says:

    Stop over building state aid networks sure. Commercial? Not a chance , that would go against everything and isn’t good for the.end customer either

  5. Avatar brian says:

    This will be LLU all over again. We’re now seeing issues where LLU is holding back speeds from tech upgrades from lrvdsl. Call Flow will be squeezing these assets as hard as possible. In ten year’s time the OR estate will be vectored, lrvdsl enabled, with g.fast boxes, and god knows what other services, what will these have? What is call flow’s tech roadmap?

  6. Avatar MikeW says:

    I had previously wondered if there was a limitation with Callflow-style projects: They can roll out an FTTC/SLU product at existing PCPs, but they wouldn’t be able to roll out a “new”, deeper, PCP with an attached DSLAM – which BT now does as an all-in-one.

    Very good to see that Callflow envisage being able to ask for CuRe work, and to deploy their own FTTRN alternative to the AIO.

    Conversely, it was weird to see that they tried FTTP as an infill to FWA, where the opposite seems like the obvious (and quicker) choice that they seem to have cottoned onto now.

    1. Avatar DTMark says:

      .. which will leave them with no USP when BT overbuilds them.

    2. Avatar FibreFred says:

      “which will leave them with no USP when BT overbuilds them.”

      It is called competition (if commercial rollout)

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