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Vodafone Attempts to Stall BT’s 330Mbps UK G.fast Broadband Rollout

Wednesday, November 16th, 2016 (9:00 am) - Score 4,720

A competition row between Vodafone and BT has erupted once again after the former wrote to Ofcom and complained that Openreach’s trial of 330Mbps (50Mbps upload) capable G.fast broadband tech had broken the regulator’s strict rules, which require a consultation to take place first.

Vodafone has repeatedly called for BT’s network access division, Openreach, to be split from the incumbents control as part of Ofcom’s on-going Strategic Review. Vodafone sees this as a means of addressing “discrimination” within the market and “improving pro-competitive investment” (here), which would also make it easier for them to build their own network if they so desired (here).

Ofcom clearly agrees with some of Vodafone’s concerns (here), but so far the regulator is still attempting to reach a softer voluntary agreement with BT and meanwhile Vodafone’s attempts to make a bolder entry into the market by hooking up with Virgin Media’s parent, Liberty Global, have faltered (here).

Elsewhere BT has continued to tout a proposed £6bn investment over the next few years, part of which will support the roll-out of their 1Gbps capable Fibre-to-the-Premise (FTTP) network to 2 million UK premises, with another 10 million benefiting from 300Mbps capable hybrid-fibre G.fast technology by 2020.

At present Openreach is already conducting several on-going trials of G.fast (e.g. Swansea in Wales, Gillingham in Kent, Huntingdon in Cambridgeshire etc.) and they now aim to launch a major pilot in January 2017, which will reach 17 locations across the UK and cover 138,000 UK premises by the end of March 2017 (here and here).

However Vodafone still has a few rounds left to fire and as a result they’ve written a new letter to Ofcom, which reminds the regulator that their own rules may require a long consultation on Openreach’s G.fast pilot before it can proceed.

A Vodafone Spokesman said:

“We call on Ofcom to discharge its legal duties and carry out a proper consultation into this issue.”

Ofcom’s original 2005 regulatory undertakings agreement with BT was tweaked in 2009 to allow the roll-out of their ‘up to’ 40-80Mbps capable Fibre-to-the-Cabinet (FTTC / VDSL2), but Vodafone argues that this was not a “blank cheque” for all future deployments. FTTP was also part of the original plan and it’s easy to forget that at one point in 2009/10 BT was talking about 2.5 million premises passed, which is similar to their “new” plan.

According to the FT (paywall), Vodafone could also launch a legal challenge if BT presses ahead with its deployment without the consultation, all of which could risk a significant delay. At present it’s likely that G.fast’s commercial roll-out in the UK will begin during the latter part of H2 2017, but such a delay could easily push it into H1 2018 or later.

On the one hand Vodafone’s approach could be considered a touch petty, but on the other hand there is a question mark over whether or not G.fast is different enough from FTTC as to require an additional consultation. The basic deployment approach is roughly similar to FTTC, although G.fast will be largely deployed via extension pods on existing PCP street cabinets.

We’ve also seen Openreach carry off plenty of similar technology trials (e.g. FTTrn, FTT-Basement, Long Reach VDSL2) and all without attracting the same sort of concern, although admittedly none of those are planned for a massive national roll-out.

Ofcom tends to be fairly flexible with pilots / trials (too much paper work might be counter-productive) and they may well argue that part of the issue is already being handled within their existing Strategic Review. Meanwhile rivals believe that an independent Openreach could forge ahead with FTTP/H and largely abandon G.fast, but at present there’s no clear plan for such an outcome.

The official line from Ofcom is that the regulator will consider Vodafone’s concerns “very carefully“, while a spokesperson for Openreach complained that the attempt to “delay the roll-out … is an unhelpful move that benefits no one.”

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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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26 Responses
  1. Avatar Adam says:

    Seriously vodafone, why on they trying to slow down the next evolution / roll out of broadband services? This is so petty.

    1. Avatar arundel says:

      “EDGE should be enough for everybody” -Vodafone

      (Probably.)

  2. Avatar MikeW says:

    Want to read the FT article?

    Put the article title (“Vodafone seeks probe of BT’s copper broadband plans”) into Google, then follow the link to the story. FT will display the content that way – perhaps after asking some questions.

  3. Avatar fastman says:

    basic deployment approach is roughly similar to FTTC, although G.fast will be largely deployed via extension pods on existing PCP street cabinets. — but only where FTTc is already enabled – not on any old copper pcp

  4. Avatar Roger S says:

    Interesting turn of events, is this Vodafone trying to force BT into rolling out full FTTP or possibly upgrading their extension pod idea into a FTTdp route?
    I would be much happier if they went for a dp rollout than their current suggested route.

  5. Avatar Rich says:

    And this is where OFCOM’s obsession with enforced artificial competition where everyone resells the same product with a different badge is completely pointless.

    No other industry could a bit player hold back the market leader as they didn’t want to have to compete with new products.

    Imagine a car manufacturer coming up with a new luxury zero emissions car with 1000HP that was under £10k, and an existing manufacturer asking the government to ban it as they couldn’t be bothered to invest in their own car development.

  6. Avatar Steve Jones says:

    Given G.FAST from existing green cabinet sites is really only an evolution of FTTC technology, it strikes me as pretty well baseless. However, given that there is a gap before commercial roll-out commences, it would seem there’s time for a consultation. Otherwise this just looks like spoiler tactics.

  7. Avatar NGA for all says:

    All those Cable and Wireless assets, they could contribute to PIA processes and do more FTTP. Could they not force the issue by purchasing DT’s stake?

  8. Avatar James says:

    This article made me smile as I have just recieved an text message from vodaphone themselves saying they have just been voted the “best network provider” by independent “experts” P3?
    Never heard of them myself!

    1. Avatar OtakuBoy92 says:

      It was done via an app. I downloaded it and it monitored my performance on day to day usage and reported the results to P3 for analysis. It was approved by Ofcom.

  9. Avatar Groucho says:

    When Vodafone can run a business properly, with an accounts system that works, then perhaps people might take them seriously. I see their share price has dropped today, and no wonder.

  10. Avatar GNewton says:

    Good on Vodafone! Ofcom really needs to get its act together. Ideally it should indeed cause Openreach to be separated, or otherwise it should come to an agreement with BT, for the sake of more investment and market certainties!

    1. Avatar Chris P says:

      As suggested above, maybe VF can use their C&W infrastructure and compete with or complement openreach’s reach, instead of just moaning about BT.

    2. Avatar FibreFred says:

      No-one else on here seems to agree GNewton, that said you hate BT so would agree with anything like this.

    3. Avatar AndyH says:

      In the interests of consumers, I really fail to see how you can commend Vodafone here.

    4. Avatar FibreFred says:

      A long consultation so.. hoping to do nothing more than slow down Openreach so that they can (supposedly) put together their own products and services.

      Let’s join GNewton and cheer them on…

      I don’t see Sky or TalkTalk or anyone else for that matter raising issues.

    5. Avatar Steve Jones says:

      The commercial case for g.fast is wholly unaffected whether OR is separated or not. The financial and speed of roll-out issues are precisely the same. Separating OR does not suddenly mean £20bn of investment will appear for comprehensive FTTP, nor the means to built it out at any speed. Indeed, the costs and uncertainty of the implications od separation will have an adverse impact on the money available.

      If Vodafone really do want FTTP what will they commit to in terms of volume and price they are prepared to pay for the wholesale product?

      As it is, Vodafone are a minor customer of OR compared to Sky, Talktalk or BT Consumer.

    6. Avatar R says:

      Why are people on here having a pop at BT. Openreach
      No one is stopping Vodafone from putting what ever they want in the ground.
      When are the nit picking people going to realise that splitting up a company
      Will not bring in more investment, If Vodafone are serious then put up some money
      And show us that they wants to invest in the future.
      This is about giving everyone access to faster broadband.

    7. Avatar Chris P says:

      Maybe VodaFone can make a serious offer for OpenReach, an offer BT couldn’t refuse. Maybe VodaFone could band together with like minded firms (Sky, Talk Talk, spring to mind) as partners in the endeavour? Maybe they could offer to buy part of OpenReach and become share holders that way. Maybe they could build their own access network like Virgin Media and compete that way?
      Fred in a town wants a fibre connection & doesn’t want to pay more than £30 per month can you deliver for him? no didn’t think so.

      Its much cheaper to just constantly moan, complain and stick spanners in the works than it is to compete.

    8. Avatar Steve Jones says:

      As OpenReach is valued at about £20bn, it would be a serious amount of money for Vodafone (or any other company or a consortium) to put up. Then there’s the little problem that it will still be liable for part of the pension deficit, so that would be a continued drag on cash flow unless the new owners were to buy themselves out of the liability.

      Then, having paid out £20bn or so, then if the new owners were to do what they appear to want (that is go for a comprehensive FTTP solution), then there’s up to another £20bn to find for that. Also, the new OpenReach would still be constrained by Ofcom regulation. If the new owners were a vertically integrated telecoms company, it would just hit the same issues that people complain of with BT ownership.

      In short, it is never, ever going to happen unless they were virtually given the company.

      Let’s be under no illusion over this. What TalkTalk, Sky and Vodafone want to see is a network infrastructure operator which essentially has the entire cashflow directed towards investment on their terms with essentially no dividends paid to the existing shareholders (really the only way that it can put in – say – another £500m a year). Most likely this would be

      In that they are prepared to put any cash in at all, they are going to do it in the form of loans with a defined rate of return. I do not see them putting in equity.

      People should be under no illusion. OR is a £5bn a year turnover company worth about £20bn. A comprehensive FTTP solution would involve around £20bn of investment (double the current market cap). Most of that would have to be borrowed and, even taking into account the free cash flow, interest would easily add £500m a year, very probably more.

      The room to increase wholesale charges are very limited, both because the ISPs probably won’t wear it but also, more importantly because competition from VM will put a cap on any price premium. Then it has to be remembered that Ofcom have an explicit target to have 40% of premises having a choice of three network infrastructure operators at hyper-fast speeds by 2020. That will inevitably dilute revenues further.

      It should be born in mind that OR has no power to force full fibre conversion on the network and little sign that Ofcom will allow it to happen any time soon given the LLU investors and the SPs dependent on copper services.

      Essentially, the finances and strategy don’t work out. I’ve yet to see Ofcom (or any report commissioned by them) do any real financial modelling for this wonderful new world of theirs and the claim that there will be a choice of three suppliers for 40% of premises just sounds like wishful thinking.

  11. Avatar Evan Crissall says:

    A case of ‘what goes around comes around’, maybe?

    For its part, BT is threatening to drag-out the process of spinning-off Openreach. With Gavin Patterson warning of 10 years of litigation and arguments in a “protracted legal battle”.

    BT has also threatened to halt any further upgrades to “ultrafast” broadband until a final decision is made regarding Openreach.

    http://www.cbronline.com/news/telecoms/carrier/bt-threatens-court-battle-if-openreach-is-spun-off-200715-4626239

    What a mean-spirited act of spite towards the beleaguered consumer.

    Faced with such hostility from BT, any wonder Vodafone resorts to counter tactics?

    1. Avatar GNewton says:

      If BT really got involved in 10 years legal battle, postponing it’s ultra-fast broadband deployment, then it could be a blessing in disguise. Other operators would then be forced to invest in their own networks.

    2. Avatar AndyH says:

      BT is legally required to act in the best interests of its shareholders, which would be to oppose any forced divesture of Openreach (or any entities). Such legal action would be complicated, protracted and involve multiple counter parties.

      Anyway, that article is 15 months old and it’s not entirely accurate. All Gavin Patterson said was that BT would only commit to an ultrafast rollout if the “appropriate regulatory environment is in place”. Any other company in BT’s situation would have done the same.

      @ GNewton – Why do you think this would force other operators to invest in their own networks? Who has the billions to invest in building nationwide fibre networks? There is little stopping anyone doing it now – I don’t see why waiting for hypothetical situations makes any difference.

    3. Avatar 125us says:

      BT has a fiduciary duty to its shareholders, the owners of the business. If splitting Openreach has a negative impact on BT, the board is compelled – by law – to try and prevent it happening.

    4. Avatar Steve Jones says:

      Ofcom delayed the implementation of FTTC by Openreach due to their prevarication over the regulatory regime for the technology. They explored all sorts of unworkable ways of putting competition deep into the FTTC infrastructure itself. All work unworkable, and with precious little signs that any other operator was going to invest the required sums of money (apart from VM of course). Eventually it was permitted in 2009, but they probably delayed the whole thing by a year or more.

      Playing silly games with g.fast to delay that is wholly pointless and nothing to do with separation. The financial and logistic case for g.fast is precisely the same. It’s a quick and cost-effective way of delivering higher speeds to about 10m properties.

      The only issue over a split would be if OR lost it’s anchor customer.

  12. Avatar fastman says:

    digital region built a network with no anchor customer and look what happened to that !!!!

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