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By: MarkJ - 5 April, 2011 (6:48 AM)
bt uk fibre optic cable ductofcom fibre optic broadband uk cable duct sharingA group of senior executives from several major UK telecoms and internet (ISP) operators, including Virgin Media , TalkTalk , Geo , Vtesse Networks ( Vtesse Broadband ) and Fujitsu, have sent a joint letter to the governments Communications Minister, Ed Vaizey, in the hope that he will intervene to ensure that the price for access to BT's cable ducts and telegraph poles is not set disproportionately high.

The move helps to clarify why BTOpenreach, which has the responsibility of ensuring that all rival UK ISPs are given equality of access to the local BT network, was recently forced to admit that "only one" customer had so far signed up to the Terms and Conditions (T&C) of its related Physical Infrastructure Access (PIA) trial (here).

PIA had originally been designed by BT and Ofcom in the hope of making it easier for rival providers to deploy new fibre optic based superfast broadband services around the country, especially in rural areas, by running the cable through BT's existing network. The first Draft Reference Offer pricing for this was revealed in January 2011 but ISPs remain unhappy with what has been proposed.

ISP Executives Letter to Ed Vaizey:

"We are unanimous in the belief that the BDUK competitive procurement process will lack a credible alternative to BT, should BT fail to make substantial revisions to PIA product pricing.

PIA will be a commercial and policy failure if Openreach does not revise its prices. Moreover, we are united in the view that the product is unfit to proceed into commercial use."

The executives letter goes on to claim that BT's prices for access to its cable ducts would effectively be four to five times more expensive than their own underlying costs, thus making it more cost-effective for rival ISPs to simply build their own duplicate of BT's network. It's understood that BSkyB ( Sky Broadband ), in a separate letter, has expressed similar concerns directly to BT.

A BTOpenreach Spokesperson commented last month (here):

"We are continuing to work closely with our customers in the Trialist Working Group. All but one of these customers has now signed up to the trial Terms of Reference, but only one has so far signed the Terms & Conditions which are a pre-requisite to participation in the trial.

We know that some customers have expressed concern about the elements of the Draft Reference Offer pricing, specifically of poles and lead-ins."

The letter warns that it would be difficult for rivals to offer competitive bids for any of the future Broadband Delivery UK (BDUK) pilots, the next stage of which are due to be announced at the end of April 2011, without an adjustment to BTOpenreach's prices.

BT recently stressed that its initial PIA proposals formed part of a crucial trial and warned that it would be "unable" to establish final pricing if the process cannot even start. A failure to address the issue could also allow BT to consume most of the governments £830m broadband budget by 2017.

This would of course hamper competition, though we suspect that BT would not be too displeased at being able to maintain its strong market position. At present the commercial launch of BT's new PIA service is still expected this summer, although that timeline is beginning to look increasingly uncertain.

BT has also said that it will seek for any ISP taking its PIA product to open-up their own ducts and poles to other operators (albeit not during the trial). That is not an Ofcom requirement. Sadly the regulator cannot even look at this until after the new EU Communications Framework has been implemented in the UK by May 2011.

It's worth pointing out that most of the operators, except for Talk Talk and Sky, have at one time or another talked very roughly about their ambition to deploy superfast broadband services through PIA. Perhaps if they were all more vocal and detailed about what they'd like to do then the government would be better positioned to act upon their concerns. As for BT, there's always the risk that they might try to recoup any price reductions from somewhere else.

UPDATE 2:02pm

BT has issued a strong response to the letter.

A BT Spokesperson told ISPreview.co.uk:

"It is very disappointing that this letter was shared with the media several hours before ourselves. It’s a shame that some of the companies involved seem keener to spend more time talking about this process than actually working on it.

The fact is our proposed prices for duct access compare very well with European averages whilst our plans for pole access have been held up due to others delaying our trials. Once those trials are underway we will be in a far better position to understand the costs involved and so we would encourage these companies to start trialling with us as soon as possible.

BT already provides numerous ways in which third parties can access our network and we have committed ourselves to providing yet more forms of access. It is highly ironic that we are being criticised by some companies who provide little or no wholesale access to their assets.

Finally, BT is the only company who has installed broadband equipment in exchanges serving the last ten per cent of the UK and so we would question whether these companies are genuinely interested in serving rural Britain given their track record."

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