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Ofcom UK to Intervene Over BT Cable Ducts and Pole Broadband Pricing Dispute

Posted: 04th May, 2011 By: MarkJ
bt cable ductofcom ukOfcom could be forced to set the prices for BT's Physical Infrastructure Access (PIA) product, which allows rival ISPs direct access to the operators national network of telegraph poles and underground cable ducts. The move would allow rivals to install their own superfast 100Mbps+ fibre optic ( FTTH ) broadband services over BT kit but is being held-up by a dispute over costs.

A group of several ISPs - including Virgin Media , TalkTalk , Geo , Vtesse Networks ( Vtesse Broadband ) and Fujitsu - recently threatened to boycott the drive to boost the country's superfast broadband infrastructure unless the government put pressure on BT to bring their prices down (here).

It's no small coincidence that Fujitsu , Virgin Media , TalkTalk and Cisco have also announced related plans to build a new PIA based superfast broadband network. The new platform could reach 5 Million homes in rural areas and act as an alternative to BT (here).

PCPro reports that the UK communications regulator, Ofcom, told a Culture Media and Sport Committee yesterday that it would be better if all parties could "agree a market rate". The rivals have until June 2011 to try and reach a solution but Ofcom already believes that such an outcome is "unlikely".

Ofcom's CEO, Ed Richards, said:

"If after that there is no agreement, and there is a dispute brought to us, we will end up setting a price. We have to let the commercial negotiation process conclude first. We'll know quite quickly if we have to regulate or not."

In theory PIA should be cheaper than building a new network from scratch and BT claims that its prices are already approximately 15% below the European average. So far the only major ISP that has been brave enough to test that theory is Sky Broadband (BSkyB) (here), which is incidentally also running another FTTH trial with TalkTalk UK.

BT Statement

"Trials of duct and pole access only began last week so it is extremely early to speculate that Ofcom might need to become involved. It is our hope that we can reach agreement with industry on this issue."

In reality Ofcom's involvement was perhaps inevitable. Disputes between the big ISPs have become common, with each fighting for their own corner of a highly competitive market. Sadly any kind of intervention would also mean additional industry consultations and thus result in a significant delay that could last well into 2012.
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