BTOpenreach, which manages access to BT's national UK telecoms infrastructure, has today announced its revised and "significantly lower" Physical Infrastructure Access (PIA) prices for allowing rival broadband ISPs to access its underground cable ducts and telegraph poles.

The PIA product is designed to make it easier for rival providers (e.g. Virgin Media , TalkTalk , Fujitsu , Sky Broadband etc.) to deploy new fibre optic ( FTTH ) based superfast broadband services around the country, especially into rural areas, by running their own cable over BT's existing network.

Sadly BT's initial Draft Reference Offer (RO) for its cable duct and (telegraph) pole access (here), which claimed to offer prices that were 15% below the European average, was widely condemned (here) for being too expensive and offering prices that were allegedly four to five times more pricey than BT's own underlying costs.

As a result of that BT, under significant pressure from both telecoms regulator Ofcom (here) and the UK government (here), has today released revised prices that it claims are "in some cases more than 60 per cent lower" than the January 2011's draft when "there was a limited understanding of the costs and challenges" involved.



As well as the obvious pricing changes, BT has also broken down many of its PIA products "into their component parts", which will allegedly provide ISPs with "greater flexibility and choice" because they will now be able to pick and mix which services they buy from BTOpenreach and which they deliver themselves. It also makes the process more complex with over 100 PIA products and services.

For example, we note that BT's original price for ISPs wanting to rent spine duct access in its underground cable ducts was £1.16 per metre (per annum), which is now based on the number of cables a duct can carry and will in some cases fall to just £0.44. It's unclear how common the lower end of such pricing would be.

Meanwhile the price for access to a drop pole is roughly halving from £21 per attachment to around £11 or less where several drop-wires are fixed to each pole. This is a significant improvement but costs in other areas could still prove problematic.


Separately a future adjustment by Ofcom to the value of BT's regulatory asset base, which BT plans to dispute, could force prices even lower. Thankfully BT has promised not to hold up the BDUK bidding process and will thus not dispute any such adjustment where CPs are bidding for BDUK funds.

We hope to have the reaction from rival operators soon. Has BT done enough to quell its critics? Perhaps not but the more important question is whether or not Ofcom still sees a need to intervene. We should find out soon.

Revised BTOpenreach PIA Prices
http://www.openreach.co.uk/orpg/home/products/ductandpolesharing/...

UPDATE 2:59pm

Ofcom have responded to say that Openreach's announcement is "an important step" in enabling communications providers to participate in the process of bidding for funds to deploy networks in the final third.

Crucially Ofcom states that "the methodology Openreach has adopted for setting charges appears to Ofcom to be reasonable", yet they do still recognise "that this area is subject to significant uncertainty".

The regulator is likely to examine some of the problems further as part of their late-2012 review into the wholesale local access market, though it appears to have ruled out an immediate intervention. We note that Openreach's situation is said to be still very much "under review".


Virgin Media also questions Ovum's study, which didn't include basic work charges such as blockage clearance, cable recovery, new route build and pole replacement etc. Many of these areas that Ovum didn't investigate have either remained unchanged or gone up in price.

Separately the boss of Fibrestream (NextGenUs) welcomed the news but told us that the big issue remains the "unacceptable ban on PIA in the Middle Mile" (i.e. the links between local communities), which are apparently "still being treated as out of bounds as they are 'business connections'". Clearly BT's revised PIA prices have satisfied Ofcom, to some extent, but not its rivals.