Monday, February 08, 2010

Is the writing on the wall for BT?


Some very interesting speculation recently on BT's future in the light of the imminent election. Speaking on the importance of broadband to Britain's future on the BBC's Andrew Marr show last week, shadow chancellor George Osborne made some interesting statements:
  • “…in the 21st century let’s build the superfast broadband network that will create hundreds of thousands of jobs for Britain…”
  • “…we’re talking about 100Mbps which is a big step forward for this country…it means you can have interactive teaching over the Internet at home, you can have telemedicine…”
  • “…the best way to deliver this is to break up the BT monopoly at the moment which holds back companies like Carphone Warehouse and Virgin…”
This last comment, about breaking up the BT monopoly, was picked up by the FT with some related coverage from the BBC:
"BT faces a hostile regulatory regime if the Conservative party wins the general election...the Conservatives promised legislation to force the company to give competitors greater access to its network infrastructure...The Conservatives would introduce legislation to force BT to open up its underground ducts, so that competitors could run alternative fibre networks through them...The Conservatives would only look at the case for public subsidy for fibre networks after 2012, when the switch from analogue to digital TV is completed."
Previously the FT had also reported that Carphone Warehouse was considering the case for launching its own high-speed broadband network:
"Charles Dunstone, Carphone's chief executive, voiced concerns about BT's proposed wholesale products for high-speed broadband based on optical fibre. He said Carphone's Talk Talk telecoms unit was considering all its options, including running its own fibre network through BT's underground ducts. Analysts say BT could struggle to make a return on its £1.5bn plan for a high-speed broadband network unless it secures wholesale deals with other providers under which they supply fast internet access to consumers. Carphone and British Sky Broadcasting, the second- and fourth-largest broadband providers, want modifications to BT's fibre-based wholesale products partly because of concerns that the proposed arrangements will not allow them to innovate sufficiently."
Now comes an announcement from BT Chief Executive Ian Livingston, also reported by the FT and the BBC's Rory Cellan-Jones on his blog, that BT is preparing to open up its underground ducts so that rivals can run their own high-speed broadband networks through their infrastructure:
"BT's willingness to open up its ducts marks an important policy shift and emphasises the intensifying political and business pressure it faces. Last month the Conservatives pledged that, if the party were to win the next general election, they would legislate to force BT to open up its ducts . The Tories hope their legislation could stimulate market-led investment that would ensure superfast broadband networks reach rural as well as urban areas. BT stressed it had been talking to Ofcom, the telecoms regulator, since last year about opening up its ducts and that its decision was not a response to the Conservatives. Ian Livingston, BT's chief executive, told the Financial Times: "We told Ofcom last year we're willing to provide open access to our ducts...and we are working with them on how to achieve it. Although it's unlikely to be the silver bullet to get fibre to every home, open access to all ducts, not just ours, might help BT and others extend coverage and so we would like to see a future government support such a move." BT is rolling out a £1.5bn high-speed broadband network using optical fibre and it hopes to secure a return on its investment partly by signing wholesale deals with rivals."
Potentially a very interesting development for education, this. Sharing ducts has been identified as one of the potential remedies to reducing the cost of investing in NGA, alongside other mechanisms like sub-loop unbundling and access to dark fibre. So we should continue to watch this space in the hope that this and other announcements encourage further competition and better pricing as a result.

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