Thursday, July 12, 2012

Fujitsu: further developments

Further to my previous post about BT and Fujitsu both signing the Broadband Delivery UK (BDUK) framework contract, the Financial Times reported yesterday that Fujitsu has now withdrawn from the bidding process for both Cumbria and North Yorkshire ("Fujitsu withdraws from broadband bidding"):
"Duncan Tait, chief executive of Fujitsu, said: “We withdrew from Cumbria because we cannot currently see a clear path towards a mass market that is required to attract leading retail service providers. We continue to monitor the market place and see where we can get this to make sense. We will look at each on its own merits and see if there is a way to make it work and get to the scale we need for our anchor tenants.”"
The article went on to report that Fujitsu need to win coverage of at least 1m premises to be of sufficient scale to attract consumer broadband companies such as Virgin Media, who would deliver retail services over the wholesale infrastructures Fujitsu will build if it is successful in future local authority procurements. Further commentary from ISP Review and also ThinkBroadband, which offers this insight into the issue and also into Virgin Media's expansion plans:
"An indication of the problems over the size of investment required by the potential bidders is revealed when BT suggests that where it is part of a BDUK project, these solutions will only turn profitable after 12 years. This situation where BT appears to be the only telecoms company willing to invest in new networks is a product of almost 30 years of regulation. The cable franchises was an attempt to create a national network to compete, but with billions of debt still hanging over Virgin Media they have reached around 48% of UK households, and expanding at just 100,000 properties per year. The UK does have fibre alt-nets appearing, though actual physical connections and sightings of actual users can be rare, and none of them have delivered anything approaching the size of deployment required for BDUK projects."
This additional ThinkBroadband article suggests there may be a solution:
"Is there a simple answer? Yes, but it is the one that many don't want to accept, and that is that the UK only has one national local loop provider, and that is Openreach. If we are to meet the Government's targets they look to be the only possibility, their solutions are not perfect, but represent an improvement for the majority. Improving competition in the local loop, may require more subtle changes to funding, to encourage new start-ups and investment from those running fibre networks across Europe (though to date most of those in Europe are city based), such as those who are already looking to provide full fibre services in small areas of the UK. These embryonic companies may grow to provide serious competition in five to ten years."
Other commentaries (such as this one from The Register, also here) focus on the competition issues identified by the European Commission in relation to BDUK's framework. See this article from ISP Review and this one from The Guardian for more, as well as this analysis from TeleGeography:
"With both BT and Fujitstu having reportedly signed contracts last Friday for their respective portions of funding, it has been confirmed that no work will move forward until the European Commission is satisfied with the plans. It has been suggested that one of the main concerns with the setup is that BT is unprepared to offer access on a sufficiently open basis to the infrastructure it will roll out, with Brussels thought to want the incumbent to allow rival operators to be able to rent its dark fibre."
Finally, Tim Farron, MP for the South Lakes, has issued a statement calling on the Government to step in and run the Cumbria project directly in the light of Fujitsu's withdrawal:
"This is another blow for the broadband project and sadly another self inflicted blow by the County Council. This process has been going on for 18 months now and it's appalling that we've not been able to move any further. Securing the modern infrastructure our county needs should be one of the council's top priorities. I want to see the county council supporting community schemes which are ready to be rolled out, such as Fibre Garden in Garsdale and Dentdale. This would help to get things moving whilst we continue to work to bring super-fast broadband to the whole of Cumbria. I am happy to help the county council engage with the Government, to make sure that we can finally make the progress we all want to see."


  1. It is what we have been saying right from the start of the digitalbritain consultation period way back when...
    Our words are proving to be true.
    We need altnets, driving competition, and this hasn't happened, so the only thing that is happening is that the old phone network is being patched up to give those who have connections slightly faster ones, and the digital divide is growing ever wider.
    Get the fibre to the hardest to reach places, get it to mountaintops, and let new innovative networks provide the impetus to build a truly great digital nation.
    Or bale out the incumbent a bit longer until the dinosaurs realise its a losing game and leave us in the digital slow lane of the world.

  2. I think the phrase "slightly faster" is a little unfair. One of the UK regional broadband consortia (RBCs) serving schools has trialled FTTC to deliver on-network services to a number of schools. This has proved very successful, both in terms of providing significantly faster speeds (upload and download) and reducing costs. See the National Education Network response to the recent House of Lords broadband inquiry for more on this. The key issue is an economic one, relating to the amount of public subsidy being provided. This determines where upgrades happen, the technologies that can be employed and the amount of competition in the marketplace. The countries that are committing the most money will see the greatest benefits I think.

  3. Nothing stopping the altnets that I can see ? other than perhaps a lack of a business case or a lack of consumer demand at an appropriate price point.

    Another public sector calamity with BDUK, no change there.