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ISPs may boycott BDUK if BT's PIA pricing not adjusted
Monday 04 April 2011 18:57:04 by John Hunt

A letter has been sent by key executives at telecoms companies to Ed Vaizey, the Communications Minister, in the hope that he can step in to get BT to adjust prices for their physical infrastructure access (PIA) products. PIA gives network operators the option of renting space on BT's poles and in their ducting network to deploy their own cables which can be used to provide broadband or telephony services.

The letter, signed by Fujitsu, Geo, TalkTalk, Virgin Media and Vtesse Networks, states that the companies deem it unviable to compete with BT and as such they believe that the BDUK procurement process may not see credible alternatives to BT. Openreach released pricing details for PIA in January, and at the time claimed they were at least 15% less than the average in other countries such as France and Germany.

"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 [physical infrastructure access] product pricing."

The letter goes on to state the the proposed PIA pricing is four to five times the underlying costs, and that it would be cheaper to actually duplicate poles and ducts than to use BT's offering.

"This is clearly a highly unattractive situation for UK plc and an untenable prospect both commercially and environmentally."

Letter from telecoms executives to Ed Vaizey

A second letter, which was also signed by Sky, was sent to Ian Livingstone, BT CEO, and called for an urgent reduction in costs for the PIA products which it stated were "far from fair or reasonable".

If no other large networks bid for BDUK projects, it could lead to BT walking away with a large portion of the £830m being made available over the next few years. BT's plans for the money could see fibre-to-the-cabinet (FTTC) broadband reach around 90% of homes in the UK by 2017, but this only delivers speeds up to 40Mbps, and could lead us lagging behind other countries later in the decade. A mass adoption of this technology would likely stifle the innovation which could see faster fibre-to-the-home (FTTH) deployed to more of the country through some of the BDUK funds.

Update: 05/04/2011 14:05

BT have issued a statement in response to the letter sent to Ed Vaizey:

"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."

BT Spokesperson

Comments

Posted by GMAN99 over 6 years ago
Emmmmmmm pricing is between Ofcom and BT? Nothing to do with BDUK or these other whining ISP's. Guess you guys won't be bidding then... cya :)

15% less than other countries and they still aren't happy?
Posted by New_Londoner over 6 years ago
Interesting to see which of these is proposing to deliver FTTH at any sort of scale.

Virgin hasn't delivered FTTH anywhere as far as I know? I don't think Sky and TalkTalk havn't built any network unless you count LLU kit, and the others have only done so on a very small scale.

Do they have the interest, expertise and capital to bid?
Posted by GMAN99 over 6 years ago
Exactly... they are just throwing their toys out of their prams. Hmmm I wonder just what would happen if they were allowed to drag the prices right down? LLU all over again, no interest in bringing increased speeds to the whole country, only interested in cherry picking the must have areas.
Posted by dustofnations over 6 years ago
There is nothing that would preclude smaller operators from taking a small segment of the fund and operating local/regional [back-haul/ISP] services (or expanding in light of their contract). I believe that sort of model is used in Sweden where many infrastructure can operators exist in different municipalities.
Posted by wirelesspacman over 6 years ago
"There is nothing that would preclude..."

Unfortunately there is - at least in terms of the four big BDUK (so called) Pilot Projects. The way the terms of reference are being written excludes all but the very largest operators.
Posted by New_Londoner over 6 years ago
You'd have to worry what % of the money available would go in admin etc if the "final third" was segmented into large numbers of very small lots. Personally I'd like to see the BDUK exercise give as many people as possible a decent broadband service, preferably attracting as much private sector money as possible to help ours go further.

Anything else such as FTTH would be a bonus but is not essential, should not distract from the first objective.
Posted by New_Londoner over 6 years ago
Final point, ironic that Virgin has signed the letter - have they confirmed the prices for other companies to access their ducts yet? ;-)
Posted by GMAN99 over 6 years ago
^ lol

Access to BT Ducts and Poles - Too much
Access to Virgins ducts - Priceless
Posted by dustofnations over 6 years ago
@wirelesspacman; however I believe joint bids are acceptable?
Posted by andrew (Favicon staff member) over 6 years ago
If the alt nets actually talked about the possibly plans they have and scope, then it might be easier to see which side to support.

If PIA is forced very low, then Openreach may try to recover what it would perceive as lose via other means, in other words higher prices for other products.
Posted by New_Londoner over 6 years ago
@Andrew
Looking again at the story, are you sure that the second letter from Sky was about PIA products and not about the wholesale charges for Sky Sports?
Posted by mobilebb over 6 years ago
Bt already touched on this last week

ispreview.co.uk/story/2011/03/28/price-concerns-hamper-bt-efforts-to-open-its-cable-ducts-and-poles-for-rival-isps.html

I want to know who the one triallist is, BT Retail perhaps?
Posted by john (Favicon staff member) over 6 years ago
@New_Londoner - There was talk of a collaboration between TalkTalk & Sky on a fibre trial IIRC (can't find the details).

Also, Sky's letter was about PIA. It refers to the PIA reference offer. See the computerweekly article (linked in first sentence) for more details.
Posted by john (Favicon staff member) over 6 years ago
TalkTalk/BSkyB FTTH trial (3,600 homes in North West London) is detailed here: http://www.thinkbroadband.com/news/i/4568.html
Posted by comnut over 6 years ago
All this wanting for FTTH... I think you are getting 'lost' for love of the name, when FTTC + hispeed copper cable (similar to satellite cable) to the home produces just as fast or better...

Virgin have run this cable all the way to my mates back room, in his large house, at no extra
charge..
Posted by GMAN99 over 6 years ago
LOVE BT's response, its sooo aimed at Virgin. Put up or shut up.
Posted by craigbrass over 6 years ago
The other problem with BT's PIA offer is the restrictions. You can't offer a leased line replacement if any fibre (access network, backhaul or otherwise) goes through BT's ducts. This basically stops you offering businesses FTTH as this would be considered a leased line replacement. You also can't offer mobile phone backhaul. For smaller networks, these anchor tenants are needed to sustain the network...
Posted by GMAN99 over 6 years ago
Do we want business products of other ISP's clogging BT ducts? I'd say not which is the reason for the restrictions
Posted by themanstan over 6 years ago
I thought that Ofcom's opening of ducts etc... was intended for domestic network building. As Ofcom announced it in their consumer section.

http://consumers.ofcom.org.uk/2011/01/pole-position-for-a-super-fast-future/

Posted by craigbrass over 6 years ago
GMAN99 / themanstan: Scenario: A community wants to setup a network and use BT's ducts and poles to get from their village to a point where they can get internet connectivity. That is pricey already. To reduce the cost, they could serve businesses and mobile phone masts. This helps pay for the residential customers to get connected in the first place. These "anchor tenants" are needed to do this...
Posted by GMAN99 over 6 years ago
Exactly, the advantage BT possesses (and the reason Ofcom are saying open up) is in the delivery of services to the home, not business. Which is why business use is rightly out of scope
Posted by craigbrass over 6 years ago
But without anchor tenants like businesses and mobile phone backhaul, these communities will not be able to get fibre to the home. Are you suggesting they should be left out because of BT playing games with what PIA can be used for...?
Posted by Dixinormous over 6 years ago
Nothing produces just as fast or better than FTTH/P. If building a new network from scratch using PIA there's no reason to build anything other than FTTH/P.
Posted by GMAN99 over 6 years ago
Why craig? Why can't other ISP's use BT ducts to provide FTTH in any area? What has businesses and mobile phone backhaul got to do with residential broadband? Businesses can pay for broadband access in their own right, its a cost just like rent/consumables/wages etc.
Posted by GMAN99 over 6 years ago
And in your scenario which is not what PIA is intended for, why would providing a fibre in a BT duct to a business help any residential customer? Two totally separate customers and physically separate networks. Its bad enough they have to open their ducts for residential purposes never mind let rivals pillage their space for business purposes that has nothing at all to do with BT's SMP in the first place.
Posted by craigbrass over 6 years ago
@GMAN99: Simple - it is because the cost of providing business services and mobile phone backhaul subsidises the cost of putting FTTH in for an alternative provider in a rural area specifically - I know fairly detailed costings on doing this as I am working with a few areas at the moment. Towns / Cities are ok because of the number of properties that can easily be served but in rural areas, it is pricey. Anchor tenants are needed to pay...
Posted by craigbrass over 6 years ago
Just to clarify, when I say subsidises, I mean it stops providers having to charge £50, £100 or more for a service to subscribers and keep the cost at £30 or below so it works out the same as they pay now if they drop the BT line and go VoIP or just use their mobile.
Posted by GMAN99 over 6 years ago
Sounds like a nice dream to me :) How will it sub other customers, unless you are lucky enough to want FTTH access at the same time as the business and can somehow ask them to "pop a fibre in for me while your at it" thereby reusing some of the labour costs.
Posted by craigbrass over 6 years ago
Not a dream - the company I am involved with, NextGenUs, deployed the first fibre to the home village in the country using the soft dig approach so we were not restricted about who we could serve.

The way it works is simple. Businesses pay more for their services, especially bigger ones and schools who want SLAs. Same with mobile phone backhaul. Their monthly costs pay the network back faster. Don't think I can make it any clearer...?
Posted by GMAN99 over 6 years ago
What your saying is fine, just not in BT ducts, its not for business use. What about cable & wireless ducting should you be able to use that as well?
Posted by craigbrass over 6 years ago
Cable and Wireless were not gifted a load of state assets at the time of privatisation...
Posted by GMAN99 over 6 years ago
Gifted? BT bought them, however you want to cut it using BT ducts for business leased lines isn't allowed nor should it be IMO, its bad enough BT being forced to open up for residential deliveries without rival telco's filling ducts with leased lines for businesses. If another telcos/ISPs wants to deliver to businesses and they have no ducting , dig like cable & wireless do and BT do where there is no ducting, there's enough sponging going on as it is.
Posted by craigbrass over 6 years ago
BT bought them? How do you work that one out? GPO became BT. BT shares were sold off...

Happy to put a £100 bet on with you that this restriction will result in <5 villages getting deployments using BT's ducts and poles if it isn't removed.

Interesting how a few people on here appear to be very pro-BT...
Posted by GMAN99 over 6 years ago
It doesn't matter what you think craig, this isn't about business or res piggybacking business feeds. BT probably don't want anyone to use their ducts to be honest so they won't be upset if a few villages don't take advantage. Nextgenus or any other ISP should not be getting favours for business leased lines by using BT infrastructure, build your own network. It doesn't matter how they got what they have they are a private company with private assets, they don't owe cherry picking ISP's/Telco's anything
Posted by themanstan over 6 years ago
As GMAN99 points out investors (including 95% of BT employees took up the offer) bought BT with the assets for £15B + ~£3B debts. A lot of lolly back then!
Posted by GMAN99 over 6 years ago
Yep and I bet there was no clause in the sale stating the government reserves the right to continually meddle and make them open up what they paid all that money for to share with rival companies. AFAIK this type of activity does not happen anywhere else to any other private firm SMP or no SMP
Posted by herdwick over 6 years ago
BT shareholders, who own BT, bought the assets off the Government. Why are you living 25 years plus in the past Craig ?

The reason leased line replacements can't be forced on BT is that they aren't deemed to have SMP in the business leased line market therefore OFCOM have no legal basis on which to require 3rd party access for that purpose.
Posted by creakycopperline over 6 years ago
just a thought, if VM can deliver fibre via telegraph poles, why can't BT? do they enjoy digging trenches or do they just like wasting money? seems a bit illogical to me.
plus isn't there also the option of dsl rings?
which is a far cheaper more cost effective solution where fibre isn't economically viable

http://en.wikipedia.org/wiki/DSL_Rings

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Posted by creakycopperline over 6 years ago
smells like gman99 is a bt employee.
he doesn't mind the fact that B@ast@rd Tw@ts are giving the middle finger to those who are not included in their o so glorious bt infickle program, yet when rivals offer the solution but need access to the pysical network.
he acts like they're robbing bt's house.
i guess you favour a two tier internet network then?


Posted by dabblerp over 6 years ago
I'm sorry but GMAN99 is correct. Why should BT continue to let other ISPs and Telcos "sponge" of its network. The reason that so many broadband not spots exist (and thats what the BDUK funding and PIA whining is all about) is because there is no money in it for other providers. If BT was never privatised you might argue that there would never be the problem (or maybe even the technology advances). Many of these "rural" areas are trying to get 20mb 30mb or more broadband. Lets fact it - how many of us "townies" have it and are prepared to pay the price.
Posted by dabblerp over 6 years ago
If the Government was really serious at Broadband being as important to growth as they suggest then a lot more funding is required and they know it (BDUK have stated it is no where near enough).

As to current efforts - the only reason thess companies are interested in BDUK trials is to get their hands on the £money. I know - I work for one of these companies.
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