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Ofcom may be forced to set pricing for access to BT's poles and Ducts
Tuesday 03 May 2011 17:07:14 by John Hunt

Ofcom may end up setting pricing for access to BT's poles and ducts following a speech today by head of Ofcom, Ed Richards according to PCPro. BT announced their draft proposal for the physical infrastructure access (PIA) product back in January and this defines the pricing and process for other telecommunications providers to gain access to BT's ducts and poles to lay their own cables. Talking at a Department of Culture, Media and Sports (DCMS) committee today, Richards was asked if BT are charging too much for PIA.

"It would be much better if the parties can agree a market rate. [..] 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."

Ed Richards, (Chief Executive) Ofcom

With providers currently being rather vocal about their opinions on pricing for PIA, and BT holding their ground it looks as if things are heading toward stalemate which may end up with regulation being required. With this kind of thing, a commercial negotiation would be favoured by all parties though, so with that as a threat, it could help get providers talking. Any input required from Ofcom would likely add many months to the process and could therefore delay the roll-out of fibre from other providers by a year or more, something which is unlikely to be wanted from those who are looking to deploy their own fibre networks.


Posted by TheGuv over 6 years ago
In a world where Sky refuse to enter a regulated Wholesale Market for their TV content I find their greetin' over any pricing a bit of a cheek.

Any deal by BT to open up their ducts should be balanced by Sky being forced to provide all their premium content in a regulated framework too.

Virgin/BT etc seem to be playing with one hand behind their backs whilst Sky are riding roughshod while increasing their empire.
Posted by cyberdoyle over 6 years ago
Does anyone seriously think Openreach are going to hand over access at a reasonable price so that other companies can cut off their copper cash cow? And does anyone seriously think ofcom will do anything about it?
Posted by mattypi over 6 years ago
meh good i guess but fiber tax is still going to be more than the pole/duct acsess even at current rates.
Posted by GMAN99 over 6 years ago
How do you know its not already reasonable cyberdoyle, apparently compared to europe it is. And regardless of price its not cutting off anything, not even your imaginary copper cash cow/cabal
Posted by mattypi over 6 years ago
It is fairly reasonable the pole pricing is expensive but apart from that it actually not oo bad
Posted by mattypi over 6 years ago
yea that should have been too
Posted by ggremlin over 6 years ago
I hope virgin are to open their physical infrastructure, with similar pricing constraints
Posted by scotiaman over 6 years ago
As a shareholder in BT, I sincerely hope OfCom keep their noses out out of this. These other companies want access to BT's infrastructure for next to nothing. I'm sure they are all aware of the cost in providing this infrastructure. If they want access - LET THEM PAY FOR IT ! Or better still - build your own networks !!!
Posted by timmay over 6 years ago
Sky did not inherit an old government paid for network, why should they have to open up like BT has to.

BT has a win win situation that it should not have! BT don't provide broadband (at a reasonable speed) to all but expect to make money out of other companies trying to fill in the gaps left by BT. This is wrong! BT should not be able to make any money out of other filling in the gaps that BT say are not profitable. The price should at most cover cost but not make a profit like BT want.
Posted by themanstan over 6 years ago
BT didn't inherit a network, it was bought and paid for by investors in BT for ~£18-20 billions of pounds in the 80s and 90s.
Posted by GMAN99 over 6 years ago
yes timmay, facts right please. It wasn't inherited it was paid for. Any opening up should be at profit not cost, it a private business.
Posted by c_j_ over 6 years ago
"why should Sky have to open up like BT has to."

Because those are supposedly the rules that are meant to apply to UK players with significant market power, in order to (allegedly) prevent abuse of monopoly. Luckily for Murdoch, he doesn't have to worry about rules.
Posted by timmay over 6 years ago
Wow that was a bit of a steep price! What would that be in today's money. pounds and pence not shillings? Lol.
Posted by GMAN99 over 6 years ago
Murdoch creates his own :)
Posted by timmay over 6 years ago
BT can make money if they do the work them selves, if not then other companies might as well build their own network and screw BT over.
Posted by GMAN99 over 6 years ago
Do what work? Not sure what you mean.

Posted by GMAN99 over 6 years ago
Let's face it, these "other parties" won't be happy until duct/pole access is free or virtually free.
Posted by timmay over 6 years ago
@GMAN99 install a new local loop, FTTH.
Posted by themanstan over 6 years ago

Something of the order £50-55 billion in today's money...
They government raised £10B in the 80s, £5B in the 90s from shares and a further £3-4B in debt notes in BT in the 90s.

BT's current position however is based on restrictions from the 80s. Imagine if they had been allowed to invest in fibre when they were cash rich. However, OFCOM/gov prevented it to protect cable companies (now known as Virgin Media).
Posted by GMAN99 over 6 years ago
@Timmay, where there is money to be made (profit) BT will put in FTTH, they are already doing it. Why do you think another company (who will have to pay access charges + higher fibre rates) on top can come in and make a profit where BT can't ?
Posted by craigbrass over 6 years ago
@GMAN99: The key is guaranteed cast iron commitment to take a service once network is built along with the infrastructure owner providing services direct to customers - this model works for new entrants. ISPs are not needed anymore anyway as they are just middle men creaming profits of hard work done building networks.
Posted by GMAN99 over 6 years ago
Yep if "whoever" puts in the fibre knows they'll get a return they'll do it.
Posted by GMAN99 over 6 years ago
Not sure what you mean about not needing ISP's anymore though craig? Sure you can get pop email from anywhere these days, but its ISP's who put their kit in the exchanges and backhaul to their own networks and handle allocation of ip addresses etc, who would do all of that?
Posted by otester over 6 years ago
Yet more raping and pillaging of a private company...
Posted by GMAN99 over 6 years ago
Its pretty shocking when you think about it, I mean opening up ducts/poles sounds great on paper but it was always going to be fraught with problems.

But when you actually break it down what this amounts to is a company buying land/space and then 20+yrs later being told them have to give access to the land/space they paid all of that money for, for an undetermined amount of money that is likely to be close to actual cost if not cost itself.
Posted by GMAN99 over 6 years ago

Can you think of any other examples where this has been allowed? Its like Tesco's buying a plot of land and then the government telling them they have to share it with Sainsburys for next to nothing.
Posted by craigbrass over 6 years ago
@GMAN99: Most ISPs just resell BT products which is a case of interconnecting, putting a router or two in place and connecting to IP transit. That is the easy part but they cream profits for doing so. What is wrong with the infrastructure owner doing the lot and cutting the middle man out? We don't ISPs just because they are brand names!
Posted by themanstan over 6 years ago
The pricing of PIA is nowhere nearly as relevant as VOA of fibre. If as BT states it is pricing at -20% of the Euro average, then it's actually very well priced. As the UK is an expensive part of Europe. Business leasing is always going to be expensive compared to investing in your own infrastructure. But that's economics, let's hope OFCOM realises that and applies the pricing (if it does) based on proper economic analysis.
Posted by themanstan over 6 years ago

See this OFCOM report, it gives France Telecom's cost per metre of duct at E1.2. With the Euro being 1.1 to the £, that means BT's price is E1.05. So 13% cheaper than France. I don't see why these ISPs are crying so much at the prices offered!
Posted by ciday over 6 years ago
@themanstan because they can?
Posted by GMAN99 over 6 years ago
craig, sure for those ISP's that's fair enough, but surely you don't want one single infrastructure provider doing everything? As that's a monopoly right there. No consumer choice, a blanket set-up for traffic management etc etc. I think most people would want choice not one single internet provider
Posted by craigbrass over 6 years ago
@GMAN99: Monopolies are fine when the interests of the communities are protected. Community Interest Companies are perfect for this. The CIC regulator is more powerful than OFCOM.
Posted by deadman1984 over 6 years ago
what people dont realise is sky made there own tv lineup with no help from any other company how can people say sky should be forced to show there content on other companys like bt and virgin when its there channels they own them and its upto sky what they do with em. the only reason sky gave bt sky sports 1 and 2 is cause bt kicked off like idiots.
Posted by GMAN99 over 6 years ago
You could say the same for BT though deadman, they bought the ducts and poles everything and they've been running them themselves for over 20yrs, why should they be forced to give access?
Posted by krazykizza over 6 years ago
Ofcom need to turn their eyes to some other ISPs. Only so much we can take as a company.
Posted by bjmccourt over 6 years ago
You only have to think back to the dark ages of the Nationalised Industries like Telecomms and Gas and Electricity - No choice whatsoever...

Oh - sorry - Everyone got cheap access to all they needed ....

Forget the first complaint - My mistake...
Posted by chrysalis over 6 years ago
I would back BT up saying they shouldnt be forced to share, FTTC been devalued and all with too much competition but oh wait, they already sell infinity for the same price as adsl.
Posted by herdwick over 6 years ago
"Everyone got cheap access to all they needed "

- wrong on both counts. Prices fell massively post privatisation and it became a lot easier to get a phone line and use the kit you wanted on it.
Posted by herdwick over 6 years ago
Craig - What protection is a CIC against high prices, limited service etc ? None at all as far as I can see.
Posted by craigbrass over 6 years ago
@herdwick: The CIC regulator has the power to dictate how areas of our business are run (prices, service quality, etc) if they find us not to be running the company in the interests of the people served. If we don't, they can sack our entire board and run the company themselves or take other actions. FAR more power than OFCOM as they take decisions on a neutral basis (ie not business area specific).
Posted by creakycopperline over 6 years ago
why don't you just admit it gmann99 you're a bt employee.
defending his paymasters, so what if it's cheaper than europe, that's irrelevent. and no they didn't buy it they, they were given it on a plate, by the state after privatisation.
obvious BT lacky you are.
Posted by GMAN99 over 6 years ago
No creaky I'd be saying the same about any company. And why is it irrelevant if its cheaper than in Europe? This is about setting prices, of course its relevant.

If Ofcom were forcing just Virgin to open up their ducts I'd be saying the exact same thing.
Posted by silvryn over 6 years ago
@themanstan....France is cheaper than here because the French government heavily subsidises the industry in their country. So that point is irrelevant.
@GMAN99.....BT are going to be replacing the copper they have now with new copper...insanity. Considering copper has sky rocketed in price per tonne. China anyone. Instead they should be replacing everything with Fibre Optic, which in comparison is a lot cheap. And is very tough material. Plus it doesn't have the problem of cross talk or heat loss like copper.
Posted by GMAN99 over 6 years ago
When you say replacing copper, where? Do you mean maintaining copper? As for replacing everything with fibre, yeah they've looked at that and it was estimated to cost over £26billion, which I'm sure they'd do if there was a profit in doing it. Everyone knows fibre is better its the cost of replacing it and putting kit on the end of it, its not a straight cheap swapout.
Posted by themanstan over 6 years ago

If you'd seen previous posts on other topis you'd know that France is cheaper because of population density in Urban areas. Yes, France Gov still owns 27% of FT, but it makes a profit. The annual subsidy towards fibre is ~E500m, which is almost as much as UKgov is prepared to place for 3 years. But this is only for infrastructure. The actual service is not subsidised at all.
Posted by craigbrass over 6 years ago
@themanstan: You have to wonder at this point if instead of giving capital to the private sector to improve speeds if loans would not be a better option. ~£28bn was the final BT figure but that is a joke. Efficiency, selling off copper and getting communities involved in digging in their garden could get it done less than £15bn and if its a loan, the gov make a profit. Simples.
Posted by themanstan over 6 years ago

Unfortunately, the media has got this £26B figure stuck in it's head. Which was the original estimate, which was revised but ignored by the anti-BT media pundits.
The £15b that BT came up with later, was a 100% roll-out. Even, France isn't going to do 100%, they estimate 98% for ~E15billion, with a mix of FTTC and FTTB/P (mostly FTTB as lots of people live in apartment blocks).
Posted by GMAN99 over 6 years ago
Even £15billion is obviously a lot to spend for BT, and at what return? Their only remit is to provide voice services which is:-

On the decline
Can be done by copper

There's still the issue around pure FTTH and providing voice access during a power outage to be worked out as well.

This "just swap it with fibre" talk, there's much more too it than that.
Posted by themanstan over 6 years ago
People forget that BT and Kingston are the only operators with USO. It means they have to maintain the current infrastructure. Because, a roll-out at the speed and breadth many post on here want would bankrupt them. But mainly, because OFCOM still have not reworded USO for liability of the copper telephony network. Imagine if they did switch to fibre, what happens to all the LLU's with their expensive equipment in the exchanges... does BT pay them compensation for their now redundant kit?
Posted by craigbrass over 6 years ago
@GMAN99: Power outage problem is an easy one - put a mini UPS in the termination box with a battery that can be replaced. Simple. Verizon did that with FiOS.

@themanstan: Copper LLU was always a stop gap solution that will give operators 4-5 years of service to customers. They have now had this. They can't expect compo. USO needs changing. End of conversation.
Posted by GMAN99 over 6 years ago
@craig, oh yeah I know how its done but its getting that accepted by Ofcom etc that is still to be worked through, they are trialling FTTP with no copper at all and using VoIP so its technically possible sure. Personally I don't think the USO needs changing it needs abolishing.
Posted by creakycopperline over 6 years ago
what baffles me if virgin can prove that fibre can be used on telegraph poles, then why is bt going down the exspensive route of digging up roads, and new cabs? im not really fussed how it gets to me.if the pole across the street that provides me my line can support fibre?
at half the cost, then sell the copper at a high price, it would probably cover the cost of installation completely.
Posted by polemonkey over 6 years ago
answer for creakycopperline.
Given some thought it's not that baffling...

Q. Why do roads need to be dug up?
A. The fiber has to reach the pole somehow before it can span from the pole top to your premises? How do you think the fiber gets to the pole?

Underground. Even if one pole is fed from another pole etc. there will be a serving pole which is fed from underground. Some underground cables are direct buried, or if ducted, the existing ducts could be damaged or full.

Posted by polemonkey over 6 years ago

Q. New cabs?
A. FTTC. Quite different from "fiber from the telegraph pole" you mention, by which I have to assume you mean FTTP, which does not use cabs.

Hope that answers your questions.
Posted by themanstan over 6 years ago

Regular outdoor telephone cable is ~30p metre bought new (so if you are lucky you get half tha back for recovered material), fibre optic cable is from ~20-30p/m... you do the math on cost of install.
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