TalkTalk CEO does not know if Openreach fibre a good price?
Wednesday 31 October 2012 10:21:41 by Andrew Ferguson

The Register has covered a session of a meeting at Westminster which saw discussion of the UK present and future position with regards to broadband. The meeting even included a ministerial statement from Ed Vaizey declaring the UK was ahead of France and Germany.

Of particular interest are comments by Dido Harding the TalkTalk CEO, when discussing Openreach and their wholesale fibre products, there was a call to ensure that the regulatory framework was such that firms buying the fibre service from Openreach were paying a fair price. In a surprise statement, she announced that she had no idea whether TalkTalk was paying a fair price, which given that the UK is so far behind (or so we are often told) on its roll-out and thus there should be many other EU countries with VDSL and FTTP roll-outs to around 40% of households and growing. Comparisons with countries like France and Germany should help to judge whether Openreach is overcharging, but even in terms of the UK it is surprising that the CEO of one of the massive telco's has not been briefed in this area.

While Openreach is open to criticism, it is the one that the major broadband providers appear keen to do business with, and this is a big difference to parts of Europe, where regulatory holiday were given to the incumbent. These holidays give the incumbent 3 to 5 years usually when they can build their new fibre based network, and run it as a vertically integrated affair, which reduces the payback period on the capital investment. The certainty can also mean that competitors actually invest and thus we are seeing some cities in Europe have competing fibre infrastructure. Though it could be said in the UK that Openreach is catching up to Virgin Media, the advantage Openreach has is that while its often criticised FTTC deployment seems backward, it can form the basis for a full fibre deployment in time.

Squaring the circle that is the need to encourage fibre investment in the UK, while meeting requirements to ensure a vibrant (read cheap) broadband service to the public is firmly in the hands of Ofcom. The bulk of telecom regulation carried out by Ofcom is to price regulator the prices of products from the BT Group, often to service the needs of Sky and TalkTalk, this worked with great success in the LLU area. The question really is how far does the religion of competition need to go in the broadband arena? If nothing changes drastically we can see a UK where around 60% have the choice of two or more from Openreach, Virgin Media or altnet infrastructure, and 40% where the Openreach wholesale products are still the single choice.