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Ofcom consults on broadband charges for Market A areas
Monday 27 January 2014 12:20:35 by Andrew Ferguson

Ofcom has been moving towards new definitions of the broadband markets in the UK, reducing the definitions from three areas plus Hull to just two plus Hull. The reason for this is to help simplify the way price regulation operates and as such is part of the Wholesale Broadband Access Market review.

The latest development in this lengthy review is a 91 page pdf document that discusses proposed new charge controls for IPStream Connect Max and Max Premium for areas of the UK with just two or less principle operators. Anyone with an interest or sensible opinion is able until the 10th March 2014 to respond to the changes which are aimed at ensuring that BT Wholesale does not overcharge in Market A areas, and is also encouraged to continue its roll-out of WBC (ADSL2+).

Market A accounts for around 9.6% of UK premises, with a small 0.7% in a market known as the Hull area (i.e. where KC operates), Market B (a merge of the old Market 2&3 areas) is defined as areas where three or more operators are present or are forecast to be present. The market review also states that BT has Significant Market Power only in Market A areas.

The consultation does consider the fibre roll-outs, but seems to decide that due to uncertainty in take-up there is no desperate need to change the proposals to take account of this and that encouraging further roll-out of the WBC network is important. A couple of sections popped out at us:

"3.19 With regard to the take up of fibre by end users, we have considered the information provided by EE on copper to fibre conversion rates in Market A areas. We would expect conversion rates to be high in these areas, given that broadband speeds over copper (in contrast with fibre) diminish significantly with distance, and many premises in Market A are located far from the exchange.

3.21 Data from other sources suggests copper to fibre conversion rates are much lower than EE suggests. In particular, Ofcom’s Infrastructure Report states that around 8% of all broadband connections in the UK currently operate at less than 2Mbit/s, but only 3% of premises in the UK with speeds below 2Mbit/s do not have SFBB currently available in their area. In other words, many consumers that currently have sub-2Mbit/s broadband also have fibre available, but have not made the switch. While there may be a number of reasons for why these consumers have not taken up fibre (for example, they may have yet to roll off existing contracts, or may not know that fibre is available in their area), the Infrastructure Report shows it is uncertain that customers in Market A will always switch to fibre if available."

Extracts from Ofcom Wholesale Broadband Access Market review

In reference to 3.19 we hope that Ofcom has not forgotten the way that FTTC fibre based services drop off over distance too. This section probably was meant to highlight that for many people the cabinet to home distance is short enough to get a significant speed boost.

With regards to the 2 Mbps, the figures do correlate with previous Ofcom reports/data but with the wide variation in speeds across postcodes and that SFBB is not guaranteed to a property just because another property can access it that the conclusion over uncertainty on take-up may be misplaced.

There is lots of interesting snippets from operators on expected demand for fibre based services, but the redaction throughout the document means we can only guess at the dreams of EE, Sky and TalkTalk in this area.

Comments

Posted by herdwick over 3 years ago
"many premises in Market A are located far from the exchange" is a bit of a generalisation, within a few miles of me there are users 8km from a Mkt 3 exchange and a compact village with its own exchange that is Mkt 1 with most users within 2 miles of it.
Posted by TavistockSFB01822 over 3 years ago
It is a broad brush that describes these Market areas and reasons for not taking on superfast. I would have superfast tomorrow if it was available to my cabinet in this Market B area.
Posted by csimon over 3 years ago
Thanks to Sky and TalkTalk sticking their big feet in our exchange a couple of years ago, my area (one of the most deprived areas in the country as far as BB is concerned_ has gone from a Market 1 to a new Market B which takes it out of the 3.19 consideration above, wheras in reality we are 8km+ from the exchange with extremely poor service, BT completely dominating everything, and currently no sign of anything fibre coming. It just goes from bad to worse, doesn't anyone actually understand what's going on here?
Posted by csimon over 3 years ago
The fact that Sky and TalkTalk are in the exchange actually does nothing to improve the service I get, it's fake competition all along.
Posted by PhilCoates over 3 years ago
@csimon

Any minute now someone will be along advising you to move house if you want better BB. This of course was the aim of BDUK but much of that money is being spent upscaling speeds for people who already have decent coverage rather than staring with the worst areas and backfilling where money allows.
Posted by mdar5 over 3 years ago
..and if I want a gas supply I move to an urban area and not live in a village.
.and if I want a bus service I move to an urban area and not live in a village.
Broadband is no different.
The BDUK money available would rapidly be extinguished if you started on the worst first. Then there would be howls of outrage asking why £XX hundreds of thousands was spent on fixing broadband for a single hamlet of perhaps 70 people in the middle of nowhere.
BDUK is getting SFBB coverage for the maximum number of people for the available money - not about spending it all on just a handful of select villages
Posted by Michael_Chare over 3 years ago
@mdar5 Broadband is like a land line, mains electricity and water, all of which I would expect to get in all but the most isolated locations. I electricity and phone lines can be installed then so can a fibre connection. Less likely to get nicked!
Posted by gerarda over 3 years ago
Despite the error being pointed out to them by our district councillor, county councillor and MP Ofcom are still trotting out the nonsense that everyone connected to an FTTC cabinet can get an above 2mb. Ofcom is not fit for purpose as an organisation
Posted by PhilCoates over 3 years ago
@Michael_Chare

Read the first paragraph of the BDUK statement of purpose on their website "This guidance covers plans to continue to improve the UK’s broadband network, with particular emphasis on making high-speed broadband available in rural communities."
Posted by csimon over 3 years ago
@PhilCoates: You weren't wrong! (BTW I know you I think. RCCGB)

@Michael_Chare: That's right, there's nothing "difficult" about our area, we get electricity, phone, water, street lighting, refuse collections.... The only problem is that BT "consolidated" the local exchanges and moved ours out of the village, 5 miles away. That's not a geographical/regional/topological problem. But Ofcom seems to want to hide these areas, i.e. recognising long distances in Market 1, moving those areas out of Market 1 & pretending that areas far from the exchange don't exist in Markets 2 & 3.
Posted by Michael_Chare over 3 years ago
So if Market 2 is eliminated as a category will people who are connected to market 2 exchanges with only one competitor be charged at the higher Market 1 rates?
Posted by WWWombat over 3 years ago
If the number of premises percentage is right, then market A is smaller than the old market 1.

From that, you have to assume that the majority of market 2, if not all, must be headed for market B.
Posted by gah789 over 3 years ago
This is a review of wholesale - not retail - broadband markets. Fibre is largely irrelevant because most FTTC development is at exchanges with competition between BT and existing LLU operators. So the issue is: what should BT Wholesale be allowed to charge ISPs at exchanges where it is the only wholesale provider or faces only one LLU competitor? The distance of particular customers from the exchange has no bearing on the issue of wholesale competition at the exchange.
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