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BT may fix final 5% while Sky and INCA call for Openreach split
Monday 21 September 2015 10:16:33 by Andrew Ferguson

The politics of where the UK is heading in the broadband world continue to be played out in public with Sky publishing a copy of a letter that has also been printed in the Financial Times too.

"We do not believe that the fundamental problems identified by Ofcom can be addressed by tinkering with the existing regulatory framework. Ofcom has done a good job of delivering competition on the old copper network, but the powers given to it are insufficient for the new superfast world.

It is therefore crucial that Ofcom moves as quickly as possible to ask the Competition and Markets Authority (CMA), with its far reaching powers, to undertake a full market investigation. Only the CMA, with the support of Ofcom, can address the structural barriers to competition that will unlock the next wave of investment in communications infrastructure that the country urgently needs. We cannot afford to wait."

Letter signed by Sky, INCA, TalkTalk, Vodafone and others

The crux seems to centre around the same issues as raised recently in other letters from Sky and TalkTalk, namely that they feel Openreach is a failure and is not delivering, either in terms of access to fast and reliable broadband and sub-standard delivery experiences.

Referring the future to the CMA is something worth doing, but this investigations are lengthy generally and thus if referred today we would not expect anything concrete for 12 to 18 months, and then even if a FTSE 100 Openreach was to be created, this would take time to arrange and any benefits would not be felt for another year or so and if Openreach was to suddenly invest it would still take years to deliver nationally. Or put another way, this route is only going to provide measurable differences around 2018 and onwards.

In this war of posturing it is thought that the BT Group may be announcing this week plans to deliver fibre based broadband to the final 5% of homes in rural areas. It is possible that BT has been looking at the take-up figures and as a way of avoiding the split that many are calling for is willing to put more money into the rural broadband pot, until announcements are made of course it is difficult to tell. We do know that some broadband news is expected from BT this week and we will cover it as soon as we know anything concrete.

BT was also missing from the DCMS/BDUK pilots for the final 5% and with the Government expected to announce a chosen solution(s) and proper plans for the final 5% before the end of 2015 when the pilots have barely delivered the Government is racing towards the same mistakes that happened with the original BDUK pilots of awarding most of the main contracts before the pilots had had time to deliver anything working.

Beyond the campaigners and financial interests, the population of the UK is often forgotten and overwhelmingly the question is not about what type of technology, but people just wanting something that lets them watch video without buffering and without excessive waits for large downloads and when will it arrive and can I stay with my existing provider so I don't have to change email addresses.

Comments

Posted by chilting about 1 year ago
A fibre based solution for the final 5% is just pie in the sky. Quite apart from the cost, the time it would take to roll out this solution would be excessive. A mix of some FTTC for smaller clusters of around a 100, a bit of FTTP, but with bulk served by Fixed Wireless and 4G would offer a quicker more cost effective solution.
Posted by ValueforMoney about 1 year ago
@Andrew you say 'more money from BT'. The £353m capital contribution identified by the first NAO report is no where to seen. Rutland and North Yorkshire should be making clear how much BT capital they have received so far. It should be in documented in the £75 per premise passed.
The £129m clawback is welcome for 20-30% change in uptake on Phase 1 400k premises, but capital is missing.
Posted by n959jb about 1 year ago
FTTC is not always what it is cracked up to be; I have it, but never get over 5mbps down or 1mbps up. I always fear that the fact that I am connected via FTTC skews the statistics and that I'll just be left in a speed backwater.
Posted by 961a about 1 year ago
"...so I don't have to change e-mail addresses"

Major concern for many, especially the less technical.

We've said before, fibre for the last 5%, but especially the last few thousand rural remotes is simply never going to happen. There are much better and cheaper solutions
Posted by andrew (Favicon staff member) about 1 year ago
@valueformoney - Urm with gap funding the local authorities never receive any money from BT. Since it is BT spending the money and then raises (or as some will say fake) the invoices for work done that is chargeable.
Posted by andrew (Favicon staff member) about 1 year ago
@n959jb Skews the statistics how?

Two metrics are usually given:

1. Passed by a fibre based solution, which you will count in and
2. Passed by a superfast fibre based solution, i.e. predicted to get 24 Mbps or faster

Until we know what solutions are being talked about for all we know it could be 4G microcells with the option for FoD2 for business use.
Posted by craley about 1 year ago
there are some innovative solutions to providing FTTx available using existing infrastructure - we just need to embrace these technologies to overcome this problem.
Posted by ValueforMoney about 1 year ago
@Andrew, There is no evidence that say Rutland have received 10,500 premises passed x £75, or North Yorkshire have received c 149k premises x £75. That should be possible to make transparent given the invetsment numbers BT has made wide use of in its press releases.
You do not need fake invoices, you need to inflate your budgets which the NAO has reported and bill all you can. The 'true up' happens sometime.
Posted by andrew (Favicon staff member) about 1 year ago
@ValueForMoney The reason there is no evidence, is because the councils are paying BT not the other way around.

It would help a lot if those accusing BT of sharp accounting practices actually produced some attributable paperwork so it can be assessed and the appropriate court cases started.
Posted by TheEulerID about 1 year ago
@VFM

Are you deliberately misunderstanding this. BT do NOT pay the BDUK projects money which is then spent by the project. What happens is that BT spend the money on installation and then they bill the project for the gap funding and are paid on the basis of the formula for that local project. At regular intervals the actual expenditure and take-up are reviewed under the "claw-back" system and money can be returned to the project.
Posted by TheEulerID about 1 year ago
Incidentally, on the story it would appear that this is BT's "carrot" to Ofcom and politicians. The "stick" will be a very complex series of negotiations and, potentially, court cases plus a near halt in further NGA investments.

Whether this can be made into a binding commitment is another thing, but it might cost BT £1-2bn to buy off this threat.
Posted by ValueforMoney about 1 year ago
@TheEulerID
I am not mis-understanding this. The scale of the state aid receipts are such (c£100m a quarter), that some more adjustments will be needed to reflect that Gov/LA have funded the projects up front. Phase 1 was planned by BT on inflated costs with no BT contribution needed.
The clawback on take up is separate to a true up on the capital. £129m is take up only. I think it is £32 per customer for the 4m passed.
Posted by gerarda about 1 year ago
The article of course mixes up fibre broadband and superfast. It would not cost BT that much to enable every cabinet and claim universal fibre broadband.
Posted by ValueforMoney about 1 year ago
Ofcom only need to ask what investment? £3bn on 50,000 VDSL cabinets and fibre paths? Sure!
They probably will not ask the question for fear of the answer, or the consequences associated with the answer.
Posted by TheEulerID about 1 year ago
@VFM

Even the state paying up front is a misunderstanding. BT's commercial model is based on a payback over a long period, and the gap funding covers the difference. That revenue is after the expenditure.
The recent return is largely based on revising the takeup model which means BT are effectively paying more of the capex than originally expected via the claw-back payments. If anything BT are contributing more than originally expected due to this revision.
Posted by AndyCZ about 1 year ago
@VFM

Rather than repeating the same rhetoric over and over again (which becomes very boring), why not take you evidence of fraud to the SFO/OFCOM?
Posted by ValueforMoney about 1 year ago
TheEuleriD .. The long pay back is based on inflated cost model.
The clawback of £129m is too little to include sufficient capital to make a dent on £300m due.

@AndyCZ. Not rhetoric just basic numbers. Ofcom not interested, but the three select committees will get closer this autumn. UK law does not support class actions.
Posted by andrew (Favicon staff member) about 1 year ago
If only @ValueForMoney was to produce even a single side of A4 with worked data, one might then understand the claims that nothing like £3bn was spent on the 50,000+ commercial cabinets, handover nodes and fibre paths and the 100,000 commercial FTTP premises.
Posted by wittgenfrog about 1 year ago
@chilting
All well & good, but there are many places in hilly Rural Areas where neither WiFi nor 4G reach, without a lot of extra investment.

Nobody questions the need for a Road near my house, nor the Postal deliveries that use it. Why not the same for PROPER broadband?
Posted by zyborg47 about 1 year ago
While I am not a fan of BT and I think BTOR should be split, if Sky and Talk Talk are that bothered, why don't they set up their own infrastructure?
Posted by 961a about 1 year ago
..because every commercial organisation wants to get someone else to pay the infrastructure costs and cherry pick the easiest customers
Posted by TheEulerID about 1 year ago
@wittgenfrog

There are plenty of properties not serviced by public highways. There are plenty of private roads around. In any event, even where there is a public highway it's by no means to the same standard.
Posted by ValueforMoney about 1 year ago
@Andrew the total average costs are outlined in the NAO report and these were more difficult to serve cabinets with lower average premises served.
Do also look for an unredacted version of the Oxera report. Even the redacted version under Para 4.15 is very clear.
ON the £3bn, on the last working you had got to £2bn -less the 100k FTTP.
Your not too far away.
Posted by AndyCZ about 1 year ago
@ VFM

"UK law does not support class actions"

Have a look at 'collective actions'.
Posted by andrew (Favicon staff member) about 1 year ago
@valueformoney and for the reason that I got that close I have a BIG tendency to dismiss a lot of what you say, particularly as I know there are still commercial cabinets waiting to go live and FTTP commercial areas waiting to be finished too.

Have you looked at Northern Ireland lately?
Posted by Blackmamba about 1 year ago
Hi Broadband Watchers.
Yesterday I found locations where the lines under 15 meg from the FTTC have been over layed with fibre this means that the outliners 5% are getting a better service than the ones closer to the CAB this work I think was done under BDUK this would have been cheaper than G/fast.
Posted by themanstan about 1 year ago
For those of you who are interested i've had FOI response from NAO on their update:

I’m really sorry- I don’t think I did ever get back to you on your follow up question.

When we refer to bid costs it does also include the indirect costs directly associated with enabling a cabinet, including planning, power, testing, installation, ducting improvements etc. I don’t have an exhaustive list of every cost element within this but, based on a review of the papers that we had for our initial report, cost per cabinet includes costs such as:
Posted by themanstan about 1 year ago

Handover costs (which include headends, cards and testers, plus labour to install)
Cost of the actual green cabinet
Lock
Plinth
Planning
Installation costs
Power to the cabinet
New ducting
Electronic safety testing
Digitisation of records

It doesn’t include improvements to backhaul / core network, infill or the capital costs associated with connecting a premise to a cabinet.

I hope this is helpful and apologies again that this took so long to get back to you.
Posted by chilting about 1 year ago
@wittgenfrog
I am not saying that there is an easy solution. Using 4G in rural areas must make sense. Two major problems can be solved in one hit. The national mobile 4G network can be extended and the local rural community can get superfast broadband.
The capital costs of installation could also be shared between BDUK and the mobile operator and generous data packages offered to local broadband users in return for the BDUK investment.
Posted by ValueforMoney about 1 year ago
@themanstan thanks - I have seen GEA fibre spine costs all included. The core network capacity and capacity from HOP is covered by the retail ISP managed service contracts.
The PMO and BT management fee should also feature in this list. The NAO did list them someplace.
Posted by burble about 1 year ago
My experience of FTTC and Openreach, is that they are an abject failure, having taken the BDUK money and run.
Posted by TheEulerID about 1 year ago
@burble

I suspect that somebody might have noticed if OR had cashed a big cheque and disappeared off to Brazil.
As it is, they only get paid, by stage payments after targets have been met. Of course there will inevitably be those that miss out, and will continue to until there's a 100% target.
Posted by GMAN99 about 1 year ago
How come no-one ever agrees with the figures that VFM comes up with? :)
Posted by burble about 1 year ago
@TheEulerID
My FTTC conection is throu a BDUK funded cabinet, it ran ok for a couple of weeks, now it's dropped to 3.5Mb, TalkTalk engineer has been out to check house wiring and told me what I already knew, there's a fault on line, Openreach disagree and say the lines fine and will not check it out. Exactly the problem that TalkTalk have complained about in this story
Posted by fastman about 1 year ago
burble this is the same organsiation that has funded 4bn of its own money as well -- !!!

but that not a good headline


Posted by fastman about 1 year ago
Buble did you have a manahed install or a pcp install
Posted by fastman about 1 year ago
so it could be a fault on the line or it could be cross talk if there a heavy number of connections on that cab -- how far are you from the cab

Posted by burble about 1 year ago
It was a managed install.
Have made numerous speed checks on various sites at all times of day and always comes back the same which would be more likely line fault, although over last two days it has blipped down to 2.3 which would indicate congestion or cross talk.
Posted by Griffen about 1 year ago
I am a sky customer and sky have failed i was promised fibre between 16- 25 mbit and i either get an unstable 14 mbit, where it drops out for up to 5 minutes because skys noddy(sr102) HUB cannot maintain a connection with their own servers of a poor slow 9 mbit which is still unstable and have sever lags , BT answer was to lower the recommended speed for the line rather than repair the antiquated underground cable that is not in a conduit and difficult for them to repair . this is not fibre broadband when adsl customer are on faster and more stable speeds
Posted by Griffen about 1 year ago
SKY WILL NOT UNDERTAKE NECESSARY REPAIRS
Posted by fastman about 1 year ago
buble how far from the cab
Posted by fastman about 1 year ago
Griffen not sure how lowering the speed could be don -- the network is the network - how far from the cab are you and whats does the BT Wholes dsl checker day you shodl get --also how far is the DP form your premise as all speeds are at a DP level not at a premise level
Posted by gerarda about 1 year ago
@fastman

in my experience The BT wholesale checker merely reflects the current line speed - not the speed originally estimated and achieved.
Posted by burble about 1 year ago
@fastman
Offhand I can't recall distance to cabinet, I can tell you it's quite far, but I am not expecting superfast speeds, and that is not the issue. The speed is half that of the bottom estimate, and way below the speed it originally ran at with no problems. I should also note that after years of a stable ADSL+ connection a couple of weeks before FTTC went live the broadband started playing up and I would only get about 10mins every hour.
Posted by burble about 1 year ago
I'll now give you another case.
A friend of mine lives in a small hamlet (on a different exchange), at one time he and his nabours where getting around 5mb ADSL+, he then started suffering constant dropouts and low speeds, after getting nowhere with his provider he asked around and all his nabours where suffering the same, two years on and despite various providers and the local counciller complaining, Openreach are doing nothing.
Posted by craley about 1 year ago
we have a pre-installed network that could provide the means to deploy FTTH throughout the country - the water network - www.craley.com
Posted by Bob_s2 about 1 year ago
The current vertically integrated BT has now beyond any reasonable doubt to have been seen to have failed. Yes it is delivering basic FTTC but in many cases not very well , It has restricted competion and innovation
Posted by Somerset about 1 year ago
@Bob - if the product is so bad then plenty of opportunity for competition and innovation from others.
Posted by Gadget about 1 year ago
@Bob - I'm sure in your opinion they have failed but at what specifically, others might argue that one of the fastest rollouts in the world and one of the highest coverages is a strange definition of failure.
Posted by WWWombat about 1 year ago
@chilting
"FTTC for smaller clusters of around a 100"

The most recent council meeting in North Yorkshire stated, in the minutes, that an "aspiration for coverage was that all communities with 25 properties and above would have broadband access".

This was surrounded by talk of an as-yet unfunded phase 4. Phase 3 seems to be for wired access for 95%, so the aspiration looks like it might be for communities in the final 5%, and might include wireless access.

It'll be interesting to see what size of cluster gets included in the 95% plans.
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