ISPs may boycott BDUK if BT's PIA pricing not adjusted
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