back to article Surprise, surprise. BT the only Universal Service Obligation provider in town

BT is the only player to offer its services for universal coverage of 10Mbps by 2020, but has also placed a number of conditions on doing so, head of comms regulator Ofcom Sharon White has said. Speaking at the Culture, Media and Sports Committee hearing, White said BT has expressed interest in delivering the government's …

  1. Anonymous Coward
    Anonymous Coward

    Calling our bluff, are you?

    Since taking radical decisions and to hell with the consequences seems to be all the rage just now, I fully expect a government faced with this bluster to insist, without changing anything else, on a forced and immediate demerger of BT and Openreach.

    1. Doctor Syntax Silver badge

      Re: Calling our bluff, are you?

      "insist, without changing anything else, on a forced and immediate demerger of BT and Openreach."

      So which foreign telecoms operator do you want to see buying a demerged Openreach?

      1. Roland6 Silver badge
        Pint

        Re: Calling our bluff, are you?

        So which foreign telecoms operator do you want to see buying a demerged Openreach?

        China Telecom?

        That's a pint of Tsingtao..

      2. Alan Brown Silver badge

        Re: Calling our bluff, are you?

        "So which foreign telecoms operator do you want to see buying a demerged Openreach?"

        I don't. Look at the New Zealand model and the way it revolutionised the market there. No single entitity is allowed to own more than a small chunk of the company - and after the experience there with hostile telecomms takeovers the rules were written with teeth instead of trusting that business would do the right thing.

        It worked there and was implemented there BECAUSE of what BT was pulling with Openreach (Telecom NZ proposed the BT/Openreach model as a way of staving off govt regulation, NZ's competition authority looked at what's happening in the UK and said "nyuh uh, no way")

        And the way NZ did it is duplicatable too - make demerger a condition for any further funding for broadband rollout. No need to try and haul it through the courts if you can simply not pay them if they don't.

    2. Syntax Error

      Re: Calling our bluff, are you?

      "forced and immediate demerger of BT and Openreach."

      How's this going to solve anything? It certainly cannot be privatised as this would be a security risk. BT is a government agency and whoever is the minister for culture and media needs to do their job and tell BT to get on with rolling out fast broadband and the chancellor needs to pay for it.

      It simply comes down to government management.

      1. Phil O'Sophical Silver badge

        Re: Calling our bluff, are you?

        and the chancellor needs to pay for it.

        By which you mean, of course, the taxpayer needs to pay for it.

        Why? How many of those taxpayers actually want superfast broadband, and why should those of us who would quite like it expect everyone else to pay?

      2. Anonymous Coward
        Anonymous Coward

        Re: Calling our bluff, are you?

        @ Syntax Error

        > BT is a government agency

        I think the London Stock Exchange will be a little surprised to learn this since BT Group has a listing with them.

        Certainly BT carry a lot of government traffic but they aren't unique in doing so.

      3. Kubla Cant

        Re: Calling our bluff, are you?

        BT is a government agency

        That's funny, I'm sure I recall something about a BT privatisation. Have they re-nationalised it on the quiet?

      4. Doctor Syntax Silver badge

        Re: Calling our bluff, are you?

        "BT is a government agency"

        Looking back on your posting history you seem to have convinced yourself that this is a fact. I can't think why. The nearest thing, post-privatisation, was the so called "Golden Share" which allowed HMG to veto changes to BT's Articles of Association. The Articles make it difficult to mount a takeover unless they're changed. The Golden Share was got rid of nearly 20 years ago.

        If you actually look at history you'll find instances where HMG's decisions were hostile to BT. One of these was the block placed on BT during the cable era in order to give other carriers an opportunity. Another was the amount of govt. business given to Mercury.

        If you have evidence to support your belief in spite of the above please share it but remember that, as always on el Reg, there will be people here who've been there, done that. In this case that means work or worked for BT and/or hold actual BT shares.

        1. Doctor Syntax Silver badge

          Re: Calling our bluff, are you?

          I should also have mentioned that Deutsche Telekom now owns 12% of BT.

  2. Anonymous Coward
    Coat

    Tarnished opinion

    "Even now in the future with G.fast, BT invests less in its copper network £300m per year than in the depreciation."

    That is in the expectation of a continued monopoly, customers will see copper increasingly failing and be offered a replacement optical service at an obvious premium.

    Mine's the one with "Oxidisation for profit" in the pocket.

  3. Roland6 Silver badge

    White said BT has been "looking in its rearview mirror" at competitors such as Virgin's £3bn scheme to extend ultrafast fibre broadband to 17 million homes by 2019, which she said has helped BT up its game.

    BT doesn't need to look in its rearview mirror, due to Ofcom's obsession with competition and thus the regulation of BT, BT's preferred position is to be in the rearview mirror of the unregulated players, as then they can't complain (so much) about unfair competition from BT....

  4. Commswonk

    Oh Dear...

    She insisted that a decision has to be "a conversation in a different part of the forest" as to the one around what Openreach's future governance should look like.

    For myself I would have had great difficulty in hearing that actually said without (a) openly sniggering, and (b) deciding that whoever said it should be completely ignored.

    Furthermore (having thought about this since this article appeared) I have arrived at the conclusion that for any organisation (in this case BT) to accept having a USO placed upon it for the provision of broadband it could only achieve it if it had complete control of the chain, and that complete control would be lost if BT and Openreach were divorced from one another.

    How could BT fulfil the requirements of a USO if it did not (one way or another) control that part of the chain between the main network spine(s) and the final customers? It could be held hostage by the "local end provider" (for ease of understanding called Openreach) which (because it was not itself subject to the demands of a USO) could drag its feet and not provide unless the hamstrung provider (BT) paid a premium for its (Openreach's) services. That would have the immediate effect of forcing up broadband prices for BT customers and (very likely) downgrading the services available to other "providers".

    I am not trying to argue that the existing structure and its operation are perfect, but it has become too much of an article of faith for a lot of people that completely separating BT from Openreach would be a cure - all for the perceived shortcomings of Britsh broadband provision. It could all to easily finish up being worse.

    Chinese proverb: Be careful what you wish for, in case you get it.

    Disclaimer; I never worked for BT.

  5. Gary Heard

    \surely the USO would be on Openreach as the infrastructure provider? BT as a company made sure that they got "Superfast" into areas just as competition was starting, thus killing it. A relative put a lot of work and a considerable amount of money in getting costings to set up an ISP not too far from Cambridge where -- at the time -- there was no (known) plan to upgrade the exchange. Within a month of BT being asked about the use of ducts and poles in the area, there was an announcement that the exchange would be upgraded within 18 months, after that the bank wouldn't loan to the business, whereas previously they were keen as they saw the possibility of a profit and a growing business.

    BT? Too keen to watch their bottom line and crush small business

    1. Commswonk

      BT? Too keen to watch their bottom line and crush small business

      Yes; that's capitalism, red in tooth and claw. I'm not saying it's right, but it is just a fact of life. By way of other examples, Ford would probably dearly love to be able to put General Motors out of business, or Costa do the same to Starbucks.

      As to putting the USO on Openreach... the problem would remain. Other bits of BT could carry out the arm twisting to ensure that Openrreach was able to meet its obligations.

      Having said that, you stated Openreach as the infrastructure provider; exactly what infrastructure? Does anyone know exactly where the change of "ownership" actually is? If it's where the local cable goes through the exchange wall then Openreach's "ownership" doesn't actually extend all that far.

      1. Roland6 Silver badge

        Does anyone know exactly where the change of "ownership" actually is? If it's where the local cable goes through the exchange wall then Openreach's "ownership" doesn't actually extend all that far.

        Not sure if Openreach actually "own" anything:

        "We're responsible for the first mile of the UK access network - the copper wires and fibre that connect homes and businesses to local telephone exchanges. " [Source: https://www.openreach.co.uk/orpg/home/home.do ]

        So I would agree, Openreach may 'own' the local cable, but not the rack and equipment in the telephone exchanges it connects to (and being pedantic, it potentially doesn't own the street cabinets...).

        Hence I agree, I can't see how BT, the operator of the national broadband and telephone network, could deliver on the USO, if Openreach were to be separated.

        1. Alan Brown Silver badge

          "Not sure if Openreach actually "own" anything:"

          Given that Openreach isn't even a registered business, it can't own anything.

    2. Alan Brown Silver badge

      "A relative put a lot of work and a considerable amount of money in getting costings to set up an ISP not too far from Cambridge where -- at the time -- there was no (known) plan to upgrade the exchange."

      Same thing happened in Surrey (Cranleigh).

      Several years after killing the competition and 2 years after the promised provision date (which was 2 years after the private outfit would have been providing broadband) , BT _started_ installing the equipment to be able to do the rollout.

      Blatent anticompetitive behaviour, but ofcom won't deal with that and the competion commission won't touch telecoms companies when they pull this stuff as it's supposedly ofcom's remit.

  6. The Vociferous Time Waster

    Nationalise openreach

    Like network rail the infrastructure should be state owned and the private service providers offer the service on top of that.

    1. Tromos

      Re: Nationalise openreach

      That's all we need.

      "National cable apologises for the cancellation of your broadband service. This is due to leaves on the cabinet."

    2. Anonymous Coward
      Anonymous Coward

      Re: Nationalise openreach

      "Like network rail the infrastructure should be state owned and the private service providers offer the service on top of that."

      The trouble with that is that it puts Virgin and B4RN and Gigaclear out of business. The other last mile providers couldn't compete with a government owned and funded Openreach. The court cases would run on for years and it would dissuade others from entering the UK market.

      1. Alan Brown Silver badge

        Re: Nationalise openreach

        "The trouble with that is that it puts Virgin and B4RN and Gigaclear out of business. "

        NO, absolutely, it doesn't.

        The lines company ends up selling to all comers equally. What happened in New Zealand is that the "competitors" got the same deals on leased access that the incumbent was getting AND the option to run their own cables in the ducting. which they took with gleeful abandon.

        One unforseen and very welcome outcome of the demerger was that with the dead hand of head office released from the handbrake, the lines company was now incentivised to go out and find customers to sell services to, resulting in a _very_ rapid diversification of its customerbase and the company being extremely approachable.

        The ironic thing is that 2 years after the split, the former incumbent telco was crying foul and that the (regulated) line charges were far too high - despite competitors being charged less than half the previous rates it had been charging them and despite those figures being set by the regulators based on figures originally provided by the incumbent. It then demanded special treatment to a loud chorus(pun intended) of laughter from every other player in the market. (It's arguable that regulated rates have subsequently been set too low, but the market in NZ is still vibrant.)

        The other part that the incumbent was crying would sink the demerged linesco - pension liabilities - proved to be smoke and mirrors. In fact the linesco is in robust health whilst the old incumbent is looking rather shaky.

        1. Anonymous Coward
          Anonymous Coward

          Re: Nationalise openreach

          "NO, absolutely, it doesn't."

          That's not what the bosses of Virgin and Fibrecity say, both of whom are strongly opposed to a split of Openreach.

          The New Zealand split only worked after the government gave the newly formed last mile business a £2k handout for every home in the country and even then they've threatened to default on loans unless they're allowed to raise their prices.

  7. Loud Speaker

    Questions?

    raise questions over procurement and its ability to deliver value for money

    There are no questions here. BT does not, cannot, and will not deliver value for money. It can, and probably does, deny that there is such a concept as value for money.

    1. Anonymous Coward
      Anonymous Coward

      Re: Questions?

      "BT does not, cannot, and will not deliver value for money."

      Except that the rural broadband rollout is about the only government programme in living memory to deliver more than was planned for less money.

  8. allister ferguson

    Who else has £1B a year to invest?

    Shock....... BT is not perfect.

    Look at the figures.... investment promised........ £1b per year

    OpenReach turn over.......... around £5b

    BT turn over.......... over £20b

    Who is in the best position to spend £1b/yr in investment?

    20% borrowing of turn over OpenReach

    or less that 5%.......... BT

    1. Alan Brown Silver badge

      Re: Who else has £1B a year to invest?

      "OpenReach turn over.......... around £5b

      BT turn over.......... over £20b"

      Don't believe a word of that.

      Openreach is not a separate company and as discovered with Telecom NZ's Spark/Chorus circus, the way those figures are arrived at are incredibly suspect.

      It is in BT's interest to make Openreach's income and expenditure figures look as sick as possible in order to dissuade the government from forcing a demerger. Therefore by creative accounting techniques we all know and loathe - they will do exactly that.

      As for the money BT's been given for rural broadband, most of it's been pissed up a wall, not spent where it's supposed to have gone.

  9. hoola Silver badge

    Universal Service

    Anything with a Universal Service Obligation (Royal Mail being the other big one) is totally at the mercy of the government and private enterprise. The point of USO is so that hard to reach (expensive) locations get that service. The problem with Royal Mail is that they have the USO to everywhere in the country at a fixed price. The private postal & parcel services cream off all the profitable bits making delivering the USO even more difficult. The private companies either refuse to deliver anywhere not on the mainland or within a few miles of a motorway of make a huge surcharge. Then these is all the letter post that the private companies collect and shuffle into large areas and then dump on Royal Mail to deliver, at below cost.

    Any company taking on a USO should be seeking guarantees from the Government so that they don't end up being shat upon a few years after investing large amounts.

    Can you seriously see anyone other than BT having the capability or capacity to do this. The likes of Virgin barely go beyond the end of a street, let alone to a single connection in the middle of bugger all?

    Yes, they might if they received a huge wad of cash to do so, and a guarantee that there would not be future meddling.

    BT, like Royal Mail appear to be shafted what ever they do. Just look at what the Virgin Media, My Hermes, Yodel and other private only enterprises do. It is not impressive.

    1. Anonymous Coward
      Anonymous Coward

      Re: Universal Service

      A USO can only work if all telcos/ISPs (or all over a certain size) contribute equally to the finances.

      Else you end up walking this path;

      -Rural broadband costs 10x urban broadband - unaffordable.

      -Urban broadband revenue is used to subsidise rural broadband.

      -Rural broadband becomes affordable, urban broadband increases in price.

      -Urban customers desert the higher priced service for Virgin et al.

      -Urban broadband increases in price again as few customers subsidising rural ones.

      -More urban customers jump ship.

      -Rural broadband becomes unaffordable.

      To work there has to be a rural broadband levy or tax on all connections.

  10. Lambiclad

    Who else?

    People forget or don't know that when the original broadband franchises went out to tender everybody except BT dropped out (except for the highly lucrative big cities), leaving BT as the only company willing to invest in these high risk, long term payback areas e.g. Cornwall, rural Wales etc. Where were Virgin, Talk Talk, Sky etc. then?

    1. Anonymous Coward
      Anonymous Coward

      Re: Who else?

      My understanding is that it was the requirement to wholesale the service to other service providers that was the red line for the other companies. They were prepared to do it if they got all the customers for themselves, but not if they had to share the kit.

      That sounds like selfishness, but probably isn't. The OSS and network changes needed to be able to wholesale component parts of a retail service to others are quite significant. Significant and costly enough to make a profit making proposition into a loss making one.

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