By Jo Best, 3 March 2009 16:09
NEWS
Cheap mobile broadband and existing fixed services will keep BT from running a fibre monopoly, according to the communications regulator Ofcom.
The watchdog today announced it will be imposing no price controls on super high-speed broadband services, allowing BT to resell fibre access to other ISPs at whichever rate it sees fit.
Last year, the telco announced a £1.5bn programme of investment that will see 10 million UK homes able to get 40Mbps by 2012, as it deploys fibre to the cabinet.
Broadband from A to Z
Click on the links below to find out more...
A is for ADSL
B is for BT
C is for Cable & Wireless
D is for Dial-up
E is for Education
F is for Fibre
G is for Goonhilly
H is for HSDPA
I is for In-flight
J is for Janet
K is for Kingston
L is for Landlines
M is for Murdoch
N is for Next generation
O is for Ofcom
P is for Power lines
Q is for Quad-play
R is for Remote working
S is for Satellite phones
T is for Trains
U is for Unbundling
V is for VoIP
W is for WiMax
X is for Xbox
Y is for YouTube
Z is for Zombies
However, Ofcom chief executive Ed Richards does not believe that BT will be allowed to once again become a broadband "monopoly" as it presses ahead with its fibre rollout.
"This is a risky investment for BT. This is not the BT of old, milking copper assets put in hundreds, tens of years ago by a state-owned monopoly," he told an event in London this morning.
According to Richards, any attempt at excessive pricing of super-high speed services will be scuppered by the low-cost nature of the current generation of broadband technology and the advent of cheap mobile broadband.
"We think that existing broadband services will exercise a competitive discipline on that pricing," he added, with consumers unlikely to pay excessively above their current broadband rates for any fibre service.
"We expect there to be intense competition," Richards continued.
Forrester Research analyst Ian Fogg, however, questioned the ability of mobile broadband to provide viable competition to fibre rollouts.
"The capabilities of mobile broadband compared to fibre are completely different. The challenge with mobile broadband is the more successful an operator is with selling mobile broadband and the more people use it, the much lower speed that each user will get. With a fibre network, if more people use the service, there could be lower capacity but equally it's fairly easy for the operator to raise capacity by putting in additional fibre into the exchange and into the central office."
While mobile broadband may be no competition for fibre, BT is not without its rivals in super-fast broadband: Virgin has already started offering an up to 50 Mbps service, and some smaller operators have already announced localised rollouts.
According to Fogg, the advent of super-fast broadband could see some existing telcos struggle while new market entrants capitalise on the emergence of fibre.
"It will probably help some of the niche ISPs that don't have capital to invest in LLU [local loop unbundling] and will therefore benefit from wholesale because it gives them more of an even playing field. It may also help some of the companies that have experience with offering broadband but haven't put their full weight behind it because they haven't wanted to put capital investment in - I'm thinking of someone like Vodafone here, but it could be other operators or other companies," he told silicon.com.
"Again, what we'll see this time is some of the companies that prospered in the age of DSL may well struggle to make transition to this new era, this age of fibre broadband, because the business models are different and some investments they've made will not transfer across to the fibre broadband world."
Comments
There are 8 comments. Join the discussion
1. Ralph
Given how much telephony costs have come down over the last 20 years, versus inflation, pay rises etc. it's going to be relatively cheap anyway.
How many of us would happily pay a few quid extra each month, just to get a guaranteed service with a fast connection? Quite a few I imagine. I've tried the cheap route - and it's cheap for a reason, poor service - so am happy to pay for a quality service now.
2. Charles Smith
It will be good to get some Fibre To The Cabinet from BT. It will at least be better than "Not in Your Street" Virgin Cable.
It will be interesting to see how BT handles IPv6 when the world runs out of IPv4 addresses. The CN21 seems to have a bit of a problem there.
3. GALLEYSLAVE
Whichever way it goes we the user will likely get royaly screwed both in the wallet and in the actual speed available.
4. anonymous
Given that Mobile Broadband coverage completely sucks outside (and to be honest within) most major towns and cities, the threat of this is pitiful.
Work with BT to guarantee a return on their investment, but also allow others to make a profit as well off the back of it.
Afterall, not like Virgin Media is even an option in loads of urban places, never mind the complete never in rural locations.
5. misceng
I gave up Virgin Media because of their service failures and their attitude which was --- pay a fortune in telephone charges before we will even speak to you and then we will blame your equipment for the failure. I stopped complaining and found that with no changes at my end the service resumed eventually but this happened too often to be tolerated.
I will not be looking to Virgin to solve the broadband problem.
6. Alan
Do these people actually understand the markets, the technology, or even history?
The term "we expect..." is a red flag. How the hell can a regulator use an expectation of other, dis-similar, technologies to prevent a monopoly???
The greater the usage on a given fibre link the lesser the bandwidth... no, BT will just light up another pair. Its not as if any fibre link consists of single fibres. They are laid in bundles. Often bundles of 72 *pairs*....
Expect comms costs to rise back up to the same levels as the early 90s... They are the only national carrier with 100% coverage. No other national carrier has the national density as BT. No other national carrier has the last mile coverage (Global Crossing, Thus, C&W, Virgin, etc). This is key.
This alone gives them the leverage to charge what they want almost with impunity. All BT's rivals use BT's for the last-mile connection (from POP to CP) for 90% of their customer circuits.
Dont have a national network? You'll be looking at BT to provide backhaul from vPOPs, or provide a 'white-label' virtual service. BT will charge what they want for that.
In neither case is there ANY competition to compel BT to price competitively.
7. drew stephenson
Alan, it's central government and technology. Of course they don't understand it.
8. anonymous
BT should be able to charge whatever they choose - it is they who are taking on all of the risk. What company wants to spend copious amounts of their working capital in this current climate?
I am pleased Ofcom did not impose.