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| BT sees light: will others? |
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| Wednesday, 16 July 2008 | |
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UK incumbent to shell out £1.5bn on fibre-rich super-fast broadband…
UK incumbent BT has announced plans to roll out fibre-based, super-fast broadband to as many as 10mn homes by 2012. The £1.5bn programme will deliver a range of services with top speeds of up to 100Mbits/s with the potential for speeds of more than 1,000Mbits/s in the future. The investment forms part of BT’s wider strategy of delivering next generation broadband services nationwide. There may be one or two flies in the BT broadband ointment though. As has been noted elsewhere, the sexy, fibre-to-the-premise (FTTP) component of BT’s charge of the light brigade is targeting new build sites and, given the current state of the national housing market, you’d have to wonder what the split will be between FTTP and the less sexy fibre-to-the-cabinet (FTTC) if the ambitious10mn homes target is achieved. Perhaps more critical could be a reprise of what might be termed the ‘if-we-build-it-they-will-come-but-we-will-resist-their-efforts-to-use-it-because-we-put-up-the-moolah-in-the-first-place’ approach to broadband network access previously favoured by the like of Telstra and Deutsche Telekom (click). A statement from BT read: ‘A supportive and enduring regulatory environment is essential if this investment is to take place. Given this, BT will be discussing with Ofcom the conditions that would be necessary to enable this programme to progress. These include removing current barriers to investment and making sure that anyone who chooses to invest in fibre can earn a fair rate of return for their shareholders.’ A Q&A attached to the BT press statement also contained this: Q: Is this investment dependent on Ofcom creating a new regulatory framework? A: Yes. The right regulatory environment is vital for anyone seeking to invest. The funds required are extremely large and companies need confidence that risk-taking can be appropriately rewarded. However, another part of the BT call and response was: Q: Will BT exclude other companies in the way companies have in other countries? A: No. BT is totally committed to a wholesale market and so will make its services available on an equivalent basis to all communications providers. Here’s part of what Matt Yardley, partner at the Analysys Mason consultancy, made of the BT announcement: “First, it is not yet clear what BT's statement on the role of regulation and fair return on investment will mean in practice. BT appears to be asking for more symmetric regulation, whereby other fibre operators will also be required to wholesale their services. Ofcom is expected to provide details of its proposals for regulating NGA (Next Generation Access) in September this year. It will be fascinating to see to what extent, if any, Viviane Reding's recent comments on a 'risk premium' for NGA investments factor into Ofcom's thinking.” John Williamson |
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