Ofcom mulls BT Openreach price hike
'Free' broadband economics tested
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After months of lobbying, BT has got its wish. Ofcom today announced it will formally consider letting Openreach raise the prices it charges BT's competitors for wholesale access to local exchanges.
BT has been crying foul over Openreach because its costs have increased alongside greater competition in broadband from local loop unbundlers.
Firms which offer "free" broadband under very tight economics based on the current charges will likely squeal the loudest about any resulting rises in wholesale line rental for unbundled lines. Their economics relies heavily savings made by unbundling.
They will be able to point to Ofcom's own assessment of the level of service offered by Openreach: it's not very good.
Ofcom said in a statement: "The evidence we have reviewed to date suggests that there is likely to be a case for some increases in the charges for the regulated access services.
"However, we do not currently believe that the increases need to be as significant as is implied by the projections provided by BT."
It'll review the current price ceilings in two phases. The first consultation, beginning today, will aim to set out the current costs of Openreach and expected changes, and examine the effect raising charges will have on BT's competitors.
A second consultation will address the pounds and pence nitty-gritty. Ofcom expects to have a new deal thrashed out by the end of this year.
Openreach set up shop in January 2006, after BT cut a deal with regulators to avoid an enforced full scale dismantling of its network ownership and the services other BT divisions use it for. The "functional separation" model that emerged is being pressed on other nation's regulators by the European Commission. ®
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COMMENTS
@ jeff
I do not live in a city and hence there is no option but to use BT openreach. You go on about how happy I should be that my comms are not broken as well as expensive. Allow me to remind you that the tax payer paid for BT's infrastructure before it was privised. Further when it comes to new housing do BT use new technology or go for the cheapest solution possible? thats right they go for the same cheap ass cabling they have been using for over a hundred years.
BT have not invested a millionth of the profits they have taken from us, and you say I should be happy even though they use the cheapest support people on the planet. They should be made to change their name, the B in BT is clearly false advertising as most of the people you will speak to on their "support lines" dont even speak understandable English.
If they had cable where I live I would change like a shot, instead I had to have my personal correspondance and banking traffic snooped by BT (google PHORM). This as they dont think they are getting enough money out of me, so don't go on to me about how lucky I am to be forced to use BT kit. When I was a BT retail customer I always had their most expensive BB package, this did not protect me as there is clearly no amount of money that will slake their thirst.
Don't like BT, then go to cable providers
All you folks who don't like BT, should just bugger off and go to Virgin Media then.
BT provide and maintain the backbone of the telecoms infrastructure in the UK, and they are doing a decent job of keeping it running. Are you online right now? Are you using a telephone? Are these services working at the time of reading this? Most peoples answers to these questions are likely yes, which means you are going through BT's infrastructure to use those services.
Those services are working and doing their job, so unless anyone else can come up with the capital to upgrade the networks in the UK (i.e. fiber), they should either put up or shut up.
"invest in new equipment including DSLAMs and MSANs".
"BT ... continue to pay to maintain them and invest in new equipment including DSLAMs and MSANs. Do you really think any other organisations would be willing o carry on with this?"
Utter tripe.
First, pop over to www.samknows.com and see who's LLU'd your exchange, or any random exchange of your choice. If it does have LLU (which not everyone will, and we'll come back to that, but 70% of exchanges currently do), there'll probably be around four companies besides BT who are "investing in DSLAMs and MSANs", installed in the BT exchanges and connected with BT wires but using LLU kit and bandwidth for everything else besides BT Openreach's "local loop". And the services the LLU ISPs are able to provide are, and will be, years ahead of what BTwholesale are, and will be, able to offer to BT-based ISPs.
Second, there's the long-awaited and much over-hyped 21CN. It turns out that 21CN isn't actually about investing in improved services, it's about reducing operational costs (primarily staff, there's a surprise).
The big thing that BT did get nearly right was near-universal coverage (let's ignore the notspots and Exchange Activate, shall we?). But even that's about to vanish.
The total lack of effective regulation and in particular Ofcon's recent crazy decision to explicitly deregulate many geographic areas of the UK broadband market [1], together with the incompetent way BTw have been allowed to introduce its next-generation broadband (Wholesale Broadband Connect, WBC) with an interconnect pricing scheme unattractive to all but the largest ISPs (eg BT Retail) [2], are going to reverse the concept of broadband available at a single nationally uniform price from the ISP of your choice. In areas where there is no LLU presence (ie the 30% of exchanges which aren't financially interesting for LLU), it will soon be back to a BT monopoly from end to end, and the price won't be pretty at all (eg a £10/month "non-LLU surcharge" is already common from ISPs who currently offer both, and with BT WBC it'll get worse not better), because the price will solely reflect the costs of the most expensive areas.
First against the wall when the revolution comes? I certainly hope so.
[1] http://www.theregister.co.uk/2008/05/21/ofcom_ends_broadband_regulation/
[2] WBC is offered on a geographic basis. A BTw-based ISP who wants to continue to offer national coverage the same way as they do today has to pay (lots) for multiple interconnects between the ISP's own network and each of BTwholesale's geographic WBC areas. In contrast, today's setup charges a BT-based ISP pretty much the same regardless of where the end user or the ISP is, and the LLU ISPs just pick areas that are cheap and convenient (ie profitable).
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