Fujitsu's plans to bring rural broadband to five million UK homes over the next three to five years could be seriously hamstrung not only over a row with BT about its prices, but also if it fails to secure £500m from the public purse. The Japanese company confirmed a proposed joint venture yesterday with Virgin Media, TalkTalk, …
Give taxpayers' money to Virgin Media? You may as well burn it.
Need I say more?
The money is going to Fujitsu. Virgin will be one of the companies you will be able to pay money to every month in the hope of getting an internet connection. Talk Talk will be another. Hopefully there will be some Internet Service Providers as well.
Virgin vs BT
BT will never play ball with Fujitsu et al. Here is the precedent - Virgin Media vs BT in a bitter fight over the UK's first cable tv network - installed by BT, but now rented by Virgin! BT won't give physical access (on any commercially meaningful grounds)..
A Hard Time
I think a £2bn investment from Fujitsu to £0.5bn from the taxpayer is a good deal. I think if this Government is serious about investing (investing, not agreeing it's a good thing) in rolling out high speed internet beyond cities that it will look pretty bad if they don't take advantage of this.
I hope their broadband kit is better than Fujitsu's hard disks though!
Does the tax payer think it's a good deal?
Does the tax payer think it's a good deal?
Presumably only if they were going to use the broadband - in which case they could just pay for it the normal way.
The Fuji Kit
I've been working with recently, (not broadband, high speed SDH & DWDM kit) is quite good, at least as good as their major competitors
As part owner of this 'Public Money', I'm quite happy for it to be given to Fujitsu on the condition that my property is one of the 5 million....
So why am I paying for a private company's infrastructure?
Because the people pulling the strings...
...went to the same school?
You have been paying for BT!!
Your public funds were used in round 1 of the so-called 'broadband' shenanigans to enable one helluva lot of exchanges. We kicked up a fuss then about BT being the recipient in far too many cases, and the failure to even begin to invest in fibre back at the beginning of the Noughties.
Fujitsu et al's proposal at least looks at creating some new core and access networks that are BT-independent, and breaking the monopoly hold that has this country as hostage to their shareholders. If the BDUK money goes to BT in any way shape or form it will do the precise opposite of what this and previous governments have claimed they want - a competitive marketplace. Let alone all the other issues that BDUK raises about process etc.
BT can sabre rattle as much as they wish about new entrants, but Fujitsu are at least pledging money of their own.
What actually would be worth exploring is how many private investors there may be in homes and businesses across the country who would be willing to stump up investment in exchange for equity to remove the need for *any* of that £530M, which could then be spent solving the more expensive first mile connections of those in the final third.
Start at the outside and work in, or alternatively, start at the most difficult places and work in. I know I'd put money up to help out an alternative to BT that brought FTTH to my home office. I already pledged it publicly, and I know many others are ready to follow suit if someone would just ask us...........
<< RURAL >> broadband to five million UK homes
You obviously cant read, see above. ie not viable for the free market to make a quick buck. Unless uk gov want to pay and do it themselves there is a need for a sweetner to make the financial case stack up for a private company.
I suspect that if the EU make internet access a citizen's right, then uk gov will have to cough up unless they want to be fined.
The same reason....
...you have in the past perhaps?
Unless you think our entire telecoms infrastructure was funded by a private company of course (maybe you are to young to remember GPO / British Telecom).
Also look how may other business get grants, thousands, 10's of thousands?
It's national infrastructure and there is little financial emphasis to provide it without support and guarantee of the nation.
But its not "national". It owned by the companies. If it were taxpayer owned and leased to the companies, that would be ok.
regardless of who owns it is part of the national infrastructure. Much like electricity, water, hospitals, and an array of other things.
If rural areas don't have broadband, it will bring down the cost of living in rural areas as less people will want to do it.
I don't see why everyone's tax should be used to inflate the cost of living in rural areas to benefit the few that can hardly afford to live there but want to anyway despite no decent broadband...
what are we thinking?
People need to understand what NGA can do for them
If there is £30m left over, why not put some of it least into the very important task of market making.
One of the reasons the UK is falling behind many other countries in the race for Next Generation Access is that the majority of the population still doesn't get the potential of the internet to transform their lives. They don't understand about things like telehealth and telecare, and they may have had a go at uploading a video, been frustrated at the time it takes, and concluded it's impossible. We need to be able to demonstrate the possibilities and help people in their move from passive consumers to creators of content.
This is one of the reasons why we are undertaking the world's first internet broadcast of a village cricket match on Easter Monday http://wp.me/ppLRZ-cK because it can be done in Wray and not in 99% of other rural communities.
"It is important that the companies concerned make it clear that they are willing to invest material sums rather than just spend public money in what could be a multi-billion [pound] project,"
I had a funny conversation with an engineer about the telegraph pole that provides my house with broadband, long story short BT cheaped out and used aluminum, this creates 2 problems, half the test tools they have don't work with aluminum (give the wrong distance to faults) and they snap with the slightest touch, (someone comes to fix house b internet, house c breaks, etc).
Also the pole had been driven into so couldn't be climbed, but BT were refusing to fix it (despite a number of engineers complaining.)
They've finally (after 3 months) managed to get BT to fix it on a technicality (the wires are hanging too low.)
BT have never used aluminium - that was the Post Office...
I hate BT. If anyone has made comms in the UK 3rd rate it is BT. Overpriced, slow to react.
Please someone loosen their grip on UK Internet and comms.
If they were genuinely overpriced competitors would step in to fill the gap at a cheaper price - but they're not. I buy telecomms services all over Europe and the US, BT's about on a par - a bit more expensive than France, cheaper than Germany. There are pockets (London) where there are substantially cheaper providers than BT (Colt), but no-one else seems to want to spend money building out in other areas.
Building out infrastructure is a long-term investment - so companies can't rush to market with something that may not be fit for purpose, and they have to price it to make a return else investors are just not interested in lending you the money to build it in the first place.
Same argument could be used about the NHS and health.
"The telecoms giant failed to spot Fujitsu's declaration that it would invest up to £2bn in the project."
No, methinks that they understood perfectly well what "up to" means in a broadband context...
if it's anything like their upto 20MB service
then we can expect about £600M
mobile spectrum auctions
remember when the govt made billions off the 3g spectrum auctions? maybe they need reminding of that fact.
It's interesting that the Virgin spokesman talks of the government "gifting" BT the infrastructure. Nope, that infrastructure was sold to the shareholders of BT when it was privatised. Indeed BT was sold on at a higher value than BT's current capitalisation. Add up the three tranches of shares sold and it came to £13.9bn. Adjust for inflation and it's the equivalent of £25bn vs BT's current market cap of £24bn.
Of course what the government also unloaded onto the shareholders was a big pension liability onto the shareholders as nobody at the time much appreciated what the size of this would be given the annoying habit of the populace to live longer. Just look at the Royal Mail pension deficit to see what the government could have been lumbered with.
Indeed - If I buy a car and then sell it, I can't then claim that as I bought it first it's still mine.
The GPO was a net contributor to the exchequer - so I don't believe it was government funded, it was customer (or 'subscriber' in those days) funded. The sale of BT and the other utilities funded tax cuts by the government, so I don't think the taxpayer can claim to have somehow funded the access network and still have some moral right to own it.
It is however a fact that BT have a massive infrastructure that no-one else does and that if competition is to be encouraged the only practical method is to make them share - people don't way to pay enough money for broadband and phone lines to make any new roll-out an investable proposition.
I *think* that really means that actually utilities are a natural monopoly and attempting to force competition is kind of pointless. All lower pricing in any utility has done is discourage investment which is why we now face a power shortage in coming years in the electricity industry. If the government steps in to build power stations, we're paying it through our tax bills, we might as well have just not had the competition introduced in the first place.
I don't think there's an issue as such about opening up the infrastructure - it's just that it has to be done at a level which is a realistic representation of it's value. The assets belong to shareholders, and they've paid for them - however it was originally put in place. As you point out, if this is done at the wrong level all it does is disincentives infrastructure investment.
I wouldn't support monopoly, especially state monopoly provision. The old Post Office telecommunication organisation was monumentally inefficient and, at the time of privatisation, the vast majority of local telephone exchanges were Strowger based. Government ownership does not equal lost of investment - the exchequer have a habit of siphoning off funds.
As it is, the government does quite well out of telecoms taxation - the (for the mobile industry) disastrous 3G auctions raise about £24bn (from memory).
Whatever happened to those plans to run fibre along the side of railway lines and wrapped round the neutral cable on the National Grid pylons?
Surely that has at least got a decent backbone in place
They are not Local Distribution Networks
Running fibre down telephone lines or along the grid is fine for trunk networks (and, indeed it's done). However, it's no use whatsoever in distribution networks where you need poles or ducts. There have been schemes of various levels of practicality to use sewage pipes, gas pipes and the like, but none of those have come to much.
Where do the numbers come from
I don't think BT is ever going to be the right answer as their margins need to be too high to cover their costs (including the huge pensions liability)
However I have to come to their defence on one point. Where you say "The telecoms giant failed to spot Fujitsu's declaration that it would invest up to £2bn in the project." That is because in the press release (http://www.fujitsu.com/uk/news/pr/fs_20110413.html) it doesn't mention any figures at all!
Except where they say "provides an opportunity for any community or local authority looking to access a proportion of the £530 million earmarked by the UK Government" and a Vaizey quote "That is why the Government is investing over £500m in taking superfast broadband to everyone"
The other figures all seem to source back so a single FT article where they say "The Japanese information technology services group said its network would cost between £1.5bn and £2bn to build, and depended on Fujitsu securing at least £500m of public funds"
As this seems to base from a conversation with an unnamed Fujitsu employee then the word "would" could easily be "could" and of course they have no chance at all of securing £500M from the Govt (just as BT won't - it said it could do 90% coverage of the UK with the "fake fibre" that is Infinity if thay gave the £530M to them).
And the "No Chance" comes from the fact that there will be lots of small procurements for each council that gets a chunk of the pot (mabe £10M a time) most of which will be impossible for a monolith such as Fujitsu to economically bid.
UK Telecom Market Needs Competition
BT shouldn't have a monopoly on infrastructure. My sister moved back here recently from the US & on 26th March enquired about having a phone line & broadband installed. She had to wait until today (14th April) to have it installed. Despite making a fuss on Twitter in the hope BT would pick it up, which they did, they couldn't change the installation date. She was surprised as (despite the fairly limited competition in the US) she wouldn't have had to wait anywhere near as long as in the US. Unfortunately, I've heard of, & had firsthand experience of, BT not giving much of a stuff about their customers.
A few years ago I had a problem with my broadband. I was bounced back between my ISP (which I wasn't very happy with, but that's another story) & BT for about 3 weeks. The ISP said there was a fault with the line & it was BT's responsibility. BT said there wasn't & refused to send out an engineer. I had to hire a private engineer at my own expense to check that the problem was not mine but BT's. He himself was a former BT engineer & he said that BT would rather let a single unimportant customer become disconnected than go to the expense of sending out an engineer. He also send that sometimes if a fault was reported that BT would deny it, then the line would mysteriously "fix" itself. This was done to avoid fines as BT aren't allowed to have more than a certain number of faults. In the end a BT engineer did come out (after being told it would cost me just under £100 an hour if the fault lay at "my end") & fixed the problem- it was at BT's end.
Also once I worked in an office which we shared with another branch of the same company. Their staff were due to move out to another new office, but they were waiting an additional 6 months because a £90,000 phone line BT were meant to be installing was delayed. If £90,000 doesn't ensure good customer service, I don't know what will.
This suggests to me we need increased competition in the telecoms market to keep BT on their toes & make customers a priority again.
I dont work for BT but be realistic
"My sister moved back here recently from the US & on 26th March enquired about having a phone line & broadband installed. She had to wait until today (14th April) to have it installed."
So a new installation versus a quick config change. So 3 weeks doesnt sound so bad to me, you dont know what was going on in the background, exchange capacity, pole capacity etc. not everywhere has cabling available immediately and so they might have had to run new cabling and a dozen other things. When I moved house I phoned BT and they gave me the exact AM/PM that the lines would switch over and the new phone number. Come move date it worked perfectly as described with no problems at all.
"In the end a BT engineer did come out (after being told it would cost me just under £100 an hour if the fault lay at "my end") & fixed the problem- it was at BT's end."
This is standard if you report a fault, BT then run an initial automated test, they then advise you to check your internal cabling as most faults are based on dodgy DIY installs causing noise. Hence the £100 charge to make it worth your while to actually check first before they send out an engineer! Consider that £100 charge vs a plumber call out charge
"If £90,000 doesn't ensure good customer service, I don't know what will"
A £90k line doesnt sound like a standard phone line, you are talking about a major "pipe" that probably had at least 3mths provisioning period and would have had to be dragged from the exchange and ducted into the building. Maybe ask why a company that is moving would actually put a request in for something like that, seems more lack of planning by the company.
"BT shouldn't have a monopoly on infrastructure. "
"A few years ago I had a problem with my broadband. I was bounced back between my ISP (which I wasn't very happy with, but that's another story) & BT for about 3 weeks."
Doesnt this kind of prove that if BT didnt have a monopoly then we would be in a much worse state?
I dont work for BT, but my experience is that if you step back and appreciate the complexity of telecoms and actually follow what BT ask you to undertake, such as line checks etc. are polite to the engineers that turn up, you get a first class service.
hum after reading this something tells me bt is delibratly trying to stop other companys from investing in there areas. typical bt but the fact is how is the uk going to move up the ladder for best broadband when bt keep stopping others let them invest buy reducing the prices of rolling it out
Back to the two tins and a piece of string
Living in a brand new house of a new city and our connectivity is something like:
ADSL:2Mb/s on a good day
Mobile signal: 1-2 bars on a 2G signal
Snail Mail: It occasionally gets to the right house
FedEx: Forget it
Cable TV: No
WiMax: Despite MK council setting up a company, no signal.
Roads: local council wants entire area to be 20Mph
Perfect location for hermits, and those trying to escape 21 C life.
Please can HM Gov give Fujitsu some money.
Mark, your area sounds perfect for a RFC_1149 venture. All we need to do is ask the government for some money, and get the.... Errr... Equipment. Can't be that hard.
Allow me to take the DeLorean for a spin
This won't happen.
UK Gvt will say "Thats almost the whole pot, no way too expensive"
Fujitsu will say fine and go away.
Also seems a bit dubious - if BT isn't targeting these areas, can they really be profitable?