back to article Ofcom moves: Rural broadband price war on the cards?

Ofcom has ordered BT to slash its prices by 12 per cent below inflation per year for the company's wholesale broadband network. The telecoms watchdog claimed 3 million homes and businesses in rural parts of the UK could benefit from the price reduction by the end of 2011. It said the move "follows Ofcom's decision to reduce …

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FAIL

still will not help

people in remote area's who are too far from the main exchange for BB, and there are plenty of houses in this situation. the "95% of the population" should have (who live in or on the edge of major towns).

My parents live less than 4Km from the exchange, but BT in it's wisdom went past their village to the next one then looped back making it 4.9Km so they cant have BB.

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WTF?

errm

Can someone explain the logic behind their reasons? Surely a cheaper BT means that there is less money and incentive for BT to upgrade systems, less incentive for people to set up their own networks and make it harder to compete? Surely the more BT charges the quicker it becomes cheaper to set up your own service, not the other way around?

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I'm not convinced.

From BT's perspective:Will this really incentivise them to upgrde more exchanges? I suppose that depends on the cost of investment v. lost profit. Mind you it's news to me if BT make any profit of M1 exchanges anyway.

From the LLUO's perspective:If the cost of the wholesale product is falling that reduces the need to unbundle. Or is Ofcom hoping that the LLUOs will be looking to make money by wholesaling their own product in competition with BTw?

Either way if they are hoping to encourage FTTC in M1/M2 exchanges then someone should point out that:

a)FTTC is showing lack lustre interest from the market at the moment. BT is struggling to get people on board and has slashed prizes to ridiculously low levels. VM have a similar problem - people just aren't interested.

b)The LLUOs have mde it pretty clear that they don't want to unbundle FTTC. They don't have any appetite for investment.

So I'm left pondering this decision and struggling to see how it will help other than from a short term view of saving a few people a few pence a month.

Time will tell :-/

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Childcatcher

An update..

I've just been informed (courtesy of Thinkbroadband) that BT cannot withdraw a service without giving three year's notice. That means that this will help persuade BT to move punters away from IPStream if only to minimise losses.

In effect BT have only two options:

* Suffer reduced profits or lose even more money for the next three years.

or

* Invest money and move punters onto a product with better returns.

Even though 'better' in this context might just mean 'not quite as bad' it does suggest how this strategy might work.

It still seems a silly way of pushing BT but that's telecoms for you.

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Unhappy

Forget the price cut ...

... more important to the stuck-with-Openreach user would be a tightening of BT's licence to require some genuine urgency in fixing Broadband problems when the occur.

I've seen several neighbours without Broadband for over a week following a recent problem. Despite their being with different ISPs, served by different cables from the exchange, Openreach insisted on making an appointment to visit each home during the working day (typically a week later) - in order to establish that this customer too had an identical exchange problem that they could then fix in minutes.

When BT was privatised, there was no Internet, and it seems that the Licence has not been updated to reflect the Internet's transition from geeky-hobby to mainstream communication medium, and increasingly to the only way of interacting with organisations.

Where an electricity outage sees cables dug up 24/7 if necessary, BT shows no comparable urgency in fixing Broadband problems.You can't blame them for this - their shareholders wouldn't be amused to find them voluntarily incurring the extra cost of urgent response to captive customers. And the less the worry of a prolonged Broadband outage, the harder it will be for other parts of BT to use that fear to sell other services.

But while one can understand BT's profit-maximising interests, we can't leave the rural population with a poor service just because it doesn't suit the monopoly provider. We desperately need Ofcom to add the urgent fixing of Broadband problems to BT's licence conditions - and to factor the additional costs into their determination of acceptable price levels.

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Facepalm

We nearly did..

We very nearly did have what you want. It was being debated at the end of the last parliament. Sadly it ran out of time and all that survived was the content licensing aspect (what a surprise).

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DSL != utility

Your local electricity distributor will turn up PDQ in the event of a failure due to the following:

- The DNOs have enough manpower slack

- Service failures normally affect numerous users

- Service failures are normally easy to locate

Fixing broadband problems isn't (very often) as simple as digging up roads and replacing cables. Normally there are no fault conditions present (earth contact, short/open circuit (loop/dis), high resistance) and finding the problem is very much trial and error.

And as an aside, I DO fix xDSL faults for a living, including one this week that has, so far, taken around 100 man hours to resolve. It is not straightforward, service can be affected by radio interference, faulty appliances, poor wiring (usually in the house), knackered phones and lack of customer understanding.

Exchange and cable faults happen but they're not the norm.

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Holmes

No it's not a price war

It's a "eliminate any competition in rural areas" campaign. Nab all the customers in remote areas who've got their own provision that doesn't come through their wet string, then back to the usual fleece the customer pricing strategy once the competition has gone out of business.

Eliminate pockets of resistance, like in Upper Ribblesdale, and then see how much you can make the pips squeak.

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Holmes

Unsurprised by BT

I am currently working on a problem my elderly uncle has.

It very much looks as though the most effective solution is to switch from BT to another retail supplier.

One wonders if BT want to have a retail operation that provides service to ordinary individuals. And, looking at all the ultra-cheap deals on offer, one can see why they wouldn't want to compete.

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Are you getting confused?

This article isn't talking about BT's retail arm - not directly anyway. 'BT' is not one company. There are several and they are all supposed to operate independantly (or else Ofcom gets arset). BT's retail ISP (BT Broadband) is therefore just one of several ISPs that resell the wholesale service. As far as their pricing and service levels are concerned they make the same decisions that any other ISP makes.

By all means discuss the relative methods of BT as an ISP but be aware that it's a separate discussion to this news article. In particular BT wholesale's pricing woes are of no concern to BT Broadband.

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Stop

Unsuprised.

99% of joe blogs in this world don't understand the difference between BT Broadband/BT Internet or whoever they call themselves these days, and BT Wholesale...

They even think it's worth pay BT Broadband extra money, as it means they are getting the product from source. Of course BT Broadband won't tell them otherwise.....

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In other words...

...because I live in a city, I should effectively subsidise people in rural areas by paying the same price as them. For something like the NHS, I don't have a problem but If we want a communications network with equal access to everyone in the UK, it should've remained nationalised in the first bloody place.

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WTF?

Used to be the case

That used to be the case then Ofcom allowed BT to reducecharges in M3 exchanges. Almost no wholesale ISPs passed them on to the consumer. In fact I think the only one that did was PlusNet which - ironically - is owned by BT.

Anyway now it seems Ofcom has had a change of heart. I'd like to think it all made sense to someone but this is Ofcom. It doesn't need to make sense. It just has to look like they are doing something.

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Pint

This isn't the best of articles, but...

This isn't the best of articles, but it's not all that clear in the press release either.

It's not mentioned at all in the article, but aiui the "reduce prices by 12% a year, less inflation" only applies to a subset of BT's wholesale services. As far as I can tell it's applicable only to BT Wholesale's legacy IPstream services and variants thereof, which are the old as the hills, up to 8Mbit, ones using DSL technology that has been around for ten years or so (probably using exchange kit which in broadband terms is long obsolete, and which has probably been financially written off several years ago).

BT Wholesale's current preferred wholesale services, which offer ADSL2+ at nominally up to 20+ Mbit, or VDSL, or in a few places actual fibre, are based on newer kit and are not covered by this ruling.

So this ruling is imo more likely to motivate BT Wholesale to upgrade existing but obsolescent kit in already-served exchanges to provide faster services to those who can already get 8Mb or so. It will not motivate BT Wholesale to provide better service to poorly served areas. Nor will it motivate other ISPs with their own infrastructure (the 'LLU' ISPs) to start to serve areas they're not already serving.

As far as I know there is only one ISP who has taken the opportunity to pass on BTwholesale's geographic discount to end users on the relevant exchanges. That ISP? BT Sheffield, formerly Plusnet.

"The impact on BT wholesale will be non-material"

Kelly, you seem to be struggling with the concept that BT is supposed to be split into a number of separate groups, with chinese walls between them. One of those groups is BT Wholesale, capital W (or maybe BTwholesale, no space), who are supposed to provide customer-independent wholesale services to any ISP who wants to use them, with BT Retail (capital R) as just one customer of many. OK everybody knows that in reality BT Wholesale do what BT Retail want (BT Retail are, after all, BTw's biggest customer), but it would be nice to at least acknowledge the theory.

@AndueC: "It just has to look like they are doing something."

That's about the size of it.

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