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back to article BT and Virgin sue over £10m state-funded Birmingham broadband

BT and Virgin Media have thrown another legal block in front of a £10m investment in Birmingham's broadband infrastructure. The two telcos are dragging Birmingham City Council back to the European Commission by challenging a decision to allow the City council to improve broadband pipes. It means that the £10m investment plan in …

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Anonymous Coward

All infrastructure should be publicly owned but maintained by the service providers.

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Anonymous Coward

Then give VM back the £10+billion they invested in fibre infrastructure in the 1990s.

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Anonymous Coward

I didn't know VM owned any cable back in the 1990's, what regions were they in?

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Anonymous Coward

Formally known as telewest but renamed to VM

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Anonymous Coward

You didn't know VM did, but you know NTL and Telewest :-)

NTL swallowed Telewest, then merged with Virgin Mobile to become Virgin Media.

NTL and Telewest had substantial investment in cable/fibre networks (and still do).

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Anonymous Coward

Edinburgh, Birmingham, Croydon, Liverpool, Bristol, Preston, York etc..

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Anonymous Coward

Croydon?

Oh you mean "United Artists"... NTL swallowed them

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WTF?

I assumed the 'United Artists' stickers on cabling in our office here in Bristol was some band/record label that a fan had put everywhere, until it was explained to me that they were a precursor to Telewest.

It was an odd name for a telecoms provider methinks.

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Formerly known as e.g. Cambridge Cale

Or NTL or Telewest or in fact anyone of a lot of small; companies and not so small companies who spent billions investing in MAN networks and backbones.

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Megaphone

@AC 13:56

"Then give VM back the £10+billion they invested in fibre infrastructure in the 1990s."

I live in a medium sized market town in the middle of England, and no-one spent a penny on (or in other words, gave a sh*t about - see what I did there?) providing me with fibre infrastructure. So VM can go and boil their bottoms on this one.

I recently watched Orange/TMobile/EverythingEverywhere's promo vid for their 4G launch, and the message can be roughly paraphrased as "If you already live/work in a place where you can have a fast internet connection, we can sell you a faster one. But if you live somewhere too sparsely populated for anyone to have cared about you before, don't expect anyone to start caring any time soon."

The infrastructure does need nationalising, but the nature of any payback to the current owners should reflect the disparity in provision which they have created and perpatuated, as well as the outrageously knock-down price some of them (BT, for those too young to remember) paid for it in the first place. They only invested where they could make a profit, and they've had a jolly good long run at doing so - especially BT, who simply haven't had to compete at all in vast swathes of the country.

The time when anyone believed that a free market delivers the best service in an infrastructure-based natural monopoly is surely long gone, and these people need telling that they've had all we feel like giving them. It's time we took back what we built and paid for in the first place, and told them to sod off and find some other developing country to exploit.

And if they think that's a bad deal, they're welcome to dig up all their jolly-expensive fibre and take it with them. It won't make any difference to me, except that without it I'll be competing on a level playing field with city-based businesses who currently benefit from fibre connectivity but usually pay less for it than I pay for ADSL.

Oh dear, I think I forgot to take my dried frog pills this morning. Nurse??

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Re: @AC 13:56

"The time when anyone believed that a free market delivers the best service in an infrastructure-based natural monopoly is surely long gone."

You might want to tell the many morons in the Treasury who still believe that article of faith about the evidence that proves they're wrong.

But - ahem - free markets aren't about service provision, and never were. That was just a lie to sell privatisation to a snoozy public.

Free markets are mostly about extracting as much cash from their victims as possible, while providing the minimum possible level of service and long-term investment.

Occasionally you'll find a UK company that bucks that trend. But cconsidering the sorry state of our telecom infrastructure and the wretchedly abusive customer service doled out to the public by our leading telcos, it's clearly never been about making the UK better at these things.

Compare with Sth Korea where the government pumped in a relatively paltry few billion but also guaranteed loans of around $20bn for investment.

Net result - some of the best broadband in the world, at very little actual cost to the public.

It wouldn't happen here - not because of the financials, but because the critical question for UK pols is always 'How can I use this to make money for myself and my school chums?"

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Anonymous Coward

"'United Artists' ..... It was an odd name for a telecoms provider methinks."

Well, United Artists was then one of the big film studios and when cable TV first came to the UK then pay-per-view films was seen as one of the big things it would bring hence film studios wanting to get in on the act.

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"Then give VM back the £10+billion they invested in fibre infrastructure in the 1990s."

No; fuck 'em.

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Anonymous Coward

Re: @AC 13:56

> The infrastructure does need nationalising, but the nature of any payback to the current owners should reflect the disparity in provision

If it is nationalised then the payback should reflect its value otherwise is will simply be state sponsored theft.

> as well as the outrageously knock-down price

VM did not pay any knock down price. They paid to lay the cable. They still owe billions for the cost of laying that cable.

> They only invested where they could make a profit,

They are commercial companies, not charities.

> and they've had a jolly good long run at doing so

And despite this "long run" VM are still paying for the debts accumulated by laying the cable.

> It's time we took back what we built and paid for in the first place,

You neither built nor paid for it. VM did.

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Re: @AC 13:56

Go do your research properly before sounding off. Those who bought shares in BT (before there was any such thing as broadband) paid the UK government, in cash, a sum virtually equivalent to BT's current capital value over the 3 tranches of share sales. That's before inflation is taken into account, and they also took on the liabilities of the pension fund (and if you want to see what's happened there, go look at the Royal Mail where the 8bn or so defitic it having to be picked up by the tax payer).

So BT shareholders did not underpay the government, quite the reverse. The copper network was included (although Ofcom under value it as they are under industry and political pressure to do so), but the great majority of "digital" investment, including broadband, was post privatisation.

The point about public sector expenditure, is they should (like any other comparable provision) provide be included with other commercial bids with a requirement to offer wholesale terms on a non-discriminatory basis. If not, how does anybody know this is value for public money. Virgin, at least, are using their own money for their own network so would have to change policy to bid for public money.

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Anonymous Coward

"Then give VM back the £10+billion they invested in fibre infrastructure in the 1990s."

They should give me my money back for the service they should've provided me with.

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Anonymous Coward

Re: Blitheringeejit

There sure are a lot of bitter countryside types on this tech forum. Do you all live just outside of Cambridge or something?

"And if they think that's a bad deal, they're welcome to dig up all their jolly-expensive fibre and take it with them. It won't make any difference to me, except that without it I'll be competing on a level playing field with city-based businesses who currently benefit from fibre connectivity but usually pay less for it than I pay for ADSL."

Protip: If your business requires a support structure (i.e. fibre internet) in order to compete on a level playing field, start your business where that support structure is located. Do not expect other companies to build it for you when it is not in their economic interests to do so. Do not expect the taxpayer to build it for you, effectively subsidising your poor choice of location.

There are benefits to being located in the countryside, a fast internet connection is not one of them. You should have known this when you started your business. Getting pissed off at everyone else just exposes your bizarre sense of entitlement.

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FAIL

Re: @AC 13:56

No, VM paid for none of it. The bankers (and therefore, indirectly, us) who originally securitised their debt when Cable and Wireless, and later Nynex, then NTL went nearly bust paid for it. Like any other big infrastructure project, it only succeeds when the original financiers have been wiped out, and the debt reset to zero.

Anybody who bought shares in Nynex lost all their money.

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Anonymous Coward

Re: @AC 13:56

> The bankers (and therefore, indirectly, us) who originally securitised their debt when Cable and Wireless, and later Nynex, then NTL went nearly bust paid for it.

That debt is still there. It has not been written off. It is still being paid. You haven't paid for anything.

> Anybody who bought shares in Nynex lost all their money

And here lies the root of your issues, a bad investment.

Nynex = New York/New England eXchange and as far as I am aware was never listed on the London Stock Exchange.

Nynex merged with Bell Atlantic (which became Verizon Communications) and its UK assets merged with Mercury Communication.

If you read the disclaimer attached to pretty much any investment it will tell you that share values can go down as well as up. Personally, I have lost money on shares in Telewest, BT and Vodaphone. It is my own fault for buying them, nobody else’s.

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Re: @The Other Hobbes

Why does the word "railways" keep hovering at the edge of my consciousness while I read your post?

There's also a murmur of "electricity", "gas", and even "water"

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Happy

Re: @AC 13:56

>VM can go and boil their bottoms on this one

That cheered me up no end on a dull morning. Ta.

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Re: @AC 13:56

"Compare with Sth Korea where the government pumped in a relatively paltry few billion but also guaranteed loans of around $20bn for investment.

Net result - some of the best broadband in the world, at very little actual cost to the public.

It wouldn't happen here - not because of the financials, but because the critical question for UK pols is always 'How can I use this to make money for myself and my school chums?"

Erm... there is that, but also South Korea is densely populated with quite a few residents having fibre to a block of appartments and then Ethernet from there.

Might work well in some areas but what about the rural areas where there would be the need to run one piece of fibre for miles to a property?

Don't get me wrong, I'm not on BT or Virgin's side. BT seem to me to mainly roll out FTTC to the areas already covered by Virgin... and Virgin don't cover all areas of where I live... I'm one of the lucky ones that has been cabled up so I can get Virgin cable or ADSL (not FTTC/FTTP for the forseeable future though) and some areas are left pretty much with the equivalent of wet string :-/

Rob

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Anonymous Coward

**Virgin Media spokespeople argued that the planned investment was being made in the wrong place:**

Wish Virgin would invest in equipment to make my local area work again instead of spending the cash on lawyers.

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It would also have set a dangerous precedent.

Imagine the terrible things that would befall us if governments spent money on building infrastructure.

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WTF?

Back the Council

So how can I back the council on this one?

BT and Virgin have sat on their rears for too long, thinking about maybe installing fast broadband possibly perhaps, rather than actually doing the digging and getting it deployed. And even if this public project does ruin the commercial aspect, there are plenty of area's not covered here which need these services deployed.

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Government money into a private market is substantially flawed? So BT won't want any of that £150 million then?

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something is amiss here....

I'm wondering if there is something we're not being told in the articles that are written about this situation. Did Birmingham council perhaps mislead Virgin into thinking it would spend it's £10,000,000 with Virgin, in order for them to construct the infrastructure in the Birmingham area, in order to get their co-operation and expertise in a field that they would otherwise know nothing about, then stab them in the back by deciding to do it all on their own?

I'm with Virgin and BT here. BT was privatised because of the simple fact that governments are CRAP at running services like this. Look at the DWP and the NHS for prime examples of just how badly governments run public services, far better for it to be run by a private company that has an interest in keeping it's customers happy and improving services.

It's probably worth pointing out here, that I left Virgin Media years ago and will never use them again, because the exit service I received, was absolutely dire. Also, I left BT nearly a year ago in favor of Sky, because I was getting 2 - 4Mbps max and I knew my line was capable of 16Mbps, which I now get on Sky.

As you can see, I'm no fan of either of these companies, but a government, local or national, building, managing and running the services related to this kind of infrastructure, is a recipe for disaster, where they'll end up having to sell the whole thing off to VM or BT at some point anyway, likely at a MASSIVE loss to the taxpayer.

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Anonymous Coward

Re: something is amiss here....

The government only provides the money, not the manpower to put it in place.

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Stop

Re: something is amiss here....

The NHS is a crap example - see the US for details.....

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Re: something is amiss here....

"I'm with Virgin and BT here. BT was privatised because of the simple fact that governments are CRAP at running services like this. Look at the DWP and the NHS for prime examples of just how badly governments run public services, far better for it to be run by a private company that has an interest in keeping it's customers happy and improving services."

Yeah, just like our rail network!

...oh, right.

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Re: something is amiss here....

How about using the railways as an example, or maybe the gas/electricity. All wonderful examples of how the private sector bring around better competition and keep the prices low, making it better for the public while giving a *small* cut to the private investors.

On the other hand maybe you were being sarcastic yourself, seeing as you mentioned the NHS, which is better than anything the private sector could manage.

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Re: something is amiss here....

I Think more likely that BT & Virgin assumed this would be a pot of public money thay would be divvied up between them.

"Virgin and BT allege that that public money will skew the private market "

"BT said that the decision to allow government money into a private market is "substantially flawed":"

More-so say than BT or VM getting BDUK funding? Will BT hand back all the public hat it has spent in other areas? Or is that OK as BT Group becomes the wholesaler as well as the owner of publicly part - funded assets?

There really needs to be a major overhaul of Comms legislation in the UK, a REAL split between the network operating group from the other branches and removal of the Voice requirement for Broadband service, which might even help tame some of the rogue SFI charges.

Its about time these 2 abusers of SMP were put firmly in their places - nationalise the network and split it between them to run under contract with huge penaties for missed targets and avoidable service failures.

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Big Brother

Re: something is amiss here....

BT since it was privatised has been crap, it takes 90 days for BT Openreach to put an additional line in to your office in a major urban area (lords knows how long to get a cable for outer no-where UK)

When it was the old publically own GPO, everybody in the country who wanted to be connected to that new fandgled telephoine system had the option, and it cost the same, regardless of it being central london or central hebredies.

If you live in central bedfordshire (not the middle of nowhere, just outside of Luton and Dunstable), the only option for 2/3rd of the population if 56K dial up.

So if BT and Virgin are so crap at delivering service availability in the middle of birmingham, to the state the councilors think they have to spend public money to meet the cities business and domestic goals, this says tons about the private company's management teams.

So personally I think that unless the BT-VM duopoly can show that BCC is taking away customers that would otherwise have used the service they had in place, the judge should bounce them out of court and award costs to the tax payer, for trying to use the courts to protect absymal customer service, and crap business offerings.

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Re: something is amiss here....

"far better for it to be run by a private company that has an interest in keeping it's customers happy and improving services."

And there is the key flaw with privatisation of public services. The private companies that run these services have only one goal. To make as much money for their share/stakeholders as possible, if that happens to result in happy customers and improved services then great! Unfortunately 99.9% of the time it results in customers being screwed at every turn and worse service.

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Re: something is amiss here....

"governments are CRAP at running services like this"

"Virgin Media ... exit service I received, was absolutely dire"

"BT ... I was getting 2 - 4Mbps max"

So privatised services are the solution?

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Re: something is amiss here....

Oh I don't know about that, I got an op inside 3 weeks going private, the NHS couldn't even give me a rough estimate of a date.

In fact it is so good that many Trusts use the private sector to help deliver services they have undertaken to provide.

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Re: something is amiss here....

In many cases the Trusts are required to provide a % of their work to private contractors, from cleaning companies to the likes of bupa. Needless to say the medical work tends to be the easier, lower cost (to the contractor), low risk work, which leads to the private companies looking so much more efficient than their NHS counterparts. ( efficient vs effective, never confuse the two )

Of course if you're having a medical procedure done privately and the contractor screws up then you'd better hope the local NHS hospital hasn't had all of its operating theatres closed down.

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"everybody in the country who wanted to be connected ... had the option"

I think you must either have slept through the period (or perhaps had not been born) when you had to put your name on a waiting list for months or years to get even a party line from the good old Post Office - largely because the Treasury had limited funds to give them to build out their network, but partly because the GPO was used as a mechanism to prop up British manufacturing firms and its growth was also limited by their capacity.

I'm afraid the government's history of "market failure" intervention has been pretty dire too.

Don't know what the solution is, but it doesn't lie in rose-tinted nostalgia.

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Anonymous Coward

Re: something is amiss here....

"When it was the old publically own GPO, everybody in the country who wanted to be connected to that new fandgled telephoine system had the option, and it cost the same, regardless of it being central london or central hebredies."

In 1972 I moved into a flat in Bracknell that had a telephone line and handset - but no dial tone. When I asked for it to be activated I was told by the GPO that the waiting list for numbers was at least a year.

Those were the days when you had a theoretical choice between a 1950s bell handset - or the luxury extra of a trilling Trimphone. Extensions had to be cabled by the GPO.

Not sure when consumer sourcing of handsets and extensions became legal. My recollection is that the privatised BT opposed such liberalisation - as they made money out of renting consumers their handset as well as the line.

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Unhappy

Re: something is amiss here....

"So if BT and Virgin are so crap at delivering service availability in the middle of birmingham, to the state the councilors think they have to spend public money to meet the cities business and domestic goals, this says tons about the private company's management teams."

Indeed it does.

The *only* real priority of a public company is to make *profit*.

But for some this means *stopping* any new entrants as well.

The idea that they would use *some* of their profits to roll out their bandwidth as a sort of "long term" investment suggests a level of vision which in large UK companies is simply *laughable*

UK banks did it when there was a *suggestion* that the strict rules on who could be in a local credit union were under review. The banks did not want the competition, *despite* the fact the areas they were talking about barely had any banks in them to *begin* with.

Market failure. What market failure? I see no oligopoly here.

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Unhappy

Re: something is amiss here....

"In fact it is so good that many Trusts use the private sector to help deliver services they have undertaken to provide."

Funny the rule I heard was if a private provider's operation goes sideways they *dump* it on the NHS.

IIRC BUPA was the only one which did this and did *not* re-imburse for the costs (because it was *not* a formal agreement).

But perhaps the times have changed. ...

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WTF?

Re: something is amiss here....

It's not so much a "dump" but it's part of contractual arrangements.

The overwhelming majority of private hospitals in the UK have no emergency facilities and are just acute centres performing routine operations. Whilst many will have something resembling an intensive care unit, these are only staffed when there are patients scheduled who would require it post-operatively.

In the interests of patient care a patient will be transferred to the local NHS hospital should something go wrong, because they have the facilities to deal with this. It's not often things do go wrong like this (as I say, this is mostly routine) so for the private sector to build, maintain and staff such facilities just wouldn't be economical.

I work in a private hospital and although we undertake work from many trusts in a fairly large area (to keep NHS waiting list times down), we have a contract with our local trust such that we can transfer a patient if necessary.

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Flame

Re: something is amiss here....

"BT was privatised because of the simple fact that governments are CRAP at running services like this. Look at the DWP and the NHS for prime examples of just how badly governments run public services, far better for it to be run by a private company that has an interest in keeping it's customers happy and improving services."

Man, you are stupid. BT was privatized for doctrinal reasons. In fact, public or private makes no inherent difference to the quality of management nor the efficiency of service, what matters is whether the people in charge are punished for their mistakes. The banks are a nice demonstration of this and on their own demolish most of your assertion. The NHS finishes it off because, in fact, the NHS is substantially better than any private system in the world. Private medicine under-treats the poor and over-treats the rich giving a very inefficient overall result where treatment, and money, are allocated in almost completely the wrong places (since the poor generally need more treatment than the rich, not less).

There is an illusion in the UK that private medicine is a great thing because at the moment the parasitic private sector is "stepping in" (ie, profiteering) to an NHS which is being mal-administered by people who want rid of it. In fact, if you look into it, you'll find lots of problems with private hospitals and care homes which don't get a lot of coverage because there aren't big lobbying firms putting out briefs about them to the media while the same companies are delighted with every anti-NHS story they can place in the papers or TV news.

Once the NHS is gone and referrals to those private hospitals with their CAT scanners etc. are not being determined by people with no particular interest in fleecing you, then you'll find out just how fabulous the private sector can be. If you live that long.

BT, meanwhile, are just as shit as they were before they were privatized.

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WTF?

Clearly Illegal

Public sector spending can only be justified where the market fails. This is in rural areas where you cannot get BB at speeds of more than 0.5Mbps not in the centre of Birmingham where 99% of people can get 20Mbps or more.

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Anonymous Coward

Re: Clearly Illegal

Why should the public sector have to keep bailing out the private sector when it fails?

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Big Brother

Re: Clearly Illegal

"This is in rural areas where you cannot get BB at speeds of more than 0.5Mbps"

This also includes areas 5 miles down the road from major urban centres (e.g. Luton is not exactly outer mongolia), and if you can get a line they use the lack of competition to keep the prices over inflated, one only has to look at the underhanded tactics BT has used where villages have got together to set up their own netrwork, and lo and behold, BT start offering a service in the area they previously would not touch,

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Re: Clearly Illegal

Surely the market in this case has said it isn't cost effective for the to setup these new connections - is that a failing or just an outcome you didn't want?

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Re: Clearly Illegal

I live within about a mile and a half of the centre of Birmingham, and I don't get even close to any 20MB no matter whom I choose ot spend my money with......

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Re: Clearly Illegal

>Why should the public sector have to keep bailing out the private sector when it fails?

Why does the public sector feel the need to keep bailing out the private sector?

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