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back to article Ofcom probes BT over fibre pricing after repeated gripes from TalkTalk

Former jockey Dido Harding has convinced communications watchdog Ofcom to investigate BT, after the TalkTalk boss repeatedly complained about her rival's stranglehold on the fibre broadband market. The regulator opened a case on Wednesday to probe "alleged margin squeeze in superfast broadband pricing". The allegation is that BT …

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FAIL

Funny how...

These sorts of cases always benefit the businesses but never seem to benefit the consumer in terms of real reduced costs.

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Anonymous Coward

WHo'd have thought?

That BT is still acting in a monopolistic way ?

I could have told you (OFCOM) long ago. GEt your fingers out of your backside and DO something.

When fibre is becoming the norm everywhere, they are still pitching it as a premium product. ( A bit like Apple Iphones).

And of course they have full control on the Fibre, other ISPs are just resellers at higher prices.

WTF is wrong with our British companies? Too greedy? Thats would be an understatement.

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Anonymous Coward

Re: WHo'd have thought?

>WTF is wrong with our British companies? Too greedy? Thats would be an understatement.

Sorry, but there's a profit to be had.

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The problem with British companies is

the snowball effect of costs.

Because of the high taxes, charges and costs of doing business in the UK, all this snowballs into higher costs.

Because there are higher costs, the cut they want (the profit) has to be added ontop of these higher costs.

Because of these higher costs employees of such companies demand more money, which increases costs.

Hell look at Witherspoons they pay £17 in taxes and charges for every £1 profit they make.

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FAIL

Re: The problem with British companies is

Ummm... Bollocks. You know companies only pay taxes on profits, right?

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Re: The problem with British companies is

@Kenno - "Hell look at Witherspoons they pay £17 in taxes and charges for every £1 profit they make."

I am reading that as they lose £16 for every £1 they make. Are you sure that is right - any business doing that would have to be web based ... no other company could sustain such losses and still exist (I remember the initial web bubble well)

If, however, you are saying that it costs them £17 to make £1 profit (so they make £18 for every £17 spent) then that would be a different story entirely - there is always a cost to produce something (if production cost nothing we would all be billionaires. And equally worthless).

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Re: The problem with British companies is

I think what he meant was they needed to make £17 gross profit to get a £1 net profit. Although I might be misunderstanding here.

Wouldn't surprise me however, people I know used to run a pub, it was cheaper for them to buy bottles from asda than it was the brewery.

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I'd also be interested in how it's mostly residential areas that are benefiting from this, too!

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If I read that correctly....

Did I read that correctly that TT are complaining that BTOR isn't making enough profit on fibre so they want BT to increase the prices so they make more profit? So if TT win, Ofcom will make fibre more expensive for everyone?

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Meh

Re: If I read that correctly....

I don't think that's right. What TT is saying is that BTor is making too much profit but BTr is making too little. I'm not sure about the former but on the latter front BT Infinity has been very competitive all along.

But it's all very complicated. I thought no-one bought direct from BTor except for BTw. But TT may be using GEA in which case perhaps that is bought direct from BTor.

Anyway the important thing to note is that despite the names BTr should not be able to subsidise itself from BTor. But reading between the lines I think that's what TT is implying.

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Re: If I read that correctly....

Ran out of edit time.

The main divisions of BT are basically:

BT Openreach (aka BTor) - Responsible for the physical layer.

BT Wholesale - Create services for the wholesale market based around BTor's products.

BT Retail - Just an ISP. Like any other.

And supposedly all these are separate and buy/sell from the free market the same as any other company.

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Anonymous Coward

Re: If I read that correctly....

You forgot BT Greed - The people in charge.

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Anonymous Coward

should have been split into two seperate companies

I suspect the way BT works it is:

BT sell fibre with unlimited data, but looking at costing from openreach "nobody" can do that and charge a single price as all the data is charged per GB so the base cost to "any company" is totally variable when trying to offer "unlimited" data limits .

This means that for competitors to compete they are going to end up with users costing them more money than the customer is paying, BT is in the same boat.

BUT BT and Openreach are the same company so whatever virtual loss that the users cost BT, is merely an accounting problem as they are effectively paying themselves (loss on BT side balanced by increase profit on Openreach side) so BT overall don't have a loss.

BT are doing this to unfairly grab as many customers as possible into long term 18/24month contracts before they get caught, This will force other ISP's out of the market and reduce their competition.

Competitors can't do this as they aren't paying them selves for the extra GB, they are paying Openreach(BT) so if they tried to compete on the same terms they actually increase Openreach(bt) profits, and loose money.

Simple really hidden by accounting and pretending BT and openreach are independant of each other, which they are not!!.

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Anonymous Coward

Re: should have been split into two seperate companies

Forgot to say:

That once BT have the market mainly to themselves, they will then start adding data caps and price increases and throttling. (They have done this before when market was all dial up, using "un-metered" minutes, once they had driven early ISP's to the wall, restrictions and price increases followed )

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FAIL

the length of these "enquiries" astonishes me

I am continually astonished by the lengths that there, on the surface, rather simple enquiries take. 3-6 months for an initial report? Erm - how much is BT retail charging? How much does BT Wholesale (OR) charge? Subtract the two, divide into a percentage and see if it's fair. Even with a power point that will not take more than an hour as it's all pretty much public data.

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Coat

It did cost BT

Lots of money to stick long bits of glass up dark holes, then Pricing Infinity to Make Profit from other ISP's to recoup costs. Sound like a good business model to me. Maybe TT should invest a few £1billion in FTTC instead of bitching they cant have it cheap as chips after the BT infrastructure investment.

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erm

Am I missing something as I though the tender to fibre the land was put out to numerous companies and BT won. Wouldn't that mean that Talk Talk was offered the chance to bid but didn't and now they are in a huff that another business is charging them to use the infrastructure that it has put down?

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Re: erm

You are confusing BDUK with BT's private investment. Furthermore TT are not complaining about paying to use the product, but rather that BT Group shift margin from retail to Openreach in order to squeeze competitors out of the market, and thus an abuse of their position.

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Anonymous Coward

Go look at the public accounts statements on the BT website. You shall see that Openreach is by far the most profitable part of the entire group. BT Group can afford to squeeze margins in wholesale and retail. Cut Openreach out of the BT group and then see what happens. This is the only way it should be.

There is a good reason that Openreach have not deployed FTTP, and it's not just about cost (FTTP *does* generate tidy profits in cost modelling) . FTTC means that Openreach customers must take a BT product rather than LLU in order to provide broadband, unless they duplicate the FTTC infrastructure. FTTC means the end of LLU where as FTTP would have been pushed in to producing a fibre LLU equivalent. Again, BT has engineered the FTTP network in such a manner as to make LLU wholesaling difficult by placing the GPON splitters too close to the end users, meaning the network can't be reconfigured easily, rather than at a select number of aggregation nodes or the exchange.

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Interesting that Ofcom gave the OK for EE to have a monopoly on 4G but that they've not happy with BT for this...

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Bronze badge

Openreach should not be part of the BT group

BT Group can simply make their other divisions make no profit and cover it using Openreach's profits.

Split the company up properly, and not just using a rule book and it might change the face of internet in the UK.

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sweating copper

I didn't think TT had any copper, surely all the copper is leased from BT.

BT are suggesting that TT should invest in a FTTC infrastructure, maybe they should and then maybe Sky should get one and then all the streets will be lined with endless monolithic green boxes.

What should be happening is for someone to be doing the job properly in the first place and installing an underground fibre network that reaches to the home and can be used easily by ISPs.

BT needs to be broken up it's too easy for the different parts of the business to gain an advantage by trading services. The ISP is one place where this happens but there are others. I have BT maintain one of our telephone systems the engineer that fixes the telephone system is able to call the engineer that fixes the ISDN line, remote access is provided over a dedicated BT line that gets installed without any payment or paperwork.

You just need to look at the state of the Internet in Hull to see why this kind of monopoly is such a bad idea.

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Anonymous Coward

Re: sweating copper

You seem to be arguing both for a monopoly (no competing last mile networks) and against one (Hull).

I'm not sure there is a monopoly - Virgin's last mile network is pretty big. 3G and 4G broadband is also a viable alternative to fixed broadband. That those other providers choose or are not compelled to wholesale service to other ISPs is probably not BT's fault. The quickest route to competition in the underlying infrastructure would be to compel Virgin to wholesale access to other ISPs.

Regardless - the biggest issue with FTTx is the economics. At current market rates it takes over a decade to pay back the cost of an install. Add to that the fact that only 15% of households passed take the service. Businesses who build out infrastructure thus only do it where they know they'll get enough customers to make it pay. Those numbers don't change much for BT or Virgin or A.N.Other Telco. Whoever builds out a full national FTTx network will go bust. If we ask the government to do it for us, it will cost us all more in tax, regardless of whether or not we want high speed broadband. At least with the current model the people who want broadband pay for broadband.

Anyway - this isn't particularly relevant to the topic of the article. It's more of a general point - the lack of widespread FTTH isn't due to BT or Virgin or anyone else dragging their heels or refusing to invest. It's because not very many people want it, and those who do don't want to pay very much for it.

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