back to article Ofcom proposes ways to stop BT undercutting broadband rivals

Ofcom wants to slap new measures on BT to prevent it from undercutting rivals investing in super and ultrafast broadband. The UK communications regulator today proposed a clause in its draft plans to address BT's "significant market power" aimed at preventing the former state monopoly from targeted discounting of its wholesale …

Anonymous Coward

How about opening up Virginmedia's network

Whilst Ofcom are right to try and prevent predatory pricing, isn't it about time that they started to put some pressure on Virginmedia, who claim to have access to 60% of UK homes, and are planning to raise this to 70% under Project Lightnng? They're hardly a minnow any more, and a good dose of unbundling would help customers there.

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Facepalm

Re: How about opening up Virginmedia's network

You might not realise, but VM use BT cabling where they don't have CATV cable installed to provide ADSL, just like Sky et al.

Muppet.

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Re: How about opening up Virginmedia's network

Of course I know that you twerp (since you're into name calling). I was talking specifically, as per the fucking title, about Virginmedia's network, not their use of Openreach cable outside their CATV area.

Why should Openreach have to allow in particular VM access to their network, when VM do not have to? LLU makes sense for those companies with very small netorks, or no network, that doesn't apply to VM.

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Re: How about opening up Virginmedia's network

Virgin Media don't do ADSL.They sold their ADSL customers to Talk Talk well over 2 years ago.

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Re: How about opening up Virginmedia's network

No, Virgin no longer do that. I trust VerminMedia even less than OpenWretch though.

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Re: How about opening up Virginmedia's network

Unlike BT, Virgin's network wasn't rolled out using huge amounts of government funding.

Furthermore, Virgin and haven't been taking large government contracts over the last 2 decades to rollout broadband and then failing to actually do what they were contracted to do.

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If BT can lower their prices........

If BT can lower their prices, then why not nationalise the UK's internet backbone infrastructure lower the prices for all and invest in providing decent services to the whole country.

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Re: If BT can lower their prices........

"nationalise the UK's internet backbone infrastructure lower the prices for all and invest"

Historically these tend to be mutually exclusive options.

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Re: If BT can lower their prices........

"We'd love to roll out broadband to your village, but this other government department needs the money more".

That's why the government should almost never nationalise.

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Re: If BT can lower their prices........

I remember nationalized BT. I remember the media frenzy when the range of phones was doubled by the introduction of the Trimphone. I remember most of the houses in my parents' street not having a phone because it was unaffordable. I remember it taking 3 months to get a phone installed in my first house - and then I remember only using it for essential stuff after 6PM because of the cost. Happy days.

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Re: If BT can lower their prices........

I remember it taking 5 months to get a phone installed in my new house, that was 3 years ago, and all they needed to do was reconnect the wire at the exchange.

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Re: If BT can lower their prices........

Yep, an acquaintance of mine moved on to a new build estate in May and still don't have a phone line and neither do any of the other homes on the site - lack of capacity in the local exchange is apparently the issue, with no plans to upgrade. Worrying as at least another 200+ new homes being built around here!

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Re: If BT can lower their prices........

I remember the days...

Those bad experiences may not be because it was nationalised. The technology was different, the environment was different.

IIRC when the government was running the East Coast Main Line railway franchise relatively recently it was better than any of the private operators who have done that. Yet people still moan about the bad old days of BR.

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Re: If BT can lower their prices........

@ Slacker@work: You don't happen to be somewhere in Central Lancashire do you? I know of one very large new build area there.

A further point relevant to the title if not Slacker's point... this from the Ofcom report, Para 4.14.

However, we do not think it would be proportionate to introduce additional measures at this stage to restrict BT’s retail pricing. Introducing restrictions on BT’s retail pricing would entail a major intervention in retail markets that are currently broadly competitive and which we do not regulate.

I get the feeling that BT might be playing fast and loose with its wholesale prices by screwing its retail customers, of which I am one. Having seen various other company's prices I get the distinct feeling that BT's retail customers may be getting a raw deal. Mind you with all the introductory prices flying around it becomes difficult to tell, which is probably what is intended.

It all rather suggests that Ofcom is not bothered about the retail implications of its current / future policy.

.

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Re: If BT can lower their prices........

Damn here in the states that is about a week .

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Anonymous Coward

Re: If BT can lower their prices........

"If BT can lower their prices, then why not nationalise the UK's internet backbone infrastructure"

How much of the backbone do you think BT owns? Are you including things like LINX in that?

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Re: If BT can lower their prices........

@Doctor Syntax. I have a feeling that if BT hadn't been privatised it could have fitted FTTP for less than it costs to maintain copper in most cases. When I worked there nearly 28 years ago now the actual cost of 6km of fibre and the transceivers at either end would have been less than £100 per property - assuming you could run 10km of cable in one go but we probably could have done it in ten hops for a similar price by now.

I've lived here for 11 years and am on my 4th pair and have openreach out at least once a year for two or three hours while they track down faults and many of my neighbours have similar tales so I'd imagine the cost of simply replacing copper with fibre would, in the long term actually have been a lot less than BT have paid, and will continue to pay until the government coughs up to get fibre fitted fuckwits that they are.

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Re: If BT can lower their prices........

@headly_grange. Well the government specifically managed BTs budgets to ensure this sort of thing happened. BT was making several hundred million profit before privatisation and one of the reasons was it was not allowed to invest that money in the infrastructure.

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Re: If BT can lower their prices........

I remember it taking SIX MONTHS to get three phone lines installed at a customer of ours in Wales about 9 months ago! Ironically, three months later, they were told they could get full FTTP, and that took only three months to put in. As soon as that went in, we cancelled the phone lines and they went over to VoIP!

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God bless Virgin with their free evening calls

That in the small print start at 7pm, and charge you if you go over an hour.

My take is that whatever there is out there, will try to shaft you.

Your only hope is there being more out there.

I'm just about old enough to remember Trimphones and the like. When phones actually came with 'plugs' I most definitely remember 3rd party phones having to be certified as being 'legal' to use on the network (green circle versus red triangle).

My parents told me stories about having to 'book' international calls when travelling ("Come back to the post office at 2pm next Thursday).

Reassuringly all cements my feeling that everything is getting better - and people always like to whine :)

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You have a BT pension?

If so, you're why BT is expensive and needs money now.

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FAIL

Progress, eh?

"I remember it taking 5 months to get a phone installed in my new house, that was 3 years ago, and all they needed to do was reconnect the wire at the exchange."

It improved a whole month in the intervening 34 years.

I had to wait 6 months in 1980, for a brand new house with the wiring already installed.

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Re: God bless Virgin with their free evening calls

"My parents told me stories about having to 'book' international calls when travelling ("Come back to the post office at 2pm next Thursday)."

In 1976 I could direct dial my parents in Yorkshire but a friend had to go through the operator (expensive) to call her parents in Winchester.

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Anonymous Coward

Re: You have a BT pension?

"You have a BT pension?

If so, you're why BT is expensive and needs money now."

O'really?

You don't suppose BT perhaps is expensive and needs loadsamoney now largely because of the sustained incompetence and lack of vision of its senior management, who in various BT divisions have relied on abuse of significant market power to sustain their commercial market position, and in the retail telco market in particular the other big players have been happy to play the cartel game?

E.g. BT's wholesale prices go down, major retailers prices don't go down, retail prices all go up in lockstep..

E.g. name three competitive contracts in the last couple of decades that have won because they genuinely had the best offering, rather than because they knew how to manipulate the bid process at a very senior level.

Etc

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Holmes

Re: If BT can lower their prices........

@slacker

So now OR have competition in the form of VM, BARN, Gigaclear, VF etc, those alternative network providers are rushing to fulfill your connection the for some reason of obvious idleness OR can’t be bothered to hook those houses up........

Didn’t think so.

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Re: If BT can lower their prices........

@commswonk

a OFCOM are really aiming at wholesale pricing here.

While they have a current initiative to chop wholesale pricing especially for fttc, some other altnets are now complaining that that will deter their plans to build new nets as they won’t get their money back in addition if the wholesale cost is low the retail cost of fttc wil tumble and consumers won’t bother to look for full fibre if fttc is good enough and vastly cheaper.

OFCOM wanted low fttc costs to try and persuade consumers to ditch ADSL, they didn’t think it through and now realise low wholesale and fttc will deter new altnets. Fiddling with BT retail costs of fttc would allow low wholesale fttc but Force a minimum retail for fttc thereby providing some artificial margin for altnets to deploy their networks in and earn a profit. Of course that is all nonsense and all that would happen is altnets would just use OR wholesale and undercut BT Earn even more profit but OFCOM will never see it that way.

I still think to kick start proper competition (ok a 2 horse race) VM needs to be forced to wholesale their network. OR will then be forced to upgrade, and VM will get a huge revenue boost due to huge numbers of additional customers. Sky might not be too happy though (isp’s Could bundle vm tv with their B.B.), but then that’s just more competition in the tv market which should be good for consumers too.

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Re: If BT can lower their prices........

@Tom7

BT wanted to replace copper with fibre but Maggie stopped them, as the cable companies complained it would make their deployments unviable. BT. Had factories lined up and where ready to go.

http://www.techradar.com/news/world-of-tech/how-the-uk-lost-the-broadband-race-in-1990-1224784

Fibre transceivers aren’t cheap, I can’t imagine they where less than £100 28 years ago, unless they where extremely slow like tens of kb’s slow, in which case they would not be comparable to what we are doing today with lots of data down the fibre.

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Re: If BT can lower their prices........

"Fibre transceivers aren’t cheap, I can’t imagine they where less than £100 28 years ago, unless they where extremely slow like tens of kb’s slow..."

FDDI was 100Mb/s with a range of up to 200 km, and dates back to 1986-1989-ish. A customer had it in 1996 (21 years ago).

Source: Wiki - see "References" at the bottom of the article for various dates.

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Re: If BT can lower their prices........

Australia is in the process of this single nationalized network folly with their NBN.

One result is that a private company TPG, who were rolling out fibre infrastructure, were prevented from expanding their reach because the NBN' "equal for all" aspirations may be "threatened" by TPG's "cherry picking" of "areas of high return".

NBN was a political solution based on "high speed connections for all" but it's not turning out that way and is horrendously over budget and behind time (and over regulated). Many communities who were expecting fibre connections are ending up with under performing fixed wireless and satellite connections.

NBN legislation dictates that ADSL has to be switched off once NBN is in an area - and as NBN is only a wholesaler the retailers then have to sell new NBN connections at, surprisingly, higher cost than your old ADSl. While the connection speed may be higher the actual thru put is in many cases lower because of the complicated deals and contention issues at peak times. There is no point in having a 100Mbit connection to a network if the network can only serve you dribs and drabs while it also serves your neighbors (just like VirginMedia??).

I don't know what business model would deliver fair affordable high speed services for all but having another nationalized industry may not be the way to go - and anyway once all our tax pounds were sunk in it the government would no doubt sell it and we would be back to where were are.

It seems however that a modified quote, attributed to Churchill, " “Democracy is the worst form of government, except for all the others.” applies along the lines of " A nationalized backbone solution is the worst method for delivering equal Internet access for all, except for all the others.”

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Re: If BT can lower their prices........

@tom7

if it was not for Margaret Thatcher in 1990 we would of had full FTTP within a short time to replace the copper network(they was going to completely replace copper with fiber) but Thatcher blocked it (BT even had built the factory in the Uk for making fiber and the equipment which had to be written off)

this is a good read (below) on how one bad decision to block it on anticompetitive ground now cost the UK a lot of money in long run (as FTTP in 1990 would of not cost as much and BT was going to do it on there own as well, now we are mostly stuck with a Stop gap called VDSL/FTTC

http://www.techradar.com/news/world-of-tech/how-the-uk-lost-the-broadband-race-in-1990-1224784

if this had happened virgin media probably be on 1gb by now but they dont need to as fastest BT can provide ranges from 10-70mb (as they would actually have to compete with BT/openreach)

this is why i am slightly annoyed with BDUK going with VDSL/FTTC instead of FTTP, as VDSL/FTTC is a stop gap and its highest speed only achievable on less then 200m lines

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Re: If BT can lower their prices........

It's only a week in the States if the circuit is ready. There are places where reachability is a problem too.

Here in the UK, most places (i.e. urban) it takes a few days to get a phone line in. We order phone lines for our customers, and most of the time it's 1-2 weeks. There's often an expedited service available which is 1-2 days (at a cost of course!).

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Re: If BT can lower their prices........

This argument, often trotted out, against re-nationisation always strikes me to be, at least, disingenuous, more likely it's FUD. Things have moved on: " Britain's only publicly owned railway was delivering all-time record levels of punctuality before it was flogged off by the Tory Government last year.

The last end-of-year report on the East Coast mainline found passenger satisfaction was also at an “all-time record” for any long-distance line by mid-2015.

Publicly-owned Directly Operated Railways also made more than £1billion for the Treasury before the line was privatised in May 2015, the report shows.

Labour’s Shadow Transport Secretary Lilian Greenwood said: “This report proves once and for all that public ownership of the railways would deliver better services for passengers.

“It delivered record punctuality and satisfaction scores for passengers alongside better working conditions for staff.” DM, January 15th, 2016.

Then this on Wednesday: "The East Coast rail franchise will be terminated three years early, avoiding the embarrassment of another private firm handing back the keys to the government but potentially forfeiting hundreds of millions in premiums due to the Treasury.

Under a rail strategy announced by the transport secretary, Chris Grayling, a new partnership model will replace the franchise contract of Virgin Trains East Coast (Vtec). " The Guardian, November 29th, 2017. No need to make it up!

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Re: If BT can lower their prices........

"some other altnets are now complaining that that will deter their plans to build new nets as they won’t get their money back"

More to the point, based on past form, as soon as XYZ altnet announces plans to provide commercial broadband in any given village within 3 months after laying in the comms links and running tests to ensure every house can be covered, BT tells Openreach to suddenly decide it's economic to provide xDSL after all and sends a team of 500 people out to doorstep every house and get signups for contracts with BT broadband services.

When the Altnet then tries to get people who've expressed interest to actually sign a contract, they find that "Oh, we've signed a contract with BT and they've promised installation within a month"

BT then sit back knowing they've nobbled the altnet and can take as long as they like to actually _install_ that broadband - in Cranleigh the actual installation took more than 2 years and it was about 3 before any connections went live, with large portions of the village taking 6+ years to get connected.

And of course to do this kind of tiger-team installation takes Openreach away from the areas where it's being paid by the government to roll out broadband, so things get delayed there too.

THAT is the kind of anticompetitive behaviour that BT is getting away with.

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Re: If BT can lower their prices........

It's hard to compare rail with telecoms.

The nationalised BR at its core still had the mindset of the private companies which preceeded it and treated "opposition" lines accordingly when they gained control of them (retaliation and revenge), instead of treating them as assets to be used appropriately. This is why the Midland Mainline was torn up and the rights-of-way sold off, which in turn is leading to so many problems with capacity today.

This problem went right on up until the time when it was reprivatised, at which time many of the old management which still dated back to those days was removed. The politics of the original companies still rings throughout the industry - one example being HS2, which for some obscure reason is being built in one direction from London northwards over a 25 year period instead of from Birmingham North/south Manchester north/south/ etc over a period of less than 10 (Lest you think this would be pie in the sky it's EXACTLY how the Eurostar/TGV route was built from Brussels to Amsterdam. I was living in Rotterdam at the time and it was interesting to see how the works proceeded in each direction until they linked up.)

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Anonymous Coward

OK but...

"a restriction on BT's ability to vary its wholesale rental charges, in its fibre to the cabinet (FTTC) footprint, between different areas," "

It's good to see Ofcon trying to address this, but Is there anything to stop BT offering a selective *refund* to ISP for customers in "low cost areas"? I

BT have done that in the past, maybe they're still doing it now, but very few ISPs make the low cost area "discount/refund" visible to retail customers. Plusnet, now owned by BT, were one of the few that sed to offer location-dependent retail pricing.

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Anonymous Coward

Re: OK but...

When BT first started doing this location-based pricing in disguise, the word of the day wasn't "refund", it was "rebate". Same concept, different name; it applied to over a thousand exchanges. Basically, anywhere BTwholesale had possible broadband competition from LLU or cable companies, they offered a cheaper service. And Ofcon stood by and watched. Gosh what a surprise.

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BT can sell BB at no profit...

...and still have the company as a whole make money.

Which makes it odd that they are about the most expensive provider out there.

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If only BT would undercut someone else!

I pay a bloody fortune for Infinity 2 plus the sports pack.

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cb7

Re: If only BT would undercut someone else!

I heard they've been silently auto upgrading Infinity speeds to Infinity2 speeds but you carry on paying Infinity prices.

Admittedly the D/L speed difference (~50Mbps vs ~62Mbps) is only really noticeable on large downloads, but upload speeds are pretty much double (~19Mbps vs ~9.4Mbps).

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Anonymous Coward

Re: I pay a bloody fortune for Infinity 2 plus the sports pack.

You'd pay even more if BT's other customers weren't being forced into subsidising your sports pack.

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Ofcom is broken and out of touch with reality

BT should be allowed to reduce its prices were housing density high, this would make it more atractive for new entrants to fibre up the low density and rural areas that are desperate for reasonable broadband instead of te City areas that are awash with connectivity

They should force Virgin to open its network to other companies.

They should enforce FTTP or at least FTTC to a new cabinetor a Virgin Media cable on all new housing developments, the current situation for new developments is laughable.

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Re: Ofcom is broken and out of touch with reality

make it more atractive for new entrants to fibre up the low density and rural areas

I doubt it. Those areas would still cost as much to fibre up, but the new entrant would face TWO additional dicincentives to do it :

1) Their pricing would have to be lower to be competitive as expectations would be lowered by lower prices in some areas. So less scope for recovering their investment from profits.

2) They would almost certainly get fewer customers in the "lower cost BT areas". So less customers to pay into the profits that would have to be used to cross-subsidise those low density and rural areas.

I do think that perhaps we'd have had a different outcome if "good" areas were all paired with "bad" areas and cable companies had been licenced on the basis that they could only have (and keep) a licence in the "good" areas if they also services the "bad" area paired with it - as in, you want to service (eg) Mayfair with it's wealthy (on average) residents who are most likely to take your service, well you have to also service this outlying Scottish island or remote bit of Cumbria. Chances are that the end result could be that the cable companies went bust even quicker than they did and the "bad" areas would still have not got cabled up - but it's interesting to conjecture how things might have panned out.

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They should change the cost ratio so that BT retail have to charge more for the Internet connectivity and tv services and BTOpenReach charge less for the phone line.

This means that other ISPs also pay less to use the phone line, and can better compete with the value added by extra services.

At the moment the high line rental is basically subsidising BT retail and making it harder for other ISPs to compete.

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I don't think it would be fair to force VM to open up their cable network since unlike BT who inherited a publicly owned network when they were privatised the VM network has always been a private network not paid for with public money.

That would be like you spending your own money to repave your drive way and the council demanding you let others park on it because the neighbours can't park on the public highway since the government have sold it off.

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You do realise that in practice, there isn't all that much of the network that was built with public money ? And what was publicly funded was SOLD to BT's shareholders on privatisation (whether the price was right is a different discussion).

The network as it is now is a very different beast from what was flogged off 3 decades ago. Yes they had a head start in that there was an existing networks of ducts, poles etc - but that's been expanded a lot since then.

There really isn't a viable model for competing "last mile" networks. You don't have two different companies digging up your street to offer electricity, or gas, or water, or drainage - that would just be madness. Not to mention, if taken to extreme, you'd have a choice of two (or more) different road networks to get to your house !

That's the reason we don't (for the majority of us) have such end connection competition. It's costs thousands of pounds per mile to dig up roads to lay a network of ducts. You have to put that infrastructure in place before you can connect a single customer. And then you have to persuade enough customers to switch to your service to repay all those costs (and loan interest). Meanwhile, your upper price on the service is more or less set by BT who have the economy of scale from having a network that's been built of many decades.

When you look around, you tend to see that alternative networks fall into about 3 categories :

1) There's Virgin Media with it's cable network which stands no chance of being extended into lots of low density areas. But that wasn't built by VM, it was bought for pennies in the pound from the liquidators of the many cable companies that started up, incurred the cost of building out the network, but just couldn't get enough return to pay back their loans and investors.

2) There's small specialists that service places BT won't - often on a "if X sign up now, we'll come and service you".

3) And there's "community projects" like B4RN which rely a lot of donated labour (ie volunteers) and favourable treatment from landowners to keep the install costs down to something affordable. Something like that project doesn't work in even small urban areas as the costs go up very considerably when the network has to go into public roads rather than (mostly) under someone's field.

It's notable that B4RN found a number of cases where they announced a plan to extend coverage to somewhere BT had refused to service - only to find BT "suddenly finding that it was now economic" and would service that area as a spoiling tactic. Other altnets have also reported the same problem.

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Price fix

I don't quite understand ofcom' intentions here, there's under cutting and then there's lowering prices to be competitive. Broadband prices are slowly coming down but ofcom wants to stop that and then what? Create a price fixing war where consumer cost will only increase.

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Anonymous Coward

Re: Price fix

If BT's wholesale price is low it makes more sense for ISPs to resell that than it is for them to build out their own networks. If competition in the last mile is a desirable thing, that low pricing is a problem.

If you build your own, you need to convince people to lend you the money, build it on time and budget, and win enough customers at a high enough price to cover repaying the loan and then hopefully make a profit. If you resell BT's network there's no risk - the only money you need to find is for the rental from BT, and it's always covered by the revenue you get from your customer. No need to borrow from the bank.

The lower BT's wholesale pricing gets the less likely it is that anyone will build out their own networks. If it drops far enough it risks making already existing networks non-viable. It's madness to spend thousands on a dig to build something you could rent for £10 a month.

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Anonymous Coward

Re: Price fix

"It's madness to spend thousands on a dig to build something you could rent for £10 a month."

That rather depends on what the aim of the game is for any particular ISP/telco, and whether the default wholesale product from BTw is a good fit with the ISP's target market, surely?

E.g. the big LLU-based ISPs could have rented from BTw, but chose to do otherwise, because by going the LLU route they could offer a similar service at a similar retail price, but more profitably for the ISP. Or a better service for the same price. Heck even Pierre Danon, while boss man at BT Retail, made occasional public threats of going LLU rather than using BTwholesale:

https://www.thinkbroadband.com/news/1892-bt-retail-considering-using-llu (2004)

Obviusly this extra profitably only applies in cherry-picked easy to service areas (hence the BTw low-cost exchanges rebate scheme, so BTw could keep their price somewhat competitive with LLU).

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Anonymous Coward

Re: Price fix

Er, LLU operators do rent their last miles. They’ve not done a network build, they’re just buying at a different point in the value chain.

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Flame

This might seem a bit offtopic, but...

...if Broadband providers can charge me extortionate amounts of money for "upto" a speed, then I should be allowed to pay them "upto" whatever they're charging me. That seems fair.

Esp. since I've been paying £22.31/month for 768 kbps ~ 1023 kbps for around six months now.

I did do a speed check on all ISPs that I could think of (Zen, EE, etc.) and 2MB to 4MB seems to be the maximum I can get...

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