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back to article BT's taxpayer-funded broadband monopoly may lock out rivals, says independent report

BT’s monopoly in supplying Blighty’s national broadband scheme may have permanently locked out future competition – according to an independent report card on the £780m public purse project. The evaluation, by economics consultancy Oxera, was required by the European Commission, following its decision to grant the scheme state …

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  1. Otto is a bear.

    The thing is

    Digging up roads is expensive, if you already have the local conduits, then you have an advantage. You can't expect BT to allow others to put wires in their conduits, although doing it for them might be acceptable. There is a risk for BT that a third party will screw up a cable run and take out BTs cables in the process.

    There is competition at the national trunk level, and even in larger cities where investment can be justified, but smaller conurbations just don't merit the huge investment in digging up the road. Look at the gaps in the cable TV network and you'll see where costs didn't match ROI on revenue. It isn't just digging up the road either, its negotiating the land access rights. Many cable companies, didn't connect houses that had no footpath or verge outside their property, or those on the wrong side of them, because they would have needed to reach a legal agreement with each land owner to dig up the front gardens.

    BT had the wires there when the properties were built, or used telegraph poles. I doubt any cable company has thought of that, and if they have, the local authority would let them put up more.

    1 1 Reply
    1. Alan Brown Silver badge
      Reply Icon

      Re: The thing is

      "You can't expect BT to allow others to put wires in their conduits, although doing it for them might be acceptable."

      BTOR won't even do that. The only cables in BT ducts are the property of BT.

      Openreach needs to be cleaved off entirely

      5 1 Reply
    2. Keith Oborn
      Reply Icon

      Re: The thing is

      I used to work for Virgin Media. Trials were done of local network over electricity poles some time back. Although BT are required to allow third party access to their poles, they make it hard - perhaps understandably. The electricity companies have no such competition problems, and their poles tend to be a lot stronger, having to support much heavier kit.

      That worked - installation and maintenance is harder coz you have to turn the power off. But it's not economic.

      BT's ducts and cable runs were, to a large extent, paid for by the taxpayer before privatisation. Private competitors had no such out-of-the-gate advantage, which is why UK Cable (the various bits that became Virgin Media) was essentially near-bankrupt for years.

      The only other operator with any sort of advantage was Cable and Wireless. That's a whole other can of worms!

      VM has recently got to a financial position where it can contemplate expanding the access network - but that's taken about 20 years!

      So the key to leveling the playing field would have been to "tax" BT for the sunk costs of the publicly-funded infrastructure, probably at the point of privatisation.

      That, however, would just have made it an unattractive investment, and we'd still be stuck with GPO Telephones.

      Forcing a selloff of Openreach would be a possible fix. This would leave us with two independent "network operators" and lots of "service providers". Bit like the railways but with two different Network Rail entities, each with their own tracks.

      0 1 Reply
      1. Steven Jones
        Reply Icon

        Re: The thing is

        "BT's ducts and cable runs were, to a large extent, paid for by the taxpayer before privatisation."

        Yes, and the government sold BT for (corrected for inflation) about £30bn, which is not so far off BT's current market capitalisation (about £38bn). There was also virtually not fibre in the network in 1984, being utilised only for some voice trunk links. Even then, that fibre will have been long obsolete as the early stuff was very lossy. So, in effect, all the fibre investment is post-privatisation.

        1 1 Reply
  2. Ragarath

    BT Scope rubbish

    It said the scheme also had the potential to create an incentive for BT to reduce the scope of its commercial investments in order to receive state funding for projects that would still be commercially viable without the aid.

    Yep,happened at my cabinet. It was on BT's rollout plans (commercial) 2 years ago. Our authority got the government money and all of a sudden our cabinet was not viable. Our local scheme did not include our cabinet because it was on BT's commercial rollout. Now BT are only considering it because the local authority is trying to tack it on the end of their rollout.

    We may still never see it, BT are most certainly doing the scope reduction thing with us.

    11 1 Reply
    1. Tom 7
      Reply Icon

      Re: BT Scope rubbish

      My cabinet was around a mile and a half away until they got money to FTTC the exchange - now its back at the exchange 6 miles away on about a foot of fibre!

      4 0 Reply
  3. Anonymous Coward
    Anonymous Coward

    I wonder if it was a mistake not to chop up BT into smaller bits, back in 1984. Though telecoms competition has improved things a lot in my view, it's always set against the backdrop of a massive drunken BT stumbling around, stepping on things.

    3 0 Reply
    1. jonathanb Silver badge
      Reply Icon

      How would you split it up? A Scottish Telecom wouldn't compete with a Welsh Telecom or a Yorkshire Telecom, just like BT doesn't compete with Kingston Communications in Hull.

      2 0 Reply
      1. localzuk Silver badge
        Reply Icon

        Conduits and infrastructure into one business

        Business sales into another

        Consumer sales into another

        R&D into another

        Seems like a reasonable way to split it up.

        2 1 Reply
        1. FlatSpot
          Reply Icon

          @localzuk

          Nice idea but not quite right. A sole R&D company would be a high capex with no source of revenue, until it had a marketable product and what it produced was the best (or better) in the market that consumers/businesses wanted to buy the product. So highly unlikely to be viable, the other splits sound good though :)

          0 0 Reply
  4. Alan Brown Silver badge

    "I wonder if it was a mistake not to chop up BT into smaller bits, back in 1984."

    Even if that had been done, without the right precautions it would simply have reassembled itself through internal buyouts and mergers.

    That's what happened in New Zealand and (on a much longer timescale) has almost completed happening in the USA.

    1 0 Reply
  5. Sp0ck

    Where I live I assumed BT were going to win the rural broadband contract but a small company won (call flow solutions), where I was lucky to get anything over 1.5meg dl speeds I now get 24meg. The issue is I won't ever be able to change provider if I stay in this house, I can't see them opening it up. Having the monopoly they didn't have to give any incentives for signing up. I pay £44 for line rental (evening and weekend calls) and broadband. I was paying £29 before with talktalk! Swings and roundabouts I guess.

    0 0 Reply
  6. All names Taken
    Joke

    Oh! Shock! Horror

    The EU and (probably?) the world has rumbled UK "free market" working methods.

    To save them additional expense, more investigations and embarrassment to all concerned here are the UK "free market" funding practices:

    - make a state run service into a psuedo-private enterprise (shares held by Treasury no?)

    - open up invitations and make it internetable as per EU wishes

    - ensure that the "local" rules are public sector based with public sector language, practices and bureaucracy as a first stumbling block to the private sector (they don't really have the (overpaid?) staff to create all sorts of obfuscating rules, practices and hurdles to the well-intended)

    - design the framework and tone of questions and answers and paperwork and bureaucracy to comply with public service standards and practices (that means far too much of the 'orrible stuff but it does keep plenty of UK priveleged folks in jobs no?)

    - woteva make sure the contract goes to the psuedo-private company pretending it was a free market with lots n lots n lots n ... n ,,, n lots of scrutinies at every stage (got to make sure that the winner is absolutely the winner innit?)

    - remember to beg knighthood for duties performed?

    Just saying thats all

    3 0 Reply
    1. All names Taken
      Reply Icon
      Alien

      Re: Oh! Shock! Horror

      Oops apologies ... in haste

      open up invitations and make it internetable as per EU wishes

      should be

      open up invitations to tender and make it internetable as per EU wishes

      ps: biggest laugh of all?

      Deutsche Bank mulls UK EU exit plan (see bbc .co .uk) tee-hee the Tories will probably do a doublespeak on that one

      0 0 Reply
  7. Planty Bronze badge

    BT spent the money

    So why shouldnt they be allowed exclusive use of their cables?

    If anyone else is upset, too late, they shouldn't have sat on their behinds.

    1 2 Reply
    1. Anonymous Coward
      Reply Icon
      Anonymous Coward

      Re: BT spent the money

      Perhaps because a significant percentage of it was subsidized by the tax-payer?

      1 1 Reply
      1. Doctor Syntax Silver badge
        Reply Icon

        Re: BT spent the money

        @AC

        I take it you're too young to remember the privatisation. One of the problems with being subsidised by the tax payer was that there was never enough money for investment. The telephone branch of the GPO was otherwise known as the black telephone rationing company.

        1 0 Reply
        1. Anonymous Coward
          Reply Icon
          Anonymous Coward

          Re: BT spent the money

          "one of the problems with being subsidised by the tax payer was that there was never enough money for investment."

          It was a net contributor - it was a profitable enterprise, not one that was subsidised. The lack of investment was down to the government of the day taking all the money to use elsewhere and not letting PO Telecoms operate as a business and reinvest their profits.

          It was a very odd arrangement. All revenue raised was given to the exchequer and then a disbursement was paid back to the PO to allow them to pay their staff.

          0 0 Reply
      2. Trigonoceps occipitalis
        Reply Icon

        Re: BT spent the money

        subsidized?

        ... paid for by the tax payer?

        FTFY

        0 1 Reply
        1. Anonymous Coward
          Reply Icon
          Anonymous Coward

          Re: BT spent the money

          "subsidized?

          ... paid for by the tax payer?"

          The telecoms part of the post office was a net contributor to the exchequer - the opposite of a subsidy. Having it in public ownership made your tax bill lower than it otherwise would have been.

          0 0 Reply
  8. CAPS LOCK

    Wire is so last century.

    I say we all go wireless and make BT look like the dinosaurs they are.

    0 2 Reply
    1. FlatSpot
      Reply Icon

      Re: Wire is so last century.

      Until you turn on your microwave or child monitor

      1 0 Reply
      1. Trigonoceps occipitalis
        Reply Icon

        Re: Wire is so last century.

        May I just point out that placing your child in a child monitor is not recommended.

        0 1 Reply

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