Ofcom deregulating broadband: 70% of the country to be liberalised

[davej99]

Ofcom has announced the removal of regulations for wholesale broadband access in areas of the UK which are served by effective competition. More detail and a map.

Thinkbroadband observes, "One can presume that BT Wholesale will charge less in the densely populated areas in an attempt to compete with LLU and cable services but with the removal of the rules one wonders what measures are in place to ensure the continued availability of wholesale products. BT Wholesale could simply wind up its operations over time for parts of the country and the BT Group could only provide DSL based broadband via BT Retail. The effects on the smaller sub 150,000 customer providers could be dramatic if the way forward is to make wholesale agreements with LLU providers but still retain a smaller access network from BT Wholesale for the remaining 30% of the country."

Those customers in the mostly rural Ofcom Market 1 (BT only operator serving 16.4% of premises) should be concerned by this development on several counts.

(1) We may have to pay more than in deregulated Ofcom Market 3 (4 or more operators serving 69.2% of premises).
(2) BT Wholesale resellers may exit Market 1 leaving BT Retail as the only provider.
(3) Smaller ISP's may not survive price competition in Market 3.

Personally, here in the country, I see a regulator allowing geographic market cherry picking with little attention to the law of unintended consequences. In this case it is the threat of differential pricing and reduced competition in rural markets.

[Rik]

I share your concerns, Dave.

Also being discussed here.

[madasahatter]

think we can all smell cherries being picked with this one dave

Also being disussed here

[madasahatter]

You just bet me to it Rik 

[Rik]

I never bet.

[davej99]

Thanks for the "Cherry" thread. I should have connected the title. Anyway, I am starting a campaign against Offcom and others who are essentially taxing rural life. It is to be called the Fight Against Rural Taxes. All I need is a smiley.

[Rik]

You don't need a smiley - you need a scowley!

[Simon]

F.A.R.T.  Love it! 

[davej99]

The important point is that we need ISP's like IDNET to provide quality broadband to rural users who have no access to LLU and are unlikely to get it. If Ofcom acts to frustrate rural competition it is to be condemned.

My concern is that Ofcom is allowing LLU operators to cherry pick urban areas and by default helping BT seize a monopoly in rural areas. I can image that BTW resellers might face price competition driven in urban areas and cost pressures in rural ones.

If urban pricing falls, does this mean BTW will charge BT Retail less than in rural areas. Will BTR have different end user tariffs in different parts of the country, or use one area to subsidise another, presumably like the phones.

[talos2]

F.A.R.T.  Love it! 

I'll vote for that,  long live the FARTers

[gizmo71]

My concern is that Ofcom is allowing LLU operators to cherry pick urban areas and by default helping BT seize a monopoly in rural areas.

Unless I've misunderstood the report, BT already have an effective monopoly in these rural areas, and Ofcom will continue to regulate in those areas to stop BT abusing this position.

[Tacitus]

Personally, here in the country, I see a regulator allowing geographic market cherry picking with little attention to the law of unintended consequences. In this case it is the threat of differential pricing and reduced competition in rural markets. 

Also on TBB is a report saying that demand for BB is higher in rural areas.  There was an item on BBC1 Countryfile last Sunday saying exactly the same, that rural businesses are complaining of non-existent BB or a poor service when it is provided.  They are not the sort of businesses you would imagine - these are high powered design companies, programmers and the like.  Though not featured, I know of secretarial outfits who contract to do backend office work and make a reasonable living whilst enjoying country life.  Given high quality BB, I could see no reason why Simon and Tim could not run iDNet from a country cottage. 

The girl I mentioned on another thread lives in the Cotswolds and has started her own marketing company; just herself initially with the prospect of expansion.  Another case where solid Broadband is pretty much essential.

With the price of transport heading into orbit I can only see this demand growing and yet Ofcom effectively throw a spanner in the works in the name of competition.  Those whom the Gods would destroy etc...

FWIW I'm in a Market 2 area which I would classify as rural but perhaps not as rural as some.  Service quality here is poor and unlikely to improve.  The only LLU competition to BT are Orange and TT, neither of whom I would regard as a serious contender, certainly to run a business.

[Rik]

I don't know that they did it in the name of competition, Tac, Ofcom do most things in the name of perversity. 

I am utterly convinced that there should be a USO for ADSL which provides a minimum of a 2Mbps line now, with a target of 16Mbps over the next decade.

[Tacitus]

I don't know that they did it in the name of competition, Tac, Ofcom do most things in the name of perversity.   

I think you're right.

I am utterly convinced that there should be a USO for ADSL which provides a minimum of a 2Mbps line now, with a target of 16Mbps over the next decade.

TBH I would up that to 3/4Mps minimum - they might at least achieve the lower end.

[Rik]

Even to achieve 2Mbps would require a fair bit of investment.

[davej99]

Tacitus presents well the needs and benefits of knowledge industries operating in rural as opposed to urban locations. Yet we have a communications provider, BT Wholesale, with a near monopoly in rural areas, a creaking infrastructure and a regulator that seems intent on preserving the whole sorry mess. Having pitifully failed to achieve UK-wide competition he wants us to sign off on those areas that have.

I am concerned smaller resellers will exit rural areas because of higher rural wholesale costs on one side and retail prices driven down by a large unregulated market on the other. The alternative is different retail pricing in parts of the UK. That will go down well.

My view is that LLU competition is driving down BTW prices and that BTW resellers serving retail customers in all parts of the country must benefit from this. The duty of regulation is not to defend under-investment and premium tariffs but to propagate best practice and fair market pricing. It  In rural areas, where LLU critical mass is hard to achieve, this means shaking up BTW and promoting competition in that channel.

So I want to see the regulator drive down wholesale prices in all areas of the UK in line with those free market prices indicated in the newly liberalised regions and promote competition and technology growth in rural areas, not kill it.

[Tacitus]

.... I want to see the regulator drive down wholesale prices in all areas of the UK in line with those free market prices indicated in the newly liberalised regions and promote competition and technology growth in rural areas, not kill it. 

The problem is that as BTW is the monopoly supplier in rural areas, if prices are driven down how will they generate the income for better infrastructure?  This is where the whole idea of reliance on 'The Market' is more or less a complete failure.  Either the government has to abandon its idea of creating a 'knowledge' economy since the rural areas seem to be where this is taking root, or it has to subsidise BT to improve rural infrastructure.  Needless to say if it does that a fair proportion will 'leak' into shareholder's pockets.

You only have to look at our privatised railways to see how well it works.  We now pay very much more in subsidy and apart from nicely coloured trains I can't say I've noticed significant benefits. Shareholder's profits though have massively increased.

As I said above I live in a Market 2 area.  Frankly if the world + dog became LLU operators the service would still be rubbish since the infrastructure is falling apart.  Competition can only be on price, the sole determinant of any transaction nowadays, since neither innovation nor service are likely to be significantly enhanced. 

[edit] Service might improve with (say) iDNet since they pick up the phone faster in response.  However if the problems are down to poor lines there's not a lot, apart from minor tweaking, they can do to improve things.  I've been getting massive errors reported all afternoon and it hasn't even started raining yet.   

[Rik]

All of which comes back to the need, imo, for the Govt to fund fibre to the cabinet, and then lease the infrastructure to those who want to sell products based upon it.

[Tacitus]

All of which comes back to the need, imo, for the Govt to fund fibre to the cabinet, and then lease the infrastructure to those who want to sell products based upon it.

Can't see how it would work unless the Govt owned the local loop.  If they didn't we would be subsidising BT, with leakage into shareholder's pockets (= we pay far more than we need).  Not only that but if FTTC was separate from the BT owned lines - which it would necessarily be - the private sector would scream unfair competition.  To which my answer and probably yours, would be (expletives deleted).

[Rik]

I think it has to follow the path of railways, Tac, with the State owning the infrastructure, including the local loop, and those who want to hook their equipment onto it paying for the privilege. In effect, nationalise OpenReach, with access guaranteed for operators who wish to provide services. The rates charged for access should reflect the investment and the return needed on it. One potential advantage of such a scheme is that TV could be delivered by a robust medium.

[Tacitus]

I think it has to follow the path of railways, Tac, with the State owning the infrastructure, including the local loop, and those who want to hook their equipment onto it paying for the privilege. In effect, nationalise OpenReach, ......

I agree that would be the ideal way.  However given current levels of government expenditure and the parlous state of the country's finances, to say nothing of the antipathy to anything that smacks of nationalisation, ([sarcasm] Northern Crock is of course a 'special case' [/sarcasm] ) I wouldn't hold my breath. 

The fact that it might actually work and propel the UK into a position where it could compete with others is  completely overlooked in favour of doctrinaire market based 'solutions'. 

[Rik]

I agree, Tac. It's too big a scheme for them to understand, and it's not a vote winner with the general public - but with Ofcom regulating (!) the market the way it does, I don't see FTTC happening any other way, at least outside the conurbations.

[talos2]

 This new "mobile broadband" that uses the mob/phone network looks interesting, and could solve the problem for some rural users, what do you think Rik?

[Rik]

Last time I heard, the Orange service has been down for 6 days, Bob. If they can get reliability, coverage and costs right, then it's a definite alternative, but I've found that coverage has been patchy when I've tried it.

[talos2]

Last time I heard, the Orange service has been down for 6 days, Bob. If they can get reliability, coverage and costs right, then it's a definite alternative, but I've found that coverage has been patchy when I've tried it.

If Orange have anything to do with it it will never work.
Come to think on it ,the best mobile cover is in the city's or where large  volumes of peep's live, so on reflection the country folk loose out again.