Spectrum auction is fair to whom, asks CMA

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Ofcom's rebuttal to a Communications Management Association opinion in Computer Weekly regarding proposals for the upcoming spectrum auction for so-called 4G licences has drawn further comment from the CMA. Ofcom's response left it wondering whether the auction process, which it described as "fair", had the CMA asking "fair for whom?"
CMA members want Ofcom to make sure that there is national roaming, almost to the exclusion of everything else.
It said there are four questions to ask to assess whether a regulator is doing its job right:
Will the proposals result in an affordable infrastructure for innovation?
Will they result in an infrastructure fit for enterprise purposes?
Will they speed up economic growth?
Will they enahnce community development?
"This has very little to do with finessing fairness between market players," the CMA says. "It's about responding to higher national purposes and fairness to UK enterprises and society - a responsibility that the Communications Act 2003 placed squarely on the shoulders of Ofcom."

Why BT should bid for a 4G mobile licence

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Ofcom's proposals to auction frequencies in the 800MHz and 2.6GHz frequency bands seem tailor-made to attract BT back to the mobile market.
Firstly, Ofcom says it wants a fourth operator. It had four, but then Deutsche Telekon and France Telecom merged their struggling UK operations, T-Mobile and Orange respectively, into Everything Everywhere, but kept the names for branding purposes. This was making it easy to squeeze Three, which has its own small 3G network, but depends on sharing the Everything Everywhere network for much of its traffic.
Secondly, Ofcom says explicitly it will reserve a licence in the 800MHz band for an operator that promises to cover 95% of the population by 2017. Curiously enough, this is the same deadline as the government's smart meter project, which will depend on the use of 800MHz signals to penetrate buildings and to travel long distances.It is also the same percentage that BT CEO Ian Livingston promises to cover if, and only if, the government gives it most of the £830m earmarked for rural broadband networks.
Without access to mobile spectrum BT would have to depend on a friendly mobile partner if it wanted to pitch for the smart meter (and later smart grid) business. Of course, it could hook up the telephone line to the meters, but no-one is thinking that way, and besides, why else did it tie up with broadcast signal distributor Arqiva?
And it would open up competition for the end user for the first time in Market 1 areas, the two-thirds of the exchange areas around the country where it is sole supplier, assuming another operator accepted the deadline.(See the map here: WBA map final.pdf.) BT objects to this characterisation, noting that while two-thirds of the the country's exchanges are in Market 1 areas, this covers only 11.7% of the population.
Those are two powerful reasons, one defensive of its market position in rural areas, the other to improve its competitive position, are why BT should bid for the 800MHz licence.
But really, why bother with the auction? Ofcom has so hedged the auction with restrictions on the amount of spectrum an operator can own that it might as well give it away in return for a very aggressive network build deadline.
That at least would have the benefit of getting the UK quickly up speed with Uzbekistan.

Openreach reveals latest exchanges for fibre

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BT Openreach last week published its list of the exchanges to be fibred up over the next 12 months. You can see a spreadsheet of its plans here.
It shows that Openreach is already accepting orders from other communications providers on 336 of the total 785 exchanges. It has also deferred fibre-ing up the exchanges at Tulse Hill and Shepherd's Bush in London. BT has an estimated 5,500 exchanges.
BT said earlier not everyone who lives in an exchange area will receive the up to 40Mbps download speed. That access depends on the street cabinet being fibred-up, and not all cabinets in a fibred exchange are will get it.
The table below shows the extent to which BT is doing fibre to the cabinet (FTTC), compared to fibre to the premises (FTTP). The European Commission has called for half of a country's population to receive 100Mbps, which strongly implies FTTP, by 2020, a call endorsed by the Welsh Assemby government in its tender for next generation access for the principality.

Total service starts









Service      
Estimated start date FTTC FTTC/P FTTP Grand Total
Accepting CP orders now. 333 1 2 336
Deferred 3

3
01/03/2011 33 1
34
01/06/2011 109 5
114
01/09/2011 100 20
120
01/12/2011 73 17
90
01/03/2012 72 16
88
Grand Total 723 60 2 785
Source: BT Opensource





NGA needs new success model

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Next generation access local networks need to support innovation, enterprise, economic growth and the community, says Groupe Intellex's David Brunnen, in a paper based on research visits to successful schemes in Europe.
"The significance of strong local leadership, local identity and deep community engagement also emerge as major success factors," he writes in Fitness for Purpose: effectiveness of FTTx investment and deployments, which has been endorsed by the Communications Management Association (CMA).
He concludes that "FTTx investments require business models that are entirely different from any earlier telephony-based access network designs."
He suggests that access networks that do not allow ISO Layers 3 or 4 local application services, or that are not "integrated with the backhaul needs of new intensively localised mobile base stations," may be fine for residential users, but are unlikely to support "newly intensive" local businesses, especially if they need high bandwidth.
"This is a problem if standards and  expectations are, for the convenience of national operators or the comfort of regulators, set too low to allow local diversity," he says.
Brunnenm says all four elements need to be balanced.  "If any one dimension is trashed by the dominance of others, the management model at the heart of the project will inevitably struggle to survive," he says.

Good luck to Olivia Garfield, she lives in interesting times

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Congratulations to Olivia Garfield, former boss of BT strategy and now head honcho of BT Openreach following Steve Robertson's decision to hand over the reins.

Liv, who has been feisty in protecting BT's interests in all the forums where she and I have breathed the same air, takes on the biggest job in UK networking. Ofcom has just published a slew of consultations, including its new policy on next-generation access, which I am still trying to plough through. More on that later, but everyone should feel free to express their opinions here too.

Liv has to deal with the legacy of past under investment, increasing regulatory pressure, rising political expectations that call for universal access to 30Mbps broadband and for 50% of the population to get 100Mbps, and more competition for investment funds.

The Chinese curse us to live in interesting times, so please accept our blessings in anticipation of a job well done.







Cardiff resists FTTC

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Here is a sentence to chill the blood, if not stop the heart of anyone interested in fibre networking: "Openreach has spent millions of pounds to ensure that Cardiff boasts some of the best access to modern broadband technology in the UK, but residents in some enabled areas of Cardiff are proving slow to adopt the service."


It was penned by the good folk in the BT press office. It goes on to say that Openreach's fibre to the cabinet (FTTC) gives users access to at average download speeds of 31Mbps and uploads at 8Mbps.


And still Cardiffians are underwhelmed. The best take-up rate, in Whitchurch, is just 7%.
Wales is now looking for someone to provide universal access to 30Mbps, and 100Mbps to half the residents, probably at the cost of some hundreds of millions to taxpayers and shareholders.


Cardiff is not the only town to resist FTTC. Openreach's "superfast broadband" progranme director Johnny McQuoid told The Register that residents of Haringey don't want big new fibre cabinets cluttering their streets.

 
Before BDUK or the RDPE or Defra or anyone else spends one more penny on broadband, they should find out why Cardiff is proving so resistant. 

Putting your money where your broadband mouth is

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Hat's off to Lindsey Annison, late of this parish, for putting her money where her mouth is. She is pledging her own £5,000 for a citizen's fund to get a fibre-based broadband connection in her neck of the woods, or rather fells.
This comes hard on the heels of Digital Agenda commissioner Neelie Kroes getting the CEOs of top telcos round the table for a chin-wag about how to get the necessary investment to make a 30Mbps broadband service universal throughout Europe, and for half of us to have access to 100Mbps. I suspect we all know how that will end.
Lindsey makes the excellent point that no-one ever asks end users if they would be interested in investing in their local broadband supplier. Some customers might well do so, if they could influence policy and saw the chance of dividends or cheaper prices or some other benefit.
Given that some people, like communications secretary Jeremy Hunt, think 95% of the required investment will have to come from the private sector, they might do worse than talk to Lindsey about how to raise the money.

What (house) price high speed broadband?

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It's been anecdotal up to now, but a recent report in the Telegraph suggests that life is starting to imitate art, at least where it concerns house desirability and broadband access. The Torygraph reported that website Rightmove, which claims to publish details of 90% of the UK's properties for sale, was working with BT to include access to high speed broadband to its catalogue of features.
A spokesman for Rightmove said there was no agreement in place, but did not deny the talks, adding the company "could look into" adding the details in its web pages.
The spokesman could not say whether was a correlation between house prices and broadband access, or indeed how much of a difference it made.
A February survey by ISP Review didn't ask the hard question (How much more?) but did find that almost half the 773 people it asked would pay a premium for high speed (more than 40Mbps) broadband. But almost 74% said it was "critically important" to them. Just not at home.


However wide our digital divide...

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We should spare a thought for those in Libya right now.

Looking at the Google Transparency report, it would seem the plug has been pulled on the internet for the citizens and businesses of that country. 

(Thanks to Fundamentals for the heads up).
googletransparency040311.JPG

Clarity needed on fibre cabinets

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A lot of people are asking questions about what BT is actually going to deliver from its £2.5bn programme to fibre up its street cabinets to provide "superfast broadband" for all within the two-thirds of the country where BT says it is economical to lay fibre.

Reports in ISPReview and PC Pro claim that BT's fibre upgrades to its exchanges could leave as many as 60% of cabinets in an area not connected to fibre.

In response, BT said, "Openreach averages 85% coverage of homes and businesses within an enabled exchange area.

"The economics of deployment dictate that the cabinets serving the largest number of homes and businesses are most likely to be enabled, though the costs involved in enabling each cabinet are also very important. However, the 40-50% figure quoted [in the reports] is inaccurate - on average, well over 70% of cabinets within an exchange area are enabled."

That 85% average still leaves 15% of the homes and businesses in a fibred area without access to the service BT is rolling out. Add to that the one-third of homes and businesses that lie outside BT's currently planned fibre footprint, and the numbers could be interpreted to mean that nearly 50% of UK premises might see no immediate benefit from BT's investment.[Editor's note: see below]

BT, of course, works for its shareholders, while Openreach, the division that builds its physical network, is regulated by Ofcom because it has "significant market power" (ie a virtual monopoly) over two-thirds of the land area of the UK.

Unfortunately BT does not publish which cabinets it will upgrade or when - it only publishes the schedule for exchanges. Anyone who wants to buy a house or open an office in a fibred exchange area can't be sure if they'll be able to get even "up to 40Mbps". It also means that residents find it hard to attract alternative fibre suppliers. No alternative network operator wants to risk competing with BT, which can amortise its costs across the entire nation, in an area where BT already finds it hard to make money.

The net result is that a large chunk of the population could struggle to get access to the superfast broadband supplier of their choice. Is that what the government intends with its broadband strategy?

[Editor's note: This blog was amended from its original version after BT's clarification published as a comment below. BT has pointed out that it is not the case that the 15% and 33% figures are mutually exclusive and we are happy to make such a correction - but acknowledging also that there remains confusion in areas of the market about the detail behind some of these figures].  







The cost of wholesale broadband access, by Ofcom

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Ofcom has published its financial model for wholesale broadband access.

Ofcom says the copyrighted model is published to help people understand better the cost of WBA on a hypothetical ongoing network. Digital Dividend would like feedback on Ofcom's thinking.

BTW, included is the following chart of projected demand for broadband, courtesy of market analysts Analysys Masons.

UKBroadbandDemand.bmp

Nokia-Microsoft: what about Intel?

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This blog is usually about fixing UK comms, but the Nokia-Microsoft deal can't go without comment.

Nokia boss Stephen Elop said the mobile market "is now a three horse race", thus completely dissing Research in Motion's Blackberry platform, but the Twitterati aren't convinced.

Judging from posts, reaction to the news that Nokia will make Microsoft's Windows Phone operating system its primary smart phone platform was neutral to negative, even hostile, during the companies' webcast.

Elop's fears that tying up with Android might have commoditised the Nokia brand and "moved all the value to Google" may turn into his worst nightmare as consumers just go with Android anyway.

But let's see what the professionals say.

Tony Cripps, principal analyst, Ovum
"This is a bold decision by Nokia but absolutely the right one, both for itself and for Microsoft, given the drastically changed landscape for smartphones in the past couple of years. There were few short term options available to the company to help it get back on terms with Apple and especially the Android masses, which in 2011 look set to overtake Nokia in terms of smartphone shipments, bringing with it the full wrath of the investor community."

Adam Leach, principal analyst, Ovum
"It's ironic that the sole purpose of Symbian was to stop Microsoft from repeating their domination of the PC market in handsets. Nokia now has the opportunity to cast itself in the role that Intel has taken in the Windows PC market as a mutually beneficial, symbiotic marriage between equals rather than as simply a box shifter.
"However, there remains a danger that Nokia could end up as merely a vehicle for Microsoft and services should it fail to differentiate from other Windows Phone 7 makers such as HTC, Samsung and LG."

Nick Dillon, analyst, Ovum
"For Microsoft this is nothing less than a coup and the shot in the arm its new Windows Phone 7 platform needed, which despite winning acclaim for its innovative design and user experience has so far failed to set the market alight in terms of sales."


Mark Seemann, CTO at SME cloud services supplier Outsourcery
 "From a business perspective, both Microsoft and Nokia have been historically strong but their market shares have weakened lately. RIM's BlackBerry devices have seen continued success within the business market, Apple and Google's market share continues to grow and Microsoft's excellent new Windows Phone should bring them back into the game.  For Nokia to compete they are going to need to dramatically up their game and they can only achieve this with a monumental change to their organisation.  Elop's message to his staff was a public recognition of this fact. "

Unfortunately Orange was unable to offer comment on the partnership.

So much for the professionsals. I think the wild card here is Intel. The chip maker didn't do too badly out of its relationship with IBM and Microsoft to virtually monopolise the desktop, and it is already collaborating with Nokia on MeeGo. Why not the new triumvirate to do to the handset market what the old one did to the desktop?

But they will have to act fast. Ballmer and Elop promised speed of execution.They need to deliver if they want their brands to remain relevant in mobile circles. Otherwise Nokia may end up a software house for embedded Symbian devices. And probably hugely profitable at that.


Could UK get universal high speed broadband for £5bn?

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Eurim, the cross-party/industry talking shop, has published for comment a report by fomer BT chief accountant Bob Franklin on Making Broadband Investrments Work.
It appears to be a complete summary of the strengths, weaknesses, opportunities and threats facing the broadband status quo in the UK, with nods to competitive economies. It will make for uncomfortable reading in some quarters.
Franklin offers myriad different funding and network building scenarios, but, bottom line, appears to call for the authorities to accept a pluralistic approach. He makes the key points that broadband consumption tends to rise where available. This makes it cheap to provide extra capacity, except  when a step-increase is needed, and that financial returns are more akin to utilities such as power and water, i.e. low risk over the medium to long term.
And he suggests that a national fibre to the home network could be built for an annual investment of £500m to £1bn a year for about five years - a far cry from the £29bn the authorities currently accept as gospel truth.

Government fails fibre tax query

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It is a truism that you can't manage what you can't measure. It is also a truism that governments shoudn't interfere with markets, for example by taxing them, unless for very good and explicable reasons.
So it is astonishing that the government has admitted that it does not know how much money it collects from business rates on optical fibre networks.
The tax has been described as the biggest single obstacle to investment in fibre-based broadband networks. It was also the topic of a tense meeting between the govenment and invited network operators last month. And the Conservatives reneged on a pre-election promise to review the tax, So one would have thought the government was paying attention to its value to the state.
Alas. Baroness Hanham, the parliamentary under-secretary of state for the department of communities and local government (which has political control over business rates), told Lord Laird in a written reply,  "We do not collect information from local authorities on how much non-domestic rates revenue has been collected in respect of telecom companies."
Perhaps ministers should ask themselves whether business rates on fibre is a game worth the candle, despite the budget deficit. One could well argue that since it can't measure the effect of the tax, it has nothing to lose by lifting it.

What Lancashire should learn

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The report in which Lancashire County Council plans to issue a £40m tender for a county-wide "superfast" broadband network suggests to me that BT is likely to be the winner, if it enters a bid.

But BT would probably be a winner anyway. To meet the 30-month deadline, anyone who beats BT to the broadband tender will be likely to still have to use BT infrastructure to deliver services to Lancashire's homes and offices, especially in the 34% of the county that the council acknowledges will not be served by "market forces".

The recommendation is for a single supplier to provide 100% coverage, or as much as can be done for £40m, half of which must be provided by the winner of the tender, which must accept all risks and maintenance costs.

I suspect few, if any, other network operators will be tempted, after BT last month published its draft terms and conditions for access to its ducts and poles to near universal apoplexy among many network operators interested in providing local broadband access. 

BT is within its rights to try to use the procurement process to its advantage - that's what competition is all about. But what is good for BT is not necessarily what's good for UK plc, such is the nature of any regulated former incumbent operator.

When Lancashire County Council, and indeed all other counties that want fast broadband, meets to consider the bids, it needs to ask very seriously, what's in it for potential suppliers, and what's in it for their voters.







Genius/fail

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BT's reluctance to install nationwide fibre to the premises (FTTP) is looking like a fatal error for UK plc, especially in the light of the government's investment of £7.2m in fibre optic research to speed up the internet 100-fold.
Science minister David Willetts said last week the government was stumping up the money because the internet already contributed £100bn a year to UK GDP. Given the 80% a year rise in net traffic, only an ultra-fast "photonic superhighway" would meet future demand for bandwidth.
David Payne, the Southampton professor who heads the project said their ambition was to "rebuild the the internet hardware to suit the needs of 21st century Britain" by radically transforming the UK internet's physical infrastructure.
Which means, in the end, FTTP.
BT says its motive is commercial prudence. So, unless the government makes things change, by the time the photonic superhighway project ends in 2016, the UK will have the world's fastest optical fibre technology, but will not be able to exploit it fully at home. Sheer genius.

BSkyB to buy the cloud

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Rumour has it that BSkyB are buying the Cloud. I suspect this has untold ramifications that require considering. But, I'm just a community observer, so here's my thoughts:

1) Firstly, and most importantly, someone, somewhere has realised that being able to access t'interweb on your mobile is the way forward (Doncha love em, taken 'em nearly a decade, but they've got there!)

2) Someone, somewhere has realised that there is a major issue with data over mobile and in order to make it work, you need to be playing the middle mile game (ie fibre to the mast)

3)  You backhaul and longhaul folk need to resolve your issues at the masts. We know now it isn't the feed, but the management of packets (to simplify it all).

And finally, where does this leave the incumbents and the first inch like RIM, Apple etc? Particularly when you read this too. http://www.computerweekly.com/Articles/2011/01/24/245009/Microwave-technology-could-accelerate-rural-broadband.htm

 

On the seductive qualities of early break-evens

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It really does pay sometimes to look at things from across La Manche. Take Bluwan's Fibre Through the Air (FTTA) product, a preview of which Computer Weekly saw last week.
The underlying ultra-wideband microwave technology was originally developed to help soldiers sort friend from foe on the battlefield in less than a second. Now widely deployed, it has the street cred to make seductive promises to users and network operators alike, like 100Mbps for local access, and 12Gbps for mobile backhaul.
But what pricked our sceptical gene was Bluwan's claim that the cost of this was "between two and five percent of that of fibre", and that a network operator that goes for it could look forward to being cash positive within 18 months and reach break even within 24. This is an order of magnitude less than current accepted norms. If true, it makes widespread access to true "superfast broadband" a lot more affordable.
Why hasn't anyone done this before? Apparently, equipment makers hadn't seen the need, until now. Apparently it also means that Ofcom let some 3GHz of spectrum in the frequency band, namely 42GHz, go for a £200k song when it last auctioned it. All this should make the cost of exploiting all the elements very low indeed.
It certainly should get BDUK to insist on a cost comparision of FTTA against proposed alternative technologies for its four pilot studies.
Who knows? Perhaps communications minister Ed Vaizey could deliver his boss's desired "best broadband network in Europe by 2015" with change to spare from his £830m.

Digital Dividend writer tells Ashby's gigabit story

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Digital Dividend contributor Lindsey Annison has been finishing off her latest book, Ashby de la Launde, the third in the JFDI community broadband series, hence her lack of posts here since the holidays.

The book tells of the trials and tribulations residents of Ashby faced in getting gigabit broadband access around the village. They succeeded, thus givng Ashby the fastest local access network in the country, but one hamstrung by a backhaul connection running at one-tenth of the local speed.

It may well be worth Broadband Delivery UK buying a couple of copies (£18.50 each) to learn what issues communities and network operators face in getting real high speed broadband to the country's not-spots. If BDUK and the government apply the lessons apparent from the book, the return on that £18.50 could be the best they make.

Revenue for the future, from the past

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Once upon a time, circa 2000, in Korea, I fell upon a website called Cyworld that took my breath away for its audacity, revenue potential, and ingenuity. It was, though the term hadn't been coined then, a prime example of the Freemium model, and a forerunner to social networks, apps, and games such as those by Zynga.

You could build your own virtual world, for free, invite your friends to visit you, network, chat, game, and if you wanted premium/paid content, you purchased a virtual currency, acorns, for hard cash. This you then spent on presents for friends, exclusive items for your crib, and a multitude of other funky bits and bats. I thought it was genius, and I so wanted the best mini hompy amongst my new Korean friends, and/or to re-purpose the site for the West. 

But my Korean was sadly lacking, even to use the site to its full potential. My attempts to contact the owners using a Korean translator tracked down in Singapore by a London telecoms lawyer for me, yielded nothing like the EU-wide exclusive ownership deal I wanted. Today, I wish I had been more dogged as the potential was there for everyone to see when you took away the anime-type culture that is so Far East, and far less European or USA.

Now, in 2011, we are seeing indications, from CES, GigaOm, tech commentators and so on, of the likely movements during at least the first quarter within the mobile and broadband industries concerning revenue generation. And they clearly reflect Cyworld's early, pioneering attempts to build that world in what was even then the planet's number 1 broadband-enabled country.

Here's a few examples of recent news:

In-app payments and freemium gain ground

Time Warner realise the need to dump the additional device (set top box) and just send their films over IP

Is this the end for PCs and 'truck-sized' devices? (see my post on Broken Computers)

And CES - well, lots of links, go surfing!

Whilst this may seem an abstract collection of links, it isn't. What I am endeavouring to illustrate (by leaving some leaps of the imagination to your good selves) is that a) the need for devices is changing dramatically b) the mode of delivery is changing and c) the revenue streams are changing. All so that consumers have CHOICE.

What we are not yet seeing (in the UK) is a full comprehension of this shift. And it is, quite clearly, a paradigm shift because the reality is that it is becoming far less an 'operator' world, and much more one where the consumer has control. Grasp that nettle, and you may be on the bandwagon. Attempt to avoid it by continuing to place your bets on behemoth warhorse-type corporates who must have control to survive, and you may find yourself staring despondently at similar graphs to those behind this analysis all too soon.

 

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Recent Comments

  • peter : Robertson , didnt hand over the reins he was right read more
  • Somerset: Is it patching up the copper phone network or using read more
  • lamapper: WTG Lindsey Annison! The reality is no individual citizen should read more
  • Somerset: So what's the realistic way forward in the UK where read more
  • cyberdoyle: that is why the BDUK pilots should be what it read more
  • cyberdoyle: 寧為太平犬,不做亂世人; Aye good luck Olivia. You will need it. chris read more
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  • Ian Grant: BT has kindly provided us with the following clarification, from read more

 

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