The evolving on-line world leaves BDUK trailing in its wake

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Today is the deadline for responses to the BDUK consultation on which I blogged at the beginning of October . It may helpful to take the opportunity to summarise why BDUK should abandon its doomed attempt to use a mix of central planning, prescriptive regulation and state aid to support the re-creation of BT as a tier one operator capable of better delivering the types of surveillance operation revealed by Edward Snowden.

The scenarios put forward in the BDUK consultation presentation on October 7th were also implicitly based on a number of other, equally contentious, policy assumptions.

The most significant include: 

1) that BT's 21CN network provides an infrastructure that is fit for a rapidly evolving always on world in which more of us already watch video (including live sport) over mobiles than over TVs.

BT plans to share infrastructures with EE (which is also investing £1.5 billion and claims to be on course to offer 4G to 98% by the end of 2014). The implication is that BT's content publishing apirations require a more radical upgrade than that which completing the roll-out of 21CN (the basis of the current BDUK framework contracts) can deliver. Meanwhile Telefonica (alias O2) and Arqiva (who run most of the UK's terrestrial wireless infrastructure) have committed, under their DECC contracts to reach all properties with electricity supplies (not just the 98% as per the O2 and Vodafone spectrum licenses).

Will Vodafone (who have an infrastructure sharing deal with O2 and will soon have £tens of billions available for infrastructure investment) bid for Virgin Media or, more likely, do deals to carry their content and transactions (and that of everyone else) over seamless, ubiquitous  networks? Or will they decide there are better investment opportunities outside the UK and EU?

And what about Sky, Talk Talk and 3? 

Regardless of who partners with who, the stage is set for two or three competing networks serving 98% of UK consumers via fibre to the local cabinet or radio mast - provided we are serious about having a world class, open and competitive communications market.

But who will build and run those providing local access for the final 2%: three million farms, tourist attractions, country house hotels,B&Bs, Pubs, Restaurants, small businesses, homeworkers, parents and children?  

And what about all those City Centre small businesses including many would-be multi-media producers, stuck with the consequences of policies "custom designed" to protect obsolete leased line business models.     

2) that centrally organised procurement frameworks provide better value for money than the competing procurement groups of local government.

The evidence collated by EURIM for an unpublished comparative study of communications framework contracts indicated that Central Government was paying up to three times as much as Local Authorities or Educational Networks for equivalent products and services. The recent National Audit Report and Public Accounts Committee hearings savaged DCMS and BDUK in particular, but have also savaged others. The Westminster and  Kensington infrastructure sharing deal with O2 showed what Local Government can achieve, at far lower cost in consultancy time and money.

The co-operative procurements organised by SOCITM, the REIPs, JANET and the Educational Networks, as well as the PSN Framework (in which HMG has invested so much) offer a more cost-effective and flexible way forward - including by pooling funds to achieve the "Digital by Default" objectives which, under current strategies, BDUK is set to fail to deliver to the final 2%.

3) that the EU will NOT enforce the small print of its grudging approval of the BDUK framework contracts and will permit extension beyond 2015 without the specificed transparency and market reviews.

Given the BT tie up with EE (France Telecom and Deutsche Telekom) and the growing discontent on the part of would-be rival suppliers with lack of transparency (that the maps, cost of access and other information made available do not meet a reasonable interpretation of the requirements in the approval) this was becoming unlikely even before Angela Merkel expressed her disappointment with the surveillance arrangements agreed between the incumbent Telcos and the United States. Hence my comments on the bipartisan but  unpublicised agenda to give priority to re-creating BT as a Tier One provider for covert surveillance purposes over effective action to improve Internet security.    

Those responding to the BDUK request for inputs on the way forward should read the detail of the EU State Aid approval, particularly sections III.2, V3 and V4 and decide how likely they think it is that the Commission will not take enforcement action. In that context we should note the scale and nature of discontent with the current BDUK frameworks, the influx of new MEPs in 2014 who will wish to make a mark and Commission's consequent desire to be seen to do that which will win it most friends - including amongst those member states whose current leaders grew up under total surveillance regimes, as well as among those who wish to see an effective "open market" so that they can win business at the expense of the incumbent operators. 

4) That a continuation of the Labour Government return to central planning and control, after the success of Telecoms Liberalisation in the 1980 and 90s, is the "right way forward" for a coalition government which wishes to use broadband roll-out to help pull through economic recovery. 

As one of those who worked on the original 1978-9 liberalisation studies, based on experience around the world, "I would disagree, wouldn't I". I strongly believe the time has come to once again look at how things are done around the world and to "allow market forces to compensate for regulatory failure".

But we should not forget that community and municipal enterprise and local public-private partnerships are a well established part of any healthy market.

What is unhealthy is a series of cosy arrangements between central government, national  monopolies (alias "champions") and cartels of global players to "plan" the future.

Hence the need for a strong regulatory regime - but one focussed on ensuring competition not on protecting the incumbents from change.   
 

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1 Comment

Well said.

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This page contains a single entry by Philip Virgo published on October 27, 2013 11:50 AM.

Has Facebook committed commercial suicide by carrying Mexican drug lords "enforcement videos" was the previous entry in this blog.

The changing face of the UK On-line World: content and security as well as infrastructure is the next entry in this blog.

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