BT defends pole and duct pricing as industry criticism spreads

BT has defended itself against criticism of its proposed pricing for access to its poles and ducts, despite further industry support for the concerns raised by a number of its rivals this week.

BT has defended itself against criticism of its proposed pricing for access to its poles and ducts, despite further industry support for the concerns raised by a number of its rivals this week.

Several network operators wrote to communications minister Ed Vaizey and BT CEO Ian Livingston (pictured) on 4 April warning of the risk of a boycott of the government's rural broadband pilots unless BT's prices for physical infrastructure access (PIA) by third-parties were lowered to better reflect actual costs.

A boycott could jeopardise the government's plan for providing £830m of funding through BDUK to help create the best broadband network in Europe by 2015.

The Communications Management Association (CMA), which represents companies that buy some £13bn a year in communications, welcomed the suggestions contained in the letters to Vaizey and Livingston, which were seen by Computer Weekly.

The CMA said the letters could be a "tipping point" at which the government either ensures proper competition in communications services or separates BT Openreach, the telco's regulated network provider.

"Although functional separation [of Openreach] was effective in removing the worst anti-competitive excesses of the incumbent, there is much still to be done before the last negative impacts of significant market power are regulated away," the CMA said.

The organisation noted that ECTA, the European Competitive Telecommunications Association, had told the European Commission formally that competition in the provision of fibre "has had its day".

"On the same day we saw that Yota, a Russian mobile network provider, is going ahead with a single wholesale network on which the other three mobile providers can offer 4G services," said the CMA.

"In a sympathetic environment, the letters from the communications providers (CPs) could serve as a tipping point, where both government and regulator wake up to the fact that infrastructure competition is on its last legs, and a serious choice is looming between getting a firm grip on the methods used by BT to deter competition in the access network, and moving towards full structural separation of Openreach."

The CMA said the UK was "slowly and ponderously" inching towards universal access to some level of broadband, and said the pace was largely determined by BT and by a lack of determination by the regulator, Ofcom, that was matched by lack of drive or progress from government.

"From the outside, BDUK appears ineffective. Worse still, rumours are starting to appear about the extent to which BDUK might have been seduced by BT's siren song," it said.

A spokesman for the Department for Culture, Media and Sport (DCMS) said, "A competitive marketplace is important for the roll-out of superfast broadband."

He said the independent Office of the Telecommunications Adjudicator (OTA) was examining BT's draft offer for PIA pricing. "We would encourage all interested parties to engage with that process," he said.

In its March newsletter the OTA said, "Interest in the PIA product from CPs is very good and we now have an established group of regular attendees at meetings. Work on the PIA product and processes have continued, as has the work to get a trial started. A number of CPs are in establishment for the product and beginning to work through the accreditation phase."

The DCMS spokesman said that if the OTA cannot resolve the differences between the parties, it could refer the dispute to Ofcom, which could then consult and rule on the matter.

He declined to say if this could be done before the 28 April deadline for bids for the BDUK's pilot rural broadband projects.

In response to the letter to CEO Livingston, BT said it is "a shame that some of the companies involved seem keener to spend more time talking about this process than actually working on it."

BT added, "The fact is our proposed prices for duct access compare very well with European averages, while our plans for pole access have been held up due to others delaying our trials. Once those trials are underway we will be in a far better position to understand the costs involved and so we would encourage these companies to start trialling with us as soon as possible."

BT said it already provided many ways in which third parties can access its network and has committed to providing more forms of access. "It is highly ironic that we are being criticised by some companies who provide little or no wholesale access to their assets," said the company.

BT added that it is the only company that has installed broadband equipment in exchanges that serve the "last 10%" of the UK". "So we would question whether these companies are genuinely interested in serving rural Britain, given their track record."

The CMA said BT's pricing for access to the physical infrastructure of poles and ducts was not the only issue.

"Almost every other EU state has agreed a basic framework for decisions related to state aid," it said. "The UK is an exception, and every aspiring project is told by BDUK that it must find its own way through the state aid decision process.

"EU administrators are concerned about the workload costs and project delays that this engenders. BT positions itself as uniquely capable in handling these issues, and the outcome, in effect, militates against new market entrants," it said.

The CMA called either for "a level-playing field" or for Openreach to become a monopoly regulated as a utility. "Further fudging will come at the expense of damage to UK businesses' ability to compete within Europe and on a wider stage," it said.

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