Open up broadband 'duopoly', Ofcom urged

What can I get, when can I get it, what will it cost me, and is it worth it? These are questions CIOs are asking themselves following a blizzard of reports last month on the future national broadband network.

What can I get, when can I get it, what will it cost me, and is it worth it?

These are questions CIOs are asking themselves following a blizzard of reports last month on the future national broadband network.

Businesses are concerned that the failure to develop high speed national networks would compromise their ability to run their increasingly global, collaborative businesses. Fast broadband would enhance R&D, speed up logistics, promote innovation that leads to more knowledge-intensive goods, and ultimately create more high-paying jobs.

The UK communications regulator, Ofcom, proposes to leave the development of broadband to the market. But Ofcom needs to address the concerns that a laissez faire approach will lead to limited competition with only two national core networks - BT and Virgin Media.

Will Roebuck, a consultant for the Communications Managers' Association, fears that such a duopoly, left unregulated, will drive smaller network operators out of business. This will lead to higher prices, slower roll-out of services and poor service, he says.

Network competitors say it is hard to justify duplicating BT and Virgin Media's networks. Because 80% of the cost is in digging up roads to lay ducts, the incumbents' physical infrastructure gives them an overwhelming competitive advantage.

Mobile network operators, which offer the reach, cannot offer the transmission speeds that BT and Virgin Media can. Only when they implement so-called Long Term Evolution (LTE) technologies will they get up to 100Mbit/s. But LTE is still some five years from commercial launch.

Andy Evans, CTO of Cable & Wireless, a telco, says BT and Virgin Media are the only network owners with physical networks that have the "capillarity" to reach most of the UK's population.

Broadband supplier Geo operates a 3000km national broadband spine and runs a fibre network through London's sewers. CEO Chris Smedley says the fastest and probably the cheapest way to get the next generation of broadband services to most people's homes will be to spend more building out BT's and Virgin Media's networks.

Smedley and Evans say Ofcom should enforce an open access policy on network providers, especially BT and Virgin Media. They want the right to buy capacity from the expected duopoly at regulated prices, and to connect private and regional networks that they run to the backbone networks under a standards-based transparent interconnect regime. This will ensure a speedy roll-out, greater product choice and lower prices, they say.

What this means for the average CIO depends on how they set up to maintain a fast reliable IT service to the business, and in how the business wants to communicate with suppliers and customers.

One powerful trend is to save operating costs by centralising computing operations in datacentres located in countries or regions where land and electrical power are cheap. Another is to improve the reliability of systems through remote back-up sites and alternate-route networks. High speed networks make these options possible competition makes them more affordable.

Automating the supply chain takes cost out of the transactions in the chain because it reduces time and errors in it. It also encourages some firms to find innovative ways to satisfy customers' needs.

Some CIOs, typically those who work for producers of mass entertainment products, will be keen to see such networks rolled out as fast and cheaply as possible. Others, possibly working for a manufacturer who has only a handful of suppliers and customers in his vicinity, are unlikely to fret.

The recent Caio Report, which looks at inhibitors to UK broadband networks, says there is no immediate need to change the status quo. Any network user can get any network capacity if they pay the price, and UK prices are, by and large, lower than in competitive economies. But this breathing space will not last.

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