Geo Networks Ltd has dramatically announced it is quitting Broadband Delivery UK (BDUK), the body that is distributing the Government’s £530m fund to push superfast broadband into rural areas.
Geo has been actively involved in the fibre rollout in the UK, having previously been involved in the FibreSpeed project in North Wales, that wired up business parks to a fibre backbone that was indepenent of BT. In January it was also appointed to install fibre in the Manchester Corridor.
However it has now decided to make the “reluctant decision” to withdraw from all BDUK activities and projects, blaming both BT and effectively Ofcom.
“The primary reasons for our withdrawal are threefold. Firstly, we feel that the current gap-funded subsidy model being adopted by BDUK and local authorities automatically favours the incumbent (i.e. BT), which has the security and knowledge of revenue streams on its current network as the dominant and often only telecoms network owner in these regions,” complained Geo’s chief executive Chris Smedley.
“Secondly, the absence of any opportunity provided in the current procurements either to underwrite any take-up risk or to guarantee public sector revenues – for example under a Public Private Partnership model – removes the ability for us to share this with the public sector. And finally, the uncertainty around the terms and pricing for PIA, and the heavy restrictions as to what we can use it for means that, in our view, this market is not contestable.”
It is the last point about Physical Infrastructure Access or PIA (BT’s product that allows rival ISPs to use its ducting and telegraph poles to install their own kit), which perhaps proved to be the biggest bugbear for Geo.
BT agreed with Ofcom in February 2010 to allow rival ISPs to access its ducting and poles so they could install their own lines. And then in January this year BT revealed the price it would charge, but rival ISPs felt these prices were too high and threatened to boycott the BDUK.
At one stage Ofcom threatened to step in and regulate the prices BT charges, but in October BT revealed much lower PIA charges, in some cases more than 60 percent lower.
And it backed up its lower price after independent telecoms analyst group Ovum said that the UK’s PIA offering is up to 21 percent below the European average in urban areas. And in the more rural areas, the UK is as much as 38 percent below average when considering pricing in France, Portugal and Spain.
But Geo remains unconvinced, and believes that the way it is structured makes it all but impossible to install fibre over the long distances, which rural broadband requires.
“Whilst pricing may have reduced for the current PIA product (still not far enough in our view), the real issue is that it can only be used for providing the final drop from local exchange to a residential broadband consumer’s house,” said Geo’s Smedley. “PIA cannot be used for the far more costly task of crossing the long distances in rural areas to get to these remote communities (backhaul) – making the idea of being able to build new fibre connections within them faintly ludicrous. It cannot be used to connect mobile or wireless infrastructure (a critical way of quickly rolling out competitive services in hard to reach geographies) and it cannot be used to provide leased lines to businesses. Quite simply, our business case does not stack up because of these restrictions.”
“BT does not suffer from any of these restrictions when it has to assess the business case for deploying new optical fibre cable over its existing infrastructure. Only BT can deploy fibre for backhauling traffic long distances from local exchanges for itself and the wholesale ISP market. Only BT can build a business case including the revenues from the fast growing mobile and wireless data market. Only BT can deploy services for businesses over this fibre,” he said.
Smedley described these “inadequacies of the current PIA product” as “fatal to infrastructure competition.”
But critics point out that PIA is not just available to make connections between the exchange and customers’ homes/businesses.
“Geo’s departure is disappointing but hardly a surprise given fibre deployment requires a high degree of commitment and expertise,” BT told eWEEK Europe in a statement.
“It is ironic that Geo are trying to blame BT, Ofcom and BDUK for their withdrawal at the same time that the major players are making such good progress,” BT said, pointing to the below progress made in a PIA trial.
BT is to officially launch its PIA product later this month after it revealed that Fujitsu UK had completed a successful trial that saw Fujitsu using BT’s PIA product to install its own fibre in and on BT’s ducting and poles.
The trial in the Wirral, Merseyside provides 100Mbit/s line speed connection using fibre to the home (FTTH). Fujitsu is the first provider to use Openreach’s PIA system to offer services in this way.
“We’ve pulled out all the stops to make sure our products fit the needs of our customers, so I have been delighted by the positive feedback we’ve had from Fujitsu UK and others,” said Openreach chief executive Liv Garfield.
“Fujitsu UK have made strong progress to date using Openreach’s poles and ducts and so we welcome the imminent commercial launch of their products,” said Andy Stevenson CEO Fujitsu Telecommunications Europe. “I’m delighted to announce that the first of our triallists are now live on our trial network, and we’re proud to be the first Communications Provider in the UK to offer service through this route to market.
“Whilst there are still some points of detail we’re working through ahead of commercial launch, we’ve been reassured by Openreach’s collaborative approach towards pricing and product development, which gives us the confidence to move forward,” he added.
Fujitsu is also thought to be also bidding for three BDUK tenders in Cumbria, Wales and North Yorkshire.
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We have been extremely clear about the failings of Ofcom in our whitepaper (http://issuu.com/richardbrown0/docs/broadband-wales).
They are no longer fit for purpose in this market space - and it is no surprise that BT are quite happy with them... Ofcom are virtually powerless which is precisely what BT wish to maintain.
Richard Brown
wispa Limited