BT highlights demand for UK’s Public Services Network (PSN)
March 18, 2012
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BT Global Services published the findings of a study of 1, 300 public employees who consider themselves well informed about the Public Services Network (PSN), dubbed the “network of networks”, revealing that 69% consider the adoption of PSN as “important” or “very important” for their organisation’s efficiency programme.
PSN is a project undertaken by the UK Cabinet Office to create a single network for use by a series of suppliers, in order to save an estimated £500m per-year on the purchase of data and voice services through standardised network infrastructure, and by encouraging greater competition in the supply of public sector IT services. The BT research accompanied a conference on PSN, which it hosted, that saw representatives of more than 400 organisations gather to discuss the framework’s potential.
In May 2011, BT Group signed a deed of understanding with the Cabinet Office (BTwatch, #221), under which BT Global Services and BT Wholesale will participate in bidding for contracts under the PSN. BT Global Services will be one of up to 20 Direct Network Service Providers offering services to public sector customers, while BT Wholesale will become a key supplier of open and competitive Government Conveyance Network services.
As well as finding a generally positive attitude towards PSN (80% of respondents said that PSN connectivity will be valuable at their organisation), the study also identified a number of perceived barriers to the adoption of PSN among the survey participants: 14% said they would not adopt PSN without widespread adoption by other public bodies; and a further 12% said they would be deterred if there is a risk that their organisation’s cyber-security could be compromised. The study also found a lack of awareness of PSN, with 56% of respondents unaware of their organisation’s current stance on PSN.
In light of these findings, BT reiterated recommendations from the Public Administration Select Committee, backed by the government, to do more to increase awareness of modern information systems and technology across public services.
“ The public sector is right to be optimistic about the Public Services Network. PSN is a unique opportunity to transform the way the public sector works, making it easy for organisations to save money, simplify, and share services. PSN is the start of a journey, which, if planned well, will transform the way public services can be delivered. By making it easier for public sector organisations to buy and connect ICT [information and communications technology] networks and services, PSN will create opportunities that haven’t existed before. ”
“ The government estimates that by 2014, Britain’s public sector could be saving £130m or more a year. BT is playing a leading role in making the Public Services Network a reality. We’re committed to helping central government, defence, health, ‘blue light’, and local government customers prepare for PSN and the transformational benefits it will enable. This research gives us valuable insight into how our customers and stakeholders are feeling right now, so we’ll be using it to help us evolve our approach, and make sure we deliver precisely to their needs. ” – Neil Rogers, President, Global Government, BT Global Services.
BT is particularly keen to paint itself in a leading role within the PSN framework, as competition mounts from rivals such as Telefónica UK (BTwatch, #226), Virgin Media (BTwatch, #225), and Vodafone UK (BTwatch, #227) in the business and government sectors for IT and managed services. PSN suppliers are expected to be appointed throughout 2012.
BT is also jockeying for contracts on cloud-based services through its involvement with the government’s CloudStore, a portal for government bodies looking to introduce more cloud services. BT said it had a portfolio of five services available through CloudStore as it was launched at the beginning of 2012.
Ministry of Justice named as BT’s first PSN customer
While trumpeting the virtues of PSN, BT noted that the UK’s Ministry of Justice is its first customer to use PSN-compliant services under a contract that features the use of BT’s network and Siemens’ Internet Protocol telephony.
[Further reference: Public services network considered crucial to public sector efficiency drive, survey reveals -- BT, 28 February 2012; PSN and G-Cloud -- on track and ready for business -- BT, February 2012.]
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BTwatch Report #231 February-March 2012 Executive Brief
March 18, 2012
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- Openreach confirmed the April launch and initial pricing for its up-to-80Mbps fibre-to-the-cabinet offering. Wholesale prices are around 50% higher than 40Mbps services, with availability across the Openreach fibre network to follow a software upgrade. TalkTalk was the first major service provider to announce plans for a commercial launch of 80Mbps services at a £5-per-month premium to its existing fibre offering, while BT Retail is yet to show its hand. Low-cost BT subsidiary Plusnet is trialling the service more extensively before commercial launch. [pp.28-29.]
- BT Global Services announced a raft of contract wins and renewals, providing glimmers of optimism for the division, which has been struggling for profitable growth of late. The telco is to provide long-standing customer NATO with a global communications network under a five-year £39m deal. The unit also trumpeted a five-year £30m network outsourcing contract with financial services company Standard Life, as well as providing field force automation solutions to a division of technical services provider Imtech, with scope for expansion across the group. A £7m deal with Farrer Park health centre in Singapore was highlighted, and can be viewed as a success of BT’s commercialisation of its healthcare services experience, as well as progress in growing its Asia-Pacific business. [pp.16-19.]
- BT Global Services stated its intention of doubling the scale of its business in Africa and the Middle East in the mid-term, echoing its commitments to target growth in Asia-Pacific and Latin America. The drive for growth is hoped to see the region’s contribution to divisional revenue reach close to 10% within three-to-five years. While a search for new revenue opportunities outside its traditional markets might be welcomed, the BT strategy on expansion increasingly appears poorly focused and opportunistic. [pp.21-23.]
- BT is set to follow recent testing of LTE fixed-wireless solutions in Cornwall with trials of white spaces technology covering the same areas. BT had stressed that the LTE pilots with Everything Everywhere were only one of a number of options it was considering for alternatives to fixed-line broadband in hard-to-reach areas, and, although the findings were considered positive, the telco is also seeing strong performance from existing trials using redundant broadcasting frequencies to serve remote locations. LTE is certainly not being sidelined by BT, though, and the success of its lab trials into the potential for fixed and mobile network synergies from LTE technology, conducted in conjunction with mobile broadband gateway developer Stoke, was trumpeted. [pp.8, 26-27.]
- Deadlines expired for UK regional authorities to submit to the government plans for programmes to roll out superfast broadband to rural areas aided by central funding, with two Tyneside councils missing the cut-off date. Both authorities indicated they are still committed to next-generation access projects, and alluded to partnerships with BT, but the prospect of the government taking more direct control of the process could affect their ability to make decisions on partners. Fujitsu Telecommunications remains buoyant on its prospects for competing with BT on BDUK funding, a year after revealing its intention to participate, and in the wake of its withdrawal from recent BDUK-linked projects in Scotland and Wales. The technology vendor expects to win regional contracts ahead of the incumbent in coming months, and was also positive on Openreach services for communications providers. However, it was noted in the media that the BT access services division has yet to see any takers for its physical infrastructure access products for fibre, raising suggestions that revised prices are still too high. Fujitsu, which worked with BT on infrastructure access pilots, expressed confidence that, while there is still work to be done on the specifications of PIA, a viable product is within reach. [pp.4-6, 31-32.]
- BT Group is considering offering a new claims management service to external customers, building on in-house experience of handling insurance claims for its BT Fleet unit. [p.7.]
- Irish vendor Kinesense was awarded a contract to provide security solutions intended to stem the tide of copper cable thefts across BT’s UK network. [p.7.]
- BT Retail and TalkTalk lost the latest round of their legal appeal against implementation of the Digital Economy Act in the UK. Further appeals are possible, and being considered, but the incumbent is now framing its legal action against the Act as an exercise in clarification of its scope, rather than an attempt to overturn it completely. Enthusiasm within government for the implementation of its more controversial elements also appears equivocal. BT appears still to be pursuing options for the introduction of music streaming services, which might provide an alternative to proscribed activities. [pp.9-10, 12.]
- BT Engage IT is expanding its presence in NGD Europe’s tier 3+ data centre in Wales, to meet demand for cloud and co-location services. In Germany, BT Global Services unveiled plans for a new data centre in Frankfurt, to meet similar rising demand among its customer base. [pp.14, 23.]
- BT Conferencing was seen deepening its relationship with Cisco on telepresence conferencing with another accreditation. The teleconferencing sector continues to see alliances and partnerships spring up, but both BT and Cisco were notable absentees from the group supporting a new standardised and interoperable high-definition conferencing solution announced earlier in February. [p.15.]
- Momentum is gathering for the UK’s Public Services Network, which will enable public bodies to use a single network over which a range of suppliers can deliver data and voice services. The Ministry of Justice said it is working with BT on projects that are already compliant with the terms of the initiative. [pp.19-20.]
- BT Global Services showcased an updated BT Connect portfolio at the CeBIT conference in Germany, with a focus on network intelligence that is intended to support strategic use of communications infrastructure. The telco is working with vendors including Compuware, Ipanema Technologies, and Riverbed to expand the BT Connect portfolio. [p.24.]
- BT Wholesale selected IP solutions developer Genband to support its IP Interconnect offering, which enables interconnection between a wide range of global operators and platforms. [p.27.]
- A multicast offering for fibre networks was launched by Openreach, which could herald the launch of retail services using the technology, with BT Retail expected to be more active in the IPTV field in coming months. [p.32.]
- The Office of the Telecommunications Adjudicator indicated that progress is being made on effective service level guarantees from Openreach, building on more accurate forecasting of demand for appointments and order fulfilment from communications providers. The total number of UK unbundled lines is now comfortably past eight million. [p.33.]
- The European Union cleared Ofcom’s new regulatory charge controls on LLU and WLR products from Openreach, which will come into effect from April 2012. BT is pondering an appeal against the decision as the final Ofcom proposals sit towards the more severe end of the range of cuts the regulator had been considering. The merits of LLU as a whole were also cast into doubt, following research commissioned by Ofcom. [pp.34-35.]
BTwatch Report #231 February-March 2012 Snapshot
March 18, 2012
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Table of Contents
1 Executive brief
4 BT Group
4 Digital Britain
4 Councils miss BDUK deadline, but claim BT partnership
5 Financial reports
5 Missed deadline may spark centralised approach
6 Fujitsu confident of snatching BDUK contracts from BT
7 Operations
7 Public sector using BT as example of efficiency
7 Insurance
7 BT to offer claims management services
7 Operations
7 BT selects Kinesense in fight against metal theft
8 Research and development
8 BT completes LTE tests with Stoke
9 BT Retail
9 Digital home
9 BT launches new video baby monitor
9 Digital content
9 BT and TalkTalk lose DEA fight
10 Advertising
10 BT sponsors London Live
10 Plusnet
10 Plusnet uses internet predictions for self-promotion
12 Corporate social responsibility
12 BT online music service mooted, again
13 OnLive
13 OnLive Desktop launch angers Microsoft
13 Regulatory
13 BT cheers as mobile operators’ MTR appeal backfires
14 BT Engage IT
14 BT Engage IT to expand data centre
15 BT Conferencing
15 BT deepens Cisco relationship as more providers tie up
16 BT Global Services
16 Awards and accreditations
16 Contracts
16 BT wins £39m NATO deal for global network services
16 Global Services wins £30m Standard Life deal
18 Financial services
18 ING Bank deal gives Radianz access to Russia
18 BT wins Farrer Park health deal in Singapore
18 Positive news continues trickling through on health solutions
19 Financial services
19 FEX joins Radianz Cloud
19 Imtech awards BT field force automation deal
19 Public sector contracts
19 BT highlights demand for PSN
20 Tech Mahindra/Mahindra Satyam
20 Ministry of Justice named as BT’s first PSN customer
21 BT International: Africa and Middle East
21 Expansion plans for Africa, the Middle East, and Turkey
22 Investment focused on local staff and hubs, while partnering on connectivity
22 BT flags range of portfolio on offer
22 Stability important for regional growth
23 Expansive strategy highlights challenges in Global Services’ core
23 BT International: Europe
23 BT to open new data centre in Frankfurt
24 Products and services
24 BT updates BT Connect portfolio
26 BT Wholesale
26 Network
26 BT to launch white space trial in Cornwall
27 Regulatory support encouraging adoption
27 Products and services
27 BT selects Genband for Global IP Interconnect solution
28 Openreach
28 Fibre
28 Openreach confirms 80Mbps FTTC upgrade and pricing
29 Network
29 TalkTalk first to announce 80Mbps commercial launch
31 Suppliers
31 Openreach may turn to Portugal for fibre services
31 No takers for PIA yet, but Fujitsu sees potential
32 Fujitsu confident of PIA viability, with tweaks
32 Products and services
32 Multicast for GEA launched by Openreach
33 OTA2
33 BT offers service guarantees, if CSP demand as forecast
34 Regulatory pricing
34 Ofcom confirms wholesale pricing, but BT protests
34 BT still objects
35 Research questions effectiveness of LLU
36 Index
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BT Q3 FY11–12 results: BT Retail sees signs of better trends, but top-line still weak
February 20, 2012
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At the BT Group results for the quarter to the end of December 2011, BT Retail reported another period of declining revenue, with EBITDA marginally better than flat, on continued reductions in costs. While strong broadband performance was flagged again, overall, the core Consumer business looks shaky, and BT Business appears to still be searching for a new direction.
BT Retail, financial highlights, Q3 and 9m FY11-12
| Q3 FY10–11 |
Q3 FY11–12 |
Change | 9m FY10–11 |
9m FY11–12 |
Change | |
| . | ||||||
| Revenue | £1,954m | £1,849m | -5.4% | £5,784m | £5,532m | -4.4% |
| Net operating costs | -£1,502m | -£1,396m | 7.1% | -£4,476m | -£4,188m | 6.4% |
| EBITDA | £452m | £453m | 0.2% | £1,308m | £1,344m | 2.8% |
| Depreciation, amortisation | -£110m | -£101m | 8.2% | -£332m | -£305m | 8.1% |
| Operating profit | £342m | £352m | 2.9% | £976m | £1,039m | 6.5% |
| Capital investment | £115m | £108m | -6.1% | £299m | £311m | 4.0% |
| Operating cash flow | £324m | £284m | -12.3% | £950m | £922m | -2.9%. |
| . |
Source: BT and BTwatch.
BT looks for comfort in trends
As BT Retail continues to see its Consumer customer base shrink, the division said that trends were improving on line loss, although this is perhaps a sign of straws being clutched.
While the rate of active BT consumer lines lost on a quarterly basis saw an improvement — in that it dropped below 1% for the first time in at least seven quarters, and was described by the company as the lowest decline in more than five years — the loss remains significant. The ongoing shedding of revenue is not showing much sign of improvement either for the Consumer business — a 6% drop was recorded year-on-year.
BT Business looked to have taken a step back in its unsteady recovery, with an identical 6% revenue drop. The revenue decline was placed firmly at the door of BT Engage IT, BT Retail’s evolving IT services unit, which is in a state of flux (BTwatch, #228, #229) due to a reorganisation and restructuring. Ian Livingston noted it was primarily declines in IT hardware sales that accounted for the weaker BT Business performance, which is the responsibility of the Engage IT business. The difficult economic headwinds in the UK were also said to be affecting spending among BT Business customers, with investments in new equipment being among the kind of financial investment decisions being put off in the present climate. The changes at BT Engage IT are expected to move BT Retail away from the low-margin end of IT sales, but the negative impact on turnover is likely to be seen for several quarters to come.
BT Retail noted that average revenue per customer continues to rise, and was up 4.7% year-on-year to £337. BT attributed increased revenue to more bundling of services, including BT Vision. However, several price increases have been implemented by the telco in the year, which will also have supported a squeeze on the remaining customer base.
BT Retail, revenue by product type, Q3 and 9m FY11-12
| Q3 FY10–11 | Q3 FY11–12 | Change | 9m FY10–11 | 9m FY11–12 | Change | |
| . | ||||||
| Calls and lines | £1,141m | £1,031m | -9.6% | £3,407m | £3,105m | -8.9% |
| Broadband and convergence | £329m | £351m | 6.7% | £980m | £1,034m | 5.5% |
| Transit, conveyance, other* | £235m | £217m | -7.7% | £678m | £652m | -3.8% |
| Internal revenue | £114m | £127m | 11.4% | £328m | £373m | 13.7% |
| Managed solutions | £135m | £123m | -8.9% | £391m | £368m | -5.9% |
| Total | £1,954m | £1,849m | -5.4% | £5,784m | £5,532m | -4.4% |
| . |
Notes: * Transit, conveyance, interconnect circuits, Wholesale Line Rental, global carrier, and other wholesale products.
Source: BT and BTwatch.
Broadband base passes six million, fibre draws in customers
BT Retail added 146, 000 retail broadband customers in the quarter, representing a claimed 56% of the UK broadband market’s net additions for the three months (although BSkyB was able to claim a higher number of net adds in the same period). The adds boosted the retail broadband customer base to 6.1 million, and the incumbent appears to be continuing to benefit from customers abandoning TalkTalk, which is in the midst of customer service problems. The altnet has indicated that dissatisfied departing customers are often inclined towards re-joining the ‘safe pair of hands’ of the BT Retail business rather than trying another alternative provider.
BT Retail also added 95, 000 BT Infinity fibre broadband customers in the quarter, taking the customer base to more than 400, 000. This marks an increase of more than a quarter of a million from the base at the end of the past financial year, when the total stood at 144, 000.
BT noted that its fibre offering is supporting its ongoing growth in the broadband market by reducing churn among customers, and also helping it to achieve a higher share of customer acquisitions on fibre-enabled exchanges. Gavin Patterson, BT Retail’s Chief Executive, said that, in the quarter, around half of the BT Infinity adds were new customers to BT Broadband, and 20% were new to BT fixed-line services. At the end of the previous financial year, around 30% of Infinity customers were said to be new to BT Broadband.
Fibre demand draws more competition to market
BT’s performance appears to emphasise that demand for fibre is certainly present within the consumer market, but BT may not have it all its own way in future quarters, as rivals begin to introduce services. BSkyB, increasingly the main competitor to the incumbent as TalkTalk falters, is launching fibre at £20-per-month — echoing BT’s Infinity pricing.
At the risk of appearing begrudging, net adds for Infinity could also be said to be slightly underwhelming, in that the total compared to the preceding quarter, which included traditionally quiet summer months, is just 7, 000 higher (albeit on total net adds 20, 000 lower).
Broadband customer numbers (’000), Q3 FY11-12
| Q3 FY10–11 | Q3 FY11–12 | Net quarterly adds | |
| . | |||
| BT Retail | 5,529 | 6,144 | 146 |
| Virgin Media | 4,287 | 4,351 | 44 |
| TalkTalk | 4,224 | 4,079 | -50 |
| BSkyB | 3,006 | 3,651 | 166 |
| . |
Source: BT; other companies; and BTwatch.
Rivals continue to strip BT’s calls and lines business
On fixed-line voice, BT is continuing to see heavy losses in calls and lines customers, as both BSkyB and TalkTalk shift more customers onto their fully managed services.
With regards to the number of fixed lines in the UK, BT looks set to drop below 50%, in terms of controlling the line rental relationship, within a handful of quarters, should its rivals continue to attract new customers at current rates, and the incumbent fail to stem losses.
Calls and lines, customer numbers (’000), Q3 FY11-12
| Q3 FY10–11 | Q3 FY11–12 | Net quarterly adds | |
| . | |||
| BT Retail * | 12,041 | 11,138 | -185 |
| Virgin Media | 4,331 | 4,296 | 9 |
| TalkTalk ** | 2,751 | 2,966 | 56 |
| BSkyB *** | 2,215 | 3,106 | 214 |
| . |
Notes: * Total consumer lines sold by BT Retail, including Northern Ireland and Plusnet. Includes analogue and ISDN.
** MPF fully unbundled lines.
*** Line rental customer base.
Source: BT; other companies; and BTwatch.
BT Vision finally coming into its own
BT Vision is continuing its modest but noticeable improvement in customer acquisition, as the major players in the market see uptake stall from their traditional higher levels. After out-performing BSkyB in Q2 FY11-12, BT managed to match the satellite broadcaster’s numbers for the third quarter, taking around 40, 000 new customers (although its total customer base of 679, 000 is still leagues below rivals).
Pay-TV, customer numbers (’000), Q3 FY11-12
| Q3 FY10–11 | Q3 FY11–12 | Net quarterly adds | |
| . | |||
| BT Retail | 545 | 679 | 40 |
| BSkyB | 10,096 | 10,253 | 40 |
| Virgin Media | 4,331 | 4,296 | 12 |
| . |
Source: BT; other companies; and BTwatch
2012: the year smart and internet TV disrupt UK pay-TV?
BSkyB has said there are signs of reluctance to commit to long-term contracts among consumers, which could play into the hands of BT, with its more value-oriented TV packages and minimal contract commitments — although BT still manages to shoot itself in the foot by mandating that Vision customers have relatively-pricey BT Broadband services, which also invariably entail a twelve month or longer lock-in.
The challenge for BT is to build its base more aggressively, and increase associated revenue, through a new generation of higher value services, such as BT Vision 2.0, which is expected to feature live-streaming elements. YouView-based offerings may also play a part, but BT remains guarded around the subject of this latter platform, adding to the recent impression given by the telco (BTwatch, #229) that it is distancing itself from the YouView venture.
Problematically for BT, the UK pay-TV market is entering an interesting new phase, triggered by arrival of leading US internet-streamed service Netflix (see seperate report). This has already kicked off a £4.99-per-month price war with Amazon-backed incumbent Lovefilm. It has also elicited rapid competitive response from BSkyB, which, within the first half of 2012, will extend its internet-delivered video-on-demand service beyond customers of its own satellite TV and internet services, and introduce new tariffs.
A related development that could help drive adoption of disruptive new rival services is the advent of affordable smart TV, which is seeing easy access to free and paid internet TV (and other digital content) leap beyond personal computers onto a myriad of device formats, with support now being embedded into television sets, media players, gaming consoles, mobile devices, and a new generation of consumer set-top boxes from the likes of Apple TV, Boxee and Roku (just launched in the UK).
Should over-the-top internet-based pay-TV take off in the UK the way it already has in a few other developed markets, BT’s currently challenged Vision offering could quickly start coming under intense pressure, as, to a lesser extent, could its wholesale and retail broadband arms (should consumer demand become more vocal in calling for expanded 21CN and fibre connectivity, better QoS, and five- or ten-fold increases in usage caps).
BSkyB and Virgin could also feel the heat, with both having higher core ARPU to defend than BT, and a key factor could prove to be the strength of their ties to content rights holders, particularly for sports and movies. Historically, BSkyB has had these markets cornered, through a combination of wealth and long contracts, but, in recent years, rights holders have looked both cannier and more assertive. Notable is ESPN, a leading US sports network controlled by Disney (also a Hollywood major), which has built a strong UK rival to Sky Sports that is already licenced to BT Vision and elsewhere.
[Further reference: Results for the third quarter and nine months to 31 December 2011 -- BT, 3 February 2012.]
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BTwatch Report #230 January-February 2012 Executive Brief
February 20, 2012
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- BT Group announced its results for the third quarter of its FY11-12 financial year, with warning signs that aspects of the Livingston transformation of the business may be running out of steam. While there was positive news on profit, and EBITDA targets have been brought forward, BT’s previously endless capacity for cost-cutting may finally be diminishing, although continuing termination rate cuts, and exceptional items outside BT’s control are masking the possible slowdown. [pp.4-10.]
- BT Retail looked for comfort in improving trends, as customer numbers and revenue continue to slide, but rivals continue to gnaw away at the core Consumer business, and BT Business is experiencing difficult times. BT Global Services is still seeing challenges in bringing in new contracts, although Asia-Pacific and Latin America were highlighted as sources of good news. Double-digit percentage increases in revenue for the year so far from these regions, generating low hundreds of millions in annual turnover are helpful, but will take time to have meaningful impact on the division. Financial news from BT Wholesale continues to be gloomy, with migration to Ethernet services a drain on performance after the pain of transitioning managed services contracts is worked through. More hopeful for the future, mobile IP voice products are said to be gathering momentum with operators. Openreach provided most of the results’ positive highlights for BT Group, although it is seeing operating costs rise alongside increasing revenue and improving EBITDA, as earlier cuts are reversed to support growth and business-as-usual operations. [pp.14-17, 26-27, 33-34, 35-39.]
- During BT’s results presentation, Ian Livingston and Olivia Garfield casually acknowledged that FTTP currently only passes around 50, 000 properties — against BT’s target of 2.5 million for summer 2012. While the BT decision to focus almost exclusively on FTTC for its fibre rollout can be seen as pragmatic, if somewhat short-term, it may suggest that taking fibre to the cabinet has been more demanding on resources than anticipated. [p.38.]
- BT looks to have finessed an answer to questions about the lower than anticipated levels of FTTP availability in the UK, with the launch of pilot programmes that will technically make FTTP available “on demand” across its entire fibre footprint. BT is open about the uncertainty of demand for the product, but considers it might be attractive to SMEs looking for cheaper alternatives to private circuits. [pp.41-42.]
- BT Group appeared to make significant headway in winning public funding for rural fibre rollout projects under the UK government’s BDUK scheme, winning the tender with Lancashire County Council, and being left as the only remaining bidder in Wales, following withdrawal of Fujitsu. Prospects of further wins also appear improved, with Fujitsu’s exit from the well-funded Welsh tender implying that alternatives to Openreach’s “industrialised machine” for rolling out fibre may not be financially viable. Cambridgeshire and Peterborough also gave indications that they favour BT’s proposed solutions. [pp.10-12.]
- BT Infinity uptake continues to accelerate, and to prove a unique selling point for the BT Retail business. The division said around half of the 95, 000 new customers that signed for the fibre offering are new to BT Broadband, and 20% had no existing billing relationship with BT at all. The BT Vision pay-TV service is finally beginning to find a market, as consumers appear reluctant to commit to more established mainstream services, but may now face sector disruption from smart TV. The Vision offering is still a distant third in the market however, and newer services, such as BT Vision 2.0 and YouView, are taking their time to materialise. [pp.15-17.]
- Ofcom granted BT Wholesale and Everything Everywhere an extension to their temporary LTE spectrum licence, to allow trials of network cohabiting in Cornwall to continue until June 2012. Although the trials have been proving successful in terms of technical capabilities, BT played down the potential role of LTE-based services within its wider rural roll-out plans, stating that, in most circumstances, fixed-line services provide a better broadband product, and citing “white space” technology as a possible alternative. [pp.35-36.]
- Ofcom’s latest research into the UK broadband market found that broadband speeds across the UK are increasing, as customers trade up to higher-speed packages. BT Retail could be seen holding its own against copper competitors, although cableco Virgin Media still has an edge on next-generation services. Both BT’s Infinity and Virgin Media’s fibre-optic service may get a boost when new advertising restrictions come into effect, which could see most up-to-24Mbps products have their headline boast capped at around 14Mbps. [pp.17-19.]
- BT Retail and rival TalkTalk began a new appeal in their fight for a Judicial Review of the Digital Economy Act 2010. [p.20.]
- BT Retail launched an application for Research In Motion’s BlackBerry devices, which enables users to find the nearest BT FON Wi-Fi hotspot. The BT network of wireless network hotspots has expanded to cover more than three million locations. [p.21.]
- BT Conferencing signed an inter-provider agreement with Verizon Enterprise Solutions, to enable their customers to link up for video-conferencing calls using Cisco TelePresence solutions. [p.24.]
- BT Global Services made two senior international appointments, naming Luca Zappia as Country Manager for Switzerland, and Haruno Yoshida as President of BT Japan. [pp.28, 29.]
- BT Global Services signed up for Compuware’s CloudSleuth partner community, which will see its On-Demand Compute cloud hosting services monitored by CloudSleuth for service quality. The telco will also collaborate on best practices and strategies for applications in the cloud. [pp.30.]
- Telefónica’s Be Broadband indicated it is to use BT Wholesale fibre offerings to support a fibre broadband service where its network will not be able to deliver Openreach services. [p.35.]
- Within the wider fibre roll-out, Openreach provided details of the next 178 exchanges across the UK to be upgraded for fibre services. This phase will cover around 1.8 million homes and businesses, and the majority of exchanges will be enabled by the end of 2012. [p.41.]
- Openreach reported on several developments on FTTP, even though availability is scarce. The access services division promoted an expansion of its urban pilot in East London, adding more apartment buildings to its existing trial. Pricing and availability details were also provided for Openreach’s Fibre Voice Access product, which will enable communications providers to offer voice services over FTTP lines, dispensing entirely with the need for legacy copper connections for voice services. [pp.42, 43.]
- In preparation for the planned increase in maximum speeds for its FTTC products from 40Mbps to 80Mbps, Openreach announced an upgrade to its Enhanced Managed Line Checker, to reflect the higher potential speeds. It also confirmed that the faster FTTC variant would be made available by spring 2012. [p.42.]
- Ofcom submitted a new set of proposed charge controls for Openreach’s LLU and WLR services to the European Commission, outlining its proposed glide path for price reductions over the next two years. BT predictably objected to the proposals, questioning Ofcom’s methodology and claiming that price restrictions limit its incentives to invest. [pp.45, 46.]
- Openreach and ADVA officially launched their previously-announced Optical Spectrum Access service, as part of Openreach’s Optical Spectrum Service portfolio, significantly extending range and capacity over its previous OSA offerings. [p.47.]
- Openreach said that it would give communications providers greater access to performance and stability data on fibre lines, in order to allow them to evaluate the stability of lines to support linear IPTV launches. The move supports suggestions that BT Retail may soon make such a service available, building on its BT Vision on-demand service. Rival and UK new entrant Netflix gave an indication of the level of demand that video content can put on a network. During its first ten days in the UK. 21% of Netflix traffic was over the BT Retail broadband network. [pp.23-24, 44.]
BTwatch Report #230 January-February 2012 Snapshot
February 20, 2012
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Table of Contents
1 Executive brief
4 BT Group
4 Q3 FY11-12 results
4 BT progress looks fragile, but fibre adds zest
4 Underlying revenue still bumping along bottom of guidance
4 Profit underpinned by cost cutting, and flattered by external factors
5 BT Group financial highlights, Q3 and 9m FY11-12
6 Financial reports
6 Broadband a very rare revenue growth outrider
6 BT Group, revenue by product type, Q3 and 9m FY11-12
7 Corporate social responsibility
7 Divisional performance underlines “more to do” mantra
7 BT Group, performance by unit, Q3 FY11-12
8 Heritage
8 Rate of cost cutting slowing at BT
8 BT Group, operating costs, Q3 and 9m FY11-12
9 Capex well managed, annual spending remains in line
9 BT Group, capital expenditure, Q3 and 9m FY11-12
10 Digital Britain
10 People
10 People movement highlights
10 Digital Britain
10 BT gains as Fujitsu withdraws from BDUK in Wales
10 Wales development mirrors Highlands and Islands bidding
11 Digital Britain
11 FTTP appears commercially unviable for low-density regions
12 Digital Britain
12 Wales failure gives BDUK critics more ammunition
12 BT also picking up smaller contracts
14 Advertising
14 BT Retail
14 Q3 FY11-12 results
14 BT sees signs of better trends, but top-line still weak
14 BT Retail, financial highlights, Q3 and 9m FY11-12
14 BT looks for comfort in trends
15 Fibre
15 BT Retail, revenue by product type, Q3 and 9m FY11-12
15 Broadband base passes six million, fibre draws in customers
16 Fibre demand draws more competition to market
16 Broadband customer numbers (’000), Q3 FY11-12
16 Rivals continue to strip BT’s calls and lines business
16 Calls and lines, customer numbers (’000), Q3 FY11-12
16 BT Vision finally coming into its own
16 Pay-TV, customer numbers (’000), Q3 FY11-12
17 2012: the year smart and internet TV disrupt UK pay-TV?
18 Operations
18 Broadband
18 BT holds own as Ofcom finds broadband speeds up
18 Summary of average download speed by ISP package, November 2011
19 BT Payphones
19 Average speed changes impacted by BT and Virgin upgrades
19 ADSL2+ now has lion’s share of market
19 Advertising speed claims likely to be strongly curbed
20 Digital content
20 BT and TalkTalk appeal DEA Judicial Review
21 Wireless networks
21 BT launches BT FON app for BlackBerry
21 Openzone reaches three million hotspot milestone
23 BT Business
23 Television services
23 BT Retail accounts for 21% of Netflix traffic in first days
23 Netflix emphasises ISP relationships
24 Plusnet uses Netflix launch to promote fibre
24 BT Vision signs content deal with Miramax
24 BT Conferencing
24 BT ties with Verizon for extended telepresence
25 Plusnet
25 Plusnet to extend fibre trials
26 Operations
26 BT Global Services
26 Q3 FY11-12 results
26 Global Services stretching for good news
26 BT Global Services, financial highlights, Q3 FY11-12
27 Latin America providing a degree of comfort
27 BT Global Services, revenue by product type, Q3 and 9m FY11-12
28 Competitors
28 BT International: Asia-Pacific
28 BT appoints Haruno Yoshida to head BT Japan
29 BT International: Europe
29 Luca Zappia appointed to head BT’s Swiss operations
30 Partners
30 BT Global Services joins CloudSleuth partner community
32 Tech Mahindra/Mahindra Satyam
32 Tech Mahindra
32 Preparations for Tech Mahindra/Satyam merger continue
33 BT Wholesale
33 Digital Britain
33 Q3 FY11-12 results
33 BT Wholesale feels Ethernet growing pains
33 BT Wholesale, financial highlights, Q3 and 9m FY11-12
34 Wholesale pain to continue as Ethernet migration hits BT figures
34 BT Wholesale, revenue by product type, Q3 and 9m FY11-12
35 Contracts
35 BE Broadband plans to use BT fibre
35 Network
35 Ofcom extends LTE licence for BT and EE trials
36 BT tempers enthusiasm for LTE
37 Openreach
37 Network
37 Q3 FY11-12 results
37 Openreach enjoys BT starring role, as fibre passes 7m
37 Capex reined in, but operating expenses creeping up
37 Openreach, financial highlights, Q3 and 9m FY11-12
38 Network
38 Openreach, revenue by product type, Q3 and 9m FY11-12
38 New fibre products expected to develop the UK market…
38 …but signs suggest BT has abandoned FTTP
39 Vectoring to take FTTC to 100Mbps
39 Copper line growth attributed to growing population
39 BT quietly confident on BDUK progress
41 Fibre
41 Openreach trials on-demand FTTP
42 Demand for product unclear, but launch helps BT answer tricky questions
42 Openreach updates line checkers for faster FTTC
43 Openreach announces Fibre Voice Access pricing
43 FTTP developments continue apace
44 Openreach offers CPs data ahead of IP linear TV launch
45 Regulatory pricing
45 Ofcom outlines new charge controls
45 Ofcom’s proposed charge controls
46 Regulatory power shifting to Europe?
46 BT unhappy with scale of reductions
47 Suppliers
47 Openreach and ADVA launch new OSA service
48 Index
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Vodafone shutters At Home, switches from BT Wholesale to Plusnet
February 1, 2012
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Vodafone UK is closing its Vodafone at Home fixed-line broadband and voice business, and is switching customers to Plusnet, BT Retail’s low-cost broadband service provider, from February 2012.
Vodafone’s At Home service had been stagnating for several years, with revenue hovering for some time at around £30m-per-year — although the start of the 2011-12 financial year recorded a notable bump up in revenue to £10m for quarterly revenue, up from the norm of £7m-£8m.
Vodafone emailed customers subscribing to the service in December 2011 informing them of the change in service provider, and introduced a section to its website answering questions on how the change would affect them. Switching customers are being offered free bundled voice services from Plusnet for six months as part of the move. Vodafone customers will be entitled to switch to an alternative service provider rather than Plusnet on request, but would face a £25 fine to end the service altogether.
It appears that customers will see download caps and some inclusive minute features enhanced with the switch from Vodafone to Plusnet, and the Yorkshire-based service provider will see another boost to its consistently growing customer numbers. The usage cap is to be set at 60GB. Vodafone had an “unlimited” use claim in place, although it appears this was effectively capped by a 40GB fair use policy. Plusnet acknowledged its traffic management policies will be applied to Vodafone joiners, although these principally relate to shaping traffic in peak evening hours. It was noted that Plusnet customers’ use of their connection between midnight and 8am does not count towards their usage total.
“ While we believe Vodafone At Home provides great service and value-for-money to customers, the residential phone and broadband market in the UK is not a strategic focus at the present time. After assessing the whole market, we chose Plusnet as the provider that can best support Vodafone At Home customers in the future. ”
– Vodafone statement on the switch.
Plusnet a good advertisement for a ‘hands-off‘ approach at BT
The Plusnet business is a strong example of BT being able to exploit demand for low-cost services from a provider ostensibly acting independently, and the Vodafone deal can be seen as another victory.
Keeping Plusnet at arm’s length has worked for BT Retail’s consumer business in contrast to companies bought to serve business customers. These units have fared less well, and the division is still attempting to integrate the businesses Basilica Computing, DABS, and Lynx Technology into its operations through BT Engage IT (see separate report).
On the negative side for BT Group, the Vodafone move will see responsibility for the mobile operator’s fixed-line customers shift from BT Wholesale to BT Retail, which can be seen as another small, but meaningful, blow to the wholesale business. The division has recently experienced a rapid exodus of customers, and difficulty in providing profitable services on its managed services contracts (BTwatch, #223), and the Vodafone decision only adds to woes.
[Further reference: Questions about Plusnet support from 7th February 2012 -- Vodafone, December 2011; Vodafone UK scraps home broadband service and migrates users to PlusNet -- ISPreview, 20 December 2011.]
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BTwatch Report #229 December 2011-January Executive Brief
February 1, 2012
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- BT Group launched a patent infringement suit against internet giant Google, claiming that technology featured within the Google Android operating system uses BT intellectual property. The BT claims relate to six patents covering location-based services, navigation, and personalised access to content and services. While BT could be portrayed as jumping on the litigation bandwagon that is seeing the big players in the mobile space using patents as part of a wider strategy, the telco has a track record of development in these areas. [pp.6-7.]
- As Smart TV was identified as a key technology trend for 2012, and the UK market saw the arrival of on-demand content provider Netflix, BT Retail promised more interactivity for its BT Vision pay-TV offering. Details of the anticipated launch of BT Vision 2.0 are still sketchy, however, and it was noted that BT has not yet introduced many of the existing social elements of the Microsoft Mediaroom platform upon which the service is built. BT Group Chief Executive, Ian Livingston, also downplayed the significance of YouView‘s eventual arrival in the market to the telco, and indicated a mid-2012 launch for the platform is the best that can be expected at this stage. With the increasing presence of connected TVs, set-top devices, and mobile and web applications already making the leap towards social-TV a market reality, BT is in danger of seeing any advantages it may have had from its early investment in these areas evaporate. [pp.11-12.]
- Wi-Fi is another area where BT Retail is at risk from increased competition; and the telco was trumped by its former mobile business, O2 UK, to a deal to provide public wireless connectivity to Kensington & Chelsea and Westminster councils in London. The loss of the contract is all the more surprising and painful as BT already had a relationship with Westminster for the provision of a Wi-Fi cloud. [p.14.]
- As part of a swathe of new contract announcements, BT Global Services trumpeted a contract extension with Bristol-Meyers Squibb that will see BT provide network services to the US pharmaceuticals company until 2017. When the initial £250m deal between the companies was signed in 2005, it was by far BT’s largest contract in the USA, and, although the renewal is unlikely to be for as significant a sum, it appears to demonstrate BT’s ability to build its portfolio of standardised services. It also features compliance management solutions, opening a potentially rich seam of opportunities to bring its strengths in this area into a key vertical market for the Global Services division. [p.19.]
- Stephen Yeo, Chief Executive of BT Southeast Asia, provided some insight into BT‘s plans for growth in the region. As well as noting the party-line on multinational corporation growth, both into and out of Asia in the coming years, he suggested that the potential for revenue growth is not coming without significant customer expectations of what they can get for their money. He also indicated that BT’s strong financial services business in his region may not have as rosy an outlook in the short term, but appeared confident that a tipping point on business demand for unified communications was drawing nearer. [pp.26-27.]
- There were signs in the Office of the Telecommunications Adjudicator’s latest update on the access services market that Openreach talks with major customers to support efficiency in its work processes are beginning to reap benefits, although expected levels of repairs look set to flatten out at a higher rate than previously anticipated. [p.31.]
- BT‘s representatives on the board of Tech Mahindra stood down, in the latest step towards the cessation of the telco‘s involvement as a shareholder of the business process outsourcing company. However, a final disposal of the BT stake is still not expected until after the details of the merger between Mahindra Satyam and Tech Mahindra are finalised. BT’s stake in the enlarged entity is expected to amount to between 12% and 15%. The ongoing commercial relationship between the two companies is considered important to potential buyers, and both entities were keen to stress their working relationship. Nevertheless, it was reported in the Indian press that BT has agreed a 10% cut in its IT budgets across the Group for 2012, which could affect the value of deals with suppliers including Tech Mahindra. [pp.4-5, 8.]
- BT Retail signed up to feature in interactive solutions provider Rovi‘s Rovi Advertising Network, which enables advertisers to make consolidated media purchases across platforms. [p.13.]
- BT’s value brand ISP, Plusnet, is taking over the customer base of Vodafone‘s At Home fixed-line broadband and voice service from February 2012. The service generated around £30m-a-year for Vodafone, and, while it was considered a somewhat stagnant non-core element of the mobile operator’s business, it presents a nice boost for Plusnet. The switch is less positive for BT Wholesale, which had provided managed services underpinning the Vodafone offering. [p.15.]
- BT Engage IT provided more detail on its restructuring, with new management appointments announced as it looks to finally integrate its portfolio of SME-oriented IT services businesses. Interestingly, the BT iNet unit was flagged as an element of the Group that could work more closely with BT Engage IT. The division also took steps to drastically slim down its suppliers from 60 to 15. Major players such as HP and Microsoft featured, as did more niche providers such as Palo Alto. It appears though that BT iNet is to be used in some areas where Cisco might have been the default partner. [pp.17-18.]
- In Europe, BT trumpeted two, five-year framework contracts with the European Parliament, collectively valued at £99m. Under the agreements, BT will provide communications infrastructure and systems, as well as related professional services, on an exclusive basis. Deals to provide wide area network services to supermarket chain Sainsbury’s, clothing manufacturer Triumph, and office supplies retailer Staples Europe were also announced. [pp.20-21.]
- BT Global Services launched BT Advise, a newly-named unit incorporating its global consulting, systems integration, and managed services teams. Ray Stanton and BT Global Services EMEA President, Luis Alvarez will lead the unit’s 4, 500 professional staff, as the division attempts to provide a clearer purpose for disparate professional services operations. [pp.22-23.]
- BT announced the availability of its Ethernet Connect virtual private network service in North America, as new nodes were added to its networks in Canada and the USA. It is also offering pilots of enterprise-class Microsoft Lync Voice hosted services at its operations centre in Texas in conjunction with Microsoft. [pp.23, 25.]
- BT in Spain sparked a competition authority investigation into possible margin squeeze by the country‘s mobile operators, in relation to charges to virtual network operators. There were suggestions that the BT complaint initially focused on its network provider in the country, Vodafone, but was subsequently expanded. [p.28.]
- UK business ISP Vaioni flagged a new range of Ethernet-based leased-line offerings that employ the BT Wholesale Ethernet portfolio of products. [p.30.]
- There was a minor management reshuffle at Openreach, following retirement of its Service Delivery Managing Director, John Small. Network investment and service delivery are now to have separate managing directors. [p.32.]
BTwatch Report #229 December 2011-January 2012 Snapshot
February 1, 2012
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Table of Contents
1 Executive brief
4 BT Group
4 Associates and investments
4 Director departure latest step in BT Tech Mahindra exit
4 BT exit plans continuing to evolve
5 Corporate social responsibility
5 Tech Mahindra confident it can continue independently
6 Digital Britain
6 Legal
6 BT sues Google over Android patents
7 Further possible litigation?
7 A surprising return to high-profile intellectual property litigation
8 Pension
8 Operations
8 BT cutting IT budgets
8 People
8 People movement highlights
10 Pricing and tariffs
10 BT Retail
10 Contracts
10 Patterson on Olympic Games sponsorship
10 Thinking behind the Olympic strategy
11 Television services
11 Infrastructure challenges
11 Success evaluation
11 BT promises social-TV as Vision competition increases
11 Netflix highlights content explosion
12 BSkyB defending its market position highlights BT vulnerability
12 Livingston cautious on YouView’s potential
13 Competitors
13 BT joins Rovi Smart TV advertising programme
14 Competitors
14 Wireless networks
14 BT loses out on Wi-Fi deal to O2
14 BT letting early Wi-Fi lead slip
15 Plusnet
15 BT Business
15 Vodafone shutters At Home, switches to Plusnet
15 Plusnet a good advertisement for a ‘hands-off’ approach at BT
17 BT Engage IT
17 Advertising
17 BT confirms business sales restructure, trims suppliers
17 BT putting positive spin on re-org
18 Advertising
18 List of suppliers reduced from 60 to 15
18 Rebranding due in spring 2012
19 BT Global Services
19 NHS contracts
19 Contracts
19 BT wins Bristol-Meyers Squibb contract renewal
20 BT wins European Parliament framework contracts
21 Public sector contracts
21 BT wins Sainsbury’s contract
21 Triumph selects BT
21 BT wins Staples network deal in Europe
22 Tech Mahindra/Mahindra Satyam
22 Consulting services
22 BT launches BT Advise
23 Re-badging an opportunity for professional services to re-group
23 BT International: Americas
23 BT expands Ethernet Connect in Canada and USA
25 BT to host US Microsoft Lync Voice pilot
26 BT International: Asia
26 BT SE Asia sees growth, but demanding customers
28 BT International: Europe
28 BT sparks Spanish anti-trust investigation
30 Wholesale
30 Regulatory
30 Partners
30 Vaioni trumpets Wholesale partnership
31 Openreach
31 OTA2
31 Demand for repairs rising suggests OTA market update
31 Provisioning times returning to target, but regional performance varies
32 People
32 John Small retires; Openreach reshuffles management
33 Regulatory
33 BT and C&W in Ethernet dispute
34 Index
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Digital Britain: BDUK critics turn on BT with doubts over viability
January 4, 2012
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The viability of Broadband Delivery UK (BDUK), and its ability to provide a competitive tendering process for the allocation of UK government funding for rural fibre rollout, has come under heavy scrutiny after the withdrawal of at least one “major” player and one local council from the process, and ongoing wrangling over access to BT Group’s poles and ducts.
Geo Networks withdraws from BDUK bidding
Geo Networks, a fibre network operator and network provider for the FibreSpeed Next Generation Access (NGA) project in North Wales, announced its decision to withdraw from BDUK’s Broadband Framework and from future NGA procurements, and heavily criticised the funding model under which BDUK works, and the pricing and restrictions of BT’s Physical Infrastructure Access (PIA) products.
“ 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, 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. 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. ”
– Chris Smedley, Chief Executive, Geo Networks.
Smedley said that while Openreach’s October 2011 review of PIA pricing (BTwatch, #225) did not go far enough, the larger problem with its PIA products was the restriction of their use — they only cover providing the final drop from local exchange to customer premises. This means the new product portfolio cannot be used for more expensive backhaul provision, the connection of mobile or wireless infrastructure, or for the provision of leased lines to businesses.
“ 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 [internet service provider] 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. ”
– Smedley.
Smedley called on Ofcom to take “rapid action” to force Openreach to lift these restrictions, and offer PIA and dark fibre on a “truly open” and equivalent basis, as it is required to do with its local loop unbundling products. He noted that the current Business Connectivity Market Review being conducted by Ofcom is not due to conclude until late-2012, long after BDUK procurements are completed.
Geo’s complaints follow earlier signs of withdrawal
Geo’s latest announcement marks a continuation of its withdrawal from the BDUK process, after it withdrew its bid to become a pre-qualified bidder for the process under the Department of Culture, Media, and Sport’s Framework Contract in September 2011 (BTwatch, #225) — a move which would have anyway restricted Geo’s involvement in the wider project to the role of local sub-contractor.
BT bullish in response to Geo’s withdrawal
BT responded unrepentantly to Smedley’s comments in a statement to eWeek Europe, and cited the recently trumpeted progress made on its PIA trials with Fujitsu UK (see separate report).
“ Geo’s departure is disappointing, but hardly a surprise given fibre deployment requires a high degree of commitment and expertise. 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 statement.
In separate comments made to IT Pro magazine, a BT spokesperson said that BT had “never been ‘at war’ with anyone over PIA”, while making clear that there was no room for further negotiation. The telco has of late taken steps to try and move the debate on from pricing and to position itself as a dynamic force in the rollout, while rivals cavil over details.
“ The process has always been one of conciliation. Other companies now have all the information they need to compete with Openreach for BDUK funds. The time for talking is over. ”
– BT spokesperson.
Entanet predicts failure for BDUK
Following the comments from Geo Networks’ Smedley, Neil Watson, Head of Service Operations at wholesale communication provider Entanet, used the company’s website to forecast the ultimate failure of the BDUK scheme.
Watson cited an unconfirmed rumour that Cable & Wireless (C&W) has also withdrawn from BDUK bidding in the Cumbria region, and expressed cynicism over BT’s claimed trial success with Fujitsu.
“ The importance of the BDUK and the government’s plans for superfast broadband have already helped sway Ofcom to force BT to reduce its original PIA pricing, but Geo Networks (and other potential suppliers) believe this has not gone far enough; and their withdrawal from future bids has serious implications for the delivery of superfast broadband to rural and hard-to-reach locations. This means the BDUK is likely to become more reliant on the main existing broadband network providers such as BT and Virgin Media to reach the ‘last third’, which has obvious negative implications on competition within the market. ”
– Watson.
In a subsequent update to his comments, Watson also cited the news that both C&W and Fujitsu declined to bid for BDUK funding in Scotland’s Highlands and Islands region, leaving BT as the only major bidder (see separate report), as a vindication of his predictions for the future of BDUK.
INCA questions fairness of BDUK framework
Adding a further voice to BDUK’s critics, the Independent Networks Cooperative Association (INCA) also responded to Geo’s statement by calling for a government review of the tendering process for funding for fibre roll-out, and claiming that the current process fails to provide a level playing field for all potential bidders.
“ Geo and other operators, both large and small — Fujitsu Telecom, Gigaclear, Cybermoor, Fibre Options, IFNL, B4RN — are all working on plans that deliver much more [fibre-to-the-premises] — but they all require more investment than is currently on the table. If a proportion of that investment is to come from the private sector, there has to be a level playing field; the concern is that gap funding automatically favours the incumbent. ”
– Malcolm Corbett, Chief Executive, INCA.
As well as echoing Smedley’s calls for Openreach to be forced to extend its PIA offering to backhaul, and mobile or wireless infrastructure, Corbett also criticised a lack of integration between various government initiatives. In particular, he pointed to a failure to “intelligently link” the government’s rural broadband rollout plan with its £1.5bn project to roll out smart metering for businesses and homes.
“ As a rep from one of the main industry equipment suppliers said recently, ‘We’re happy to take the money off the government twice, but we can’t really see the point.’ Government needs to do more joining up of agendas at the national level whilst allowing more freedom to innovate at the local. ”
“ Government needs to move faster on the release of spectrum for wireless services, and more pressure needs to be applied to Ofcom to fix the PIA problem so we can ensure a level playing field for all operators. It needs a bit of ministerial table thumping. ”
– Corbett.
Bath and North East Somerset Council declines BDUK funding
Closely following the announcement of Geo’s withdrawal from the BDUK framework, the council for Bath and North East Somerset announced it made the decision to decline the offer of £670, 000 in BDUK funding, on the grounds that the associated £1m investment the council claims it would be required to make is too expensive, and has instead chosen to invest just £25, 000 in as-yet-undisclosed schemes to improve broadband across the area.
However, subsequent to the council’s announcement, 14 opposition councillors questioned the decision, and have forced an official review of the move to reject the government funding.
[Further reference: BT's PIA product inhibits a competitive fibre network landscape -- Geo Networks, 16 November 2011; Geo lashes out at BT and quits broadband scheme -- eWeek, 16 November 2011; BT fibre PIA plans 'fatal' to competition -- IT Pro, 16 November 2011; Is this the beginning of the end for the BDUK? -- Entanet, 22 November 2011; BT left as only BDUK bidder for Highland and Islands superfast broadband -- ISPReview, 28 November 2011; Bath and North East Somerset UK shun government BDUK broadband funding -- ISPReview, 17 November 2011; Is BDUK on the right track? -- INCA, 18 November 2011.]
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