Government support could give BT a monopoly, warns TalkTalk boss
BT is trying to establish a monopoly on the UK’s fibre optic broadband market, the commercial boss of rival Internet service provider TalkTalk has warned.
In an interview with the Observer on Sunday, TalkTalk’s David Goldie said that BT’s attempts to regain its former dominance of the market could leave Britain with a second-class broadband infrastructure.
“At all times BT is thinking about how it can recover the monopoly position that it lost many years ago,” he said. “I don’t think that is going to represent good value for the British taxpayer.”
Fujitsu to challenge BT
Some observers have warned that BT could get a monopoly on rural fibre through a £530 million government plans to support its installation.
In 2010, BT pledged to invest £2.5 billion in rolling out fibre to around two thirds of UK homes by 2015. The company is now also bidding for a further £360 million of the government subsidy, announced last month for England and Scotland, to help get fibre to rural areas.
However, Japanese electronics firm Fujitsu, which announced plans to build its own £2 billion superfast fibre network back in April, intends to bid against BT for the government money – and TalkTalk and Virgin Media have promised to support it.
Fujitsu’s success will depend on BT lowering the fees it charges rival service providers to access its telephone poles and underground ducting, over and through which fibre optic cables run. In a letter to communications minister Ed Vaizey and BT CEO Ian Livingston earlier this year, a group of ISPs warned that high fees would make competition “unviable”.
The letter added that “urgent intervention” was needed to “require BT to quickly revise the pricing”. However, BT responded that proposed prices for duct access compared very well with European averages.
“It is highly ironic that we are being criticised by some companies who provide little or no wholesale access to their assets,” BT said. The regulator, Ofcom has required a wholesale price cut from BT, but Virgin Media has said it is not enough.
Regulation could be needed
BT is scheduled to publish interim prices for other operators to access its network of ducts and poles by September, but Ofcom chief executive Ed Richards has admitted that BT is unlikely to set an acceptable price and “anticipates” that regulation will be needed. Fujitsu told the Observer that BT should halve its prices over a three- to five-year period.
BT has already won several large contracts to provide high-speed broadband to rural parts of the country – including Northern Ireland, Wales and Cornwall. It is also competing for a £120 million project to wire up Cumbria. The majority of these projects provide fibre-to-the-cabinet (FTTC) rather than fibre-to-the-home (FTTH), meaning the ‘last mile’ connection is still over copper lines.
According to Goldie, however, this is the wrong approach. “I don’t think they are building the right infrastructure for Britain,” he said.