Duct Access – The Devil is in the Detail

The Coalition Government professes to understand the benefits of superfast broadband to businesses and the economy.  Their Broadband Strategy, which was launched in December 2010, explained that:

 “The benefits of superfast broadband have an impact across the whole economy – whether this is through greater scope for tele-working and home-working, which reduces the pressure on the transport network and lowers carbon emissions, or better delivery of public services – such as remote education services.  …  It will reduce costs for consumers and enhance the capability of businesses to communicate and exchange information with their customers and suppliers. This is fundamental to our future prosperity.  …   It is important that the vision of broadband is not limited to domestic users only – the effect on businesses can be just as dramatic.”

But that vision doesn’t seem to have filtered down to Ofcom.  Ofcom have always found it hard to take an interest in anything outside of mass market consumer services.  It doesn’t fit with their economic theories or make an impact on public opinion.  Big brands, bundling and broadcasting are where it’s at, as far as they’re concerned.

When imposing a requirement on BT to open up its ducts to investors in superfast broadband networks (known as “Passive Infrastructure Access”), they nailed their colours to the mast.  In their review of the Wholesale Local Access Market they decided that:

“BT will be obliged to provide PIA services for the purposes of deploying of NGA networks to support services such as broadband, telephony and cable TV, but not, at this stage, leased lines. Further consideration will be given to extending the scope of the remedy to include leased lines in the next business connectivity market review, which is due for completion in 2012.”

 “Leased Lines” is Ofcom jargon for high bandwidth symmetric data services which are BT’s cash cow.  Of course BT doesn’t want to cannibalise this revenue.  Ofcom’s economists put it like this:

 “The use of PIA for arbitrage of BCMR remedies [i.e. leased lines] in this way could then mean that BT was unable to recover its common costs.”

 Which, translated, means:  “We do not wish investors in fibre networks to offer high bandwidth services at affordable prices to small businesses because of the impact it would have on BT’s revenue stream.”

 BT have now published their draft contract for duct access and its terms duly prohibit the use of the duct “for leased line or fixed or mobile backhaul services or for the provision of uncontended service between two business end user premises [or] for any other purpose than for its own Next Generation Access Services”.

Messrs Vaizey and Hunt should be reminded that the Devil is in the detail.