The Trade and Industry select committee, in a report published on Tuesday, said that it didn't believe BT should be broken up but regretted the fact that ISPs have little option when buying wholesale broadband services to resell to users.
"We would naturally support any effort to ensure that investment in the existing network is sustained and that the rollout of other, alternative means to deliver broadband is encouraged. However, these alternative means of delivering broadband will not be sufficiently extensive to provide a genuine, nationwide alternative to BT's ADSL network, at least in the medium term," said the UK Broadband Market report.
BT's ADSL network currently serves about 85 percent of UK homes and businesses, and is expected to reach 99 percent coverage by the end of 2005. In contrast, only around 40 percent of the country can get a cable broadband service from NTL or Telewest, while local-loop unbundling has so far failed to open up much of BT's network to other telcos.
A product called Datastream allows rival telcos to connect their networks with BT's "last mile" copper links to homes and offices, but there has been considerable anger from those telcos, who say BT is charging too much for this service.
The Trade and Industry committee agrees that the current situation isn't helping broadband competition. "As yet DataStream has failed to deliver the competition in the wholesale broadband market, and, in turn, in the retail broadband market, that had been hoped of it," it says in the report. "The danger is that, because of a lack of confidence rather than a lack of demand, there is insufficient uptake of DataStream and it will ultimately be allowed to wither."
The Broadband Industry Group, which consists of a number of BT's competitors, has welcomed the report's findings. "The report confirms what the industry already knows -- that the current regime has not delivered, and competition in the wholesale broadband market does not yet exist," claimed the Broadband Industry Group in a statement. "Without decisive action a true mass market in broadband will remain beyond our grasp."
BT, which also gave the report its backing, said it was pleased that the committee had not pushed for its break-up.
"This is an argument that has been pushed forward by a few interested players and it is encouraging to see that the committee has taken the only realistic view on this subject -- i.e. that a strong BT is central to the creation of Broadband Britain," said Ben Verwaayen, the telco's chief executive, on Tuesday afternoon.
Talkback
If the MPs are unhappy with BTs dominance why dont they buy it back and make it state run again?
Wihout BT the spread of ADSL would not
have been so successful. Think how little
of the country would be able to enjoy the
service if left to government.
There are a number of issues here but what MPs have to try to appreciate is that the UK is relatively small island with a mere 60m or so inhabitants. In short, there is not the critical mass neccessary to sustain more than one large provider of Broadband in a way that they can make sensible enough profits out of it and invest in new infrastructure. All that competition does in this country is to undermine improvements to the infrastructure. It's also worth considering that there is life beyond ADSL which is now a fairly ancient technology. If we want "true" broadband which will run at say 10-20Mb/s then this implies more fibre and nobody apart from BT has the potential to do this. If we allow competition to keep nibbling away at BT's profits then the chances of this get smaller and smaller. So, strategically from a UK plc point of view the logical answer is a single provider properly regulated. Lets not repeat the mistakes made with our railways in the name of competition!!
Dick Winchester makes his point very well, and the analogy with the Railways is spot on. I do wish MPs would not interfere in areas they patently do not understand, but rather concentrate on issues which they could do something about, like sorting out the situation on the roads where such a high percentage of drivers drive untaxed and uninsured. That is an area where technology could really help - spend time there and stop trying to emasculate BT all the time.
BT will dominate until the local loop is opened
up, and I mean opened up. It should be removed from BT control and all interested
parties should be allowed open access to it
MPs can't have it both ways. BT is obliged to provide its services to the whole of the UK - which no other company is either obliged to or wants to. ASDL over existing phone lines is not the best technical solution, cable is the preferred solution for increasing bandwidth and reliability. But this requires substantial investment which BT has offerred many times in the past provided it is allowed to recuperate through provision of additional services in the entertainment field (eg cable TV, streaming media, etc). The "local loop", ie the exisitng BT network from exchanges to houses/offices, needs supplementing and upgrading. Who is to pay for this and who will reap the rewards from this investment. The next generation of cable network must be optical fibre to every home - except for extreme rural areas which need a more economic technical solution. I can't think of any commercial enterprise which is willing to invest on this scale. BT has one arm tied behind its back by OFTEL, and there are only NTL and Telewest left, and they are likely to combine in the long run. Or are we going to allow Richard Murdoch to dominate the whole entertainment and communications field?
Leave BT alone - they should be given all encouragement to provide a national broardband service. If BT had been given their head during the last coservative government virtually the whole of UK would have a near fibre broardband link. Do other companies think broardband can be provided for peanuts - BT have toi recover their costs when this is accomplished then let the network be opened up.
Yeah right of course BT want FTTH - but as long as the shareholders don't have to pay for it . I'm sure BT would end up asking govt. to stump up the cost of this, even though they are not a privately owned monopoly.
If 60 million population isn't big enough , how do all the CLECs & "baby Bells" in the US survive on a fraction of this number?
The US population is approx. 4.5 times that of the UK,& supports many more telcos than the UK has.
As for the commentor who said the Tories held back BT? If they'd have invested in the technolgy current at the time we'd still be using ISDN (DSL was first developed in 1989).
As BT dislike swapping out obsolete technology, ISDN would have NEVER been implemented because of the upgrade costs from ISDN (the fact that system X exchanges weren't easily retrofitted with ISDN has nothing to do with the relative lack of promotion by BT of ISDN in the UK, honest! Only when ETA 10 exchange equipment was more prevalent was ISDN pushed as a data transmission technology - contrast this with Germany to see what I mean.) So , to all youbelieverrs of the articals in airline magazines I say this - do better research!
The issue here is more fundamental than BT, it is to do with the whole idea of privatisation. A line has to be drawn on what can and can NOT be privatised. Rightly with the railways it was a disaster, only because it is blatently a public service. Whereas we have the definition of government as elected by the people to look after the afairs of people, it goes and sells people's interests to a minority (capitalists) in the name of copmetition and improvement. And we know very well that share holders will look for their own pockets and not the public inerest. Ok, competition is needed but not by jeoperdising the vital interests of public! Competition could be encouraged in the provision of services for example, the CPE's and the private networks sector, whereas the infrastructure is a public affair and should be run by government to the best of people's interests. If government is not doing its job properly, then we have a problem with the government not the public utilities run by it, so breaking up networks and railways will not solve make it go away.
The only hope for Broadband in rural areas, like mine in the middle of Dorset, is that eventually, like electricity, it will arrive. We can manage without gas, cable TV, public transport and street lighting, but the lack of high speed telecoms is stifling rural businesses.
When advocating liberalisation of the BT local loop, similar consideration must be given to the broadband element of cable companies who are very protective of their monopoly.
A far reaching study must be carried out into the whole "carrier system" within UK to ensure that developers/licence holders do not select only the highly profitable areas but, like BT, are obliged to provide services to uneconomic localities.