BT faces criticism for revised duct and pole access prices

A backlash from other network operators prompted BT to revise its January draft prices

BT Openreach has revised its January draft prices that communication providers must pay to access its ducts and poles (PIA), following a backlash from other communication providers and information gained from ongoing trials.

PIA allows network operators to connect to Openreach's infrastructure, where they can install sub-ducts in BT's ducts, or attach equipment on to BT's poles, in order to provide broadband in hard to reach areas without having to make huge capital investments in setting up their own infrastructure.

BT has said it hopes this will contribute towards the government's aim to have the best broadband network in Europe by 2015, as it will create commercially viable options for communication providers to deploy broadband in rural areas.

Ofcom stipulated that Openreach would have to open up its infrastructure in October 2010, resulting in Openreach running trials to establish cost-based prices.

However, when BT announced its draft prices in January, there was much criticism from network operators that the use of PIA was still not commercially viable.

For example, Andy Stevenson, managing director of network solutions at Fujitsu, spoke to Computing in April and insisted the prices were too high.

"We have not agreed to pay the original price proposed by BT," said Stevenson at the time.

The original five-year draft price for spine duct access was set at £1.16 per metre in January. This has now dropped, in some cases, to 44p per metre. The price for a lead-in duct, which is used for the last few metres to the premise, has fallen from £2.12 per metre to £1.34.

The price for access to a drop pole, where several wires can be fixed to each pole, has fallen from £21 per attachment to £11.

A study by industry analysts Ovum has found that under the revised prices, communication providers will pay between 15 and 22 per cent below the European average (compared with Portugal, Spain and France) for access involving fibre-to-the-premises, and between 17 and 38 per cent less in fibre-to-the-cabinet.

"We have tried to model the costs over a 10-year period, so we take a mixture of the one-off costs and the ongoing costs, because if you look at things from day one it's always going to be expensive," said Matthew Howett, analyst at Ovum.

"But the communication providers that will be making use of this offer will be deploying networks, which will probably last at least 10 years," he added.

Howett told Computing that network operators should be pleased with the result.

"Communication providers really should be happy with this. The prices have come down quite substantially – as much as 40 per cent in some cases," he said.

However, if BT was expecting a positive reaction, it hasn't received one. Although Fujitsu and TalkTalk were not able to provide much comment, Virgin Media provided detail that suggests the outcome is not what it had been hoping for.

BT faces criticism for revised duct and pole access prices

A backlash from other network operators prompted BT to revise its January draft prices

In April of this year, Virgin Media, Fujitsu, TalkTalk and Sky submitted a letter to BT chief executive Ian Livingston, highlighting five areas where they felt charges needed to be significantly reduced to make PIA commercially viable:

1. Joint box breakthrough
• Openreach January price – £600
• Market price proposed by network operators – £165

2. Joint box/manhole pull-through
• Openreach January price – £522
• Market price proposed by network operators – £190

3. New pole
• Openreach January price – £550
• Market price proposed by network operators – £340

4. New small footway box
• Openreach January price – £825
• Market price proposed by network operators – £240

5. Blockage clearance
• Openreach January price – £695
• Market price proposed by network operators – £270

Of the above five areas that BT's competition thought should be reduced to make duct and pole access a commercial option, Openreach has only reduced the price of blockage clearance to between £254 and £358.

BT's competitor, Virgin Media, suggests that BT's prices and Ovum's research do not take this into account and should be investigated further.

"We have had to wait 10 months, only to find that many of the crucial new build and ancillary charges remain unchanged or are even increased. However, today's revised pricing is a belated acknowledgement that certain basic charges were too high," said a Virgin Media spokesperson.

"With significant amounts of public money already allocated to help bridge the digital divide between rural and urban areas, it's crucial that every pound is spent in the most efficient way. Reasonably priced access to BT's ducts and poles is central to creating a truly competitive process that will enable others, not just BT, to bid for and access those funds."

The UK government pledged £530m last November towards ensuring that 90 per cent of households in each local authority could access super-fast broadband as part of its Comprehensive Spending Review.

BT may face further hurdles if communications regulator Ofcom objects to some of the PIA pricing as part of its ongoing wholesale line rental (WLR) and local-loop unbundling (LLU) consultation, which is due to finish at the end of this year.

The consultation is looking at the pricing of a variety of Openreach products, and Ofcom has told BT that the pricing of ducts may still come under scrutiny.

"While we hope the specific regulation for PIA meets Ofcom's requirements, duct prices may still be affected as part of their wider consultation," said a BT spokesperson.

"We don't agree that there is a legal basis for the consultation to relate to duct access, and our hope is that they won't find it should apply. However, if they do, rather than hold up the whole process for a couple of years with an appeal, what we have said is, if they lower the prices, we will honour those prices for companies that are bidding for BDUK funds," they added.

During an appeal, if it takes place, Openreach will not allow companies that are looking to access ducts and poles in urban areas to benefit from the lower prices.

It also said that because it would be volunteering the pricing for network operators that applied for BDUK funding, it would not be able to reclaim money if its appeal was successful at a later date. However, if successful, the prices would then be raised to the current level.

"We are trying our best to focus on the good news of reaching an agreement on these prices, but I think we are all aware there is a cloud on the horizon that may come our way," said the BT spokesperson.