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Geo attacks BT as it quits UK fibre-funding process

The company says BT has an unfair advantage in the rollout of fibre-based broadband to rural Britain, and it should be compelled to take a local-loop unbundling approach to dark fibre
Written by David Meyer, Contributor

Fibre broadband company Geo Networks has pulled out of all future next-generation access procurements, saying the scales are unfairly tilted in BT's favour.

BT Openreach van

Geo has pulled out of the Broadband Delivery UK framework, saying BT has an unfair advantage in the process. Photo credit: didbygraham/Flickr

Geo said on Wednesday it will no longer take part in the Broadband Delivery UK (BDUK) framework, which seeks to parcel out £530m in government funding for the upgrading of the UK's rural broadband infrastructure. It also announced its withdrawal from other procurement processes, including that being run by the Welsh government, although it said it will remain involved in the existing FibreSpeed project in North Wales.

In a statement, Geo chief Chris Smedley said BT is putting unreasonable restrictions on access to its ducts and poles (known as Physical Infrastructure Access, or PIA). He also said the BDUK 'gap-funded subsidy' model gives BT, as the only existing provider of telecoms services to some parts of rural Britain, too much of an advantage.

"Whilst pricing may have reduced for the current PIA product (still not far enough in our view), the real issue is that it can only be used for providing the final drop from local exchange to a residential broadband consumer's house," Smedley said. "PIA cannot be used for the far more costly task of crossing the long distances in rural areas to get to these remote communities (backhaul), making the idea of being able to build new fibre connections within them faintly ludicrous."

The gap-funding model is hugely favourable to the current supplier, as they have all the revenues on their copper network.
– Chris Smedley, Geo

The PIA restrictions also mean other ISPs cannot use BT's ducts and poles to provide backhaul for mobile or wireless infrastructure, or even to deploy leased lines to business customers, he added.

Ofcom told BT to open up access to its ducts and poles a year ago. The costs of getting that access have been a subject of intense argument, but BT said on Wednesday that PIA trials are almost complete.

According to BT, Fujitsu UK hooked up its first customers last week using PIA, and PIA will come out of the trial phase later this month. In BT's words, "all UK communications providers will be able to order the new products from [BT] Openreach on an open, wholesale basis".

Geo is one of the companies trialling PIA, and Smedley told ZDNet UK that its withdrawal from the BDUK will not change that participation. Nonetheless, he said, BT should voluntarily remove its PIA restrictions or Ofcom should force it to do so in its upcoming Business Connectivity Market Review. The telecoms regulator's review is not due to conclude until towards the end of 2012, however.

On Thursday, Ofcom told ZDNet UK it is "reviewing the business connectivity market and as part of this will consider the role that access to ducts and poles play".

Funding model

PIA is only one of the problems cited by Geo. Another major issue is the way BDUK allocates funds. Bidders approach the funding group with a figure of how much capital they can put into a fibre deployment; BDUK then chooses the bid that requires the least public funding. The public funding goes to fill the gap between the bidder's funds and the amount needed to complete the project.

According to Geo, a public-private partnership model would be preferable. This would allow bidders that do not already have major guaranteed revenues to share the risk with the public sector, Smedley argued.

"The gap-funding model is hugely favourable to the current supplier, as they have all the revenues on their copper network," he said. "Much of the UK still has only BT's network, with other service providers using BT's asset. BT has a perfect knowledge of the size of the market [and has] the least risk, so it can make the biggest offers of capital."

Dark fibre

Finally, Smedley criticised BT for not offering a "truly open dark fibre product" to other providers, in the case of publicly-funded deployments. Dark fibre is unlit, unmanaged fibre that could be run without BT's interference.

According to Smedley, a dark fibre product could be set up along the lines of 'local-loop unbundling' (LLU). Regulators forced BT to institute LLU on its copper network, so that rivals could avoid having to resell BT's wholesale product by installing their own kit in BT's exchanges.

The European Commission wants fibre in the UK to be truly unbundled at some point, but has accepted Ofcom's solution of 'virtual unbundling' (VULA) as a stopgap measure.

"We don't believe in virtual unbundling," Smedley said. "Full unbundling is what we're interested in, and in the fibre market that is dark fibre. We want, when BT is rolling out new fibre networks with public money, that they be compelled to offer a dark fibre product to the rest of the industry."

BT responded to Geo's withdrawal from the BDUK framework by suggesting Geo did not have what it takes to roll out fibre on a large scale.

"Geo's departure is disappointing, but hardly a surprise given fibre deployment requires a high degree of commitment and expertise," a BT spokesperson said. "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."

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