Fujitsu's promise to put fibre-optic links to 5m rural homes depends on Ofcom forcing down charges by BT and more government funding - which look unlikely
Plans by communications minister Ed Vaizey to encourage rollout of superfast broadband using fibre-optic cables to rural homes and businesses are under threat from internet service providers and infrastructure providers angry at what they see as overcharging by BT.
Fujitsu, which provides infrastructure support for a number of telecoms operators around the world, announced on Wednesday that it plans to build a fibre-optic network bringing superfast connections - which could run at 100 megabits per second (Mbps) or more - to 5m rural homes, working with Virgin Media, Talk Talk and the network company Cisco.
But it admitted that the plan depends on getting government funding as well as a change in BT's charges for access to its existing network of telegraph poles and underground ducts - which just a week ago it condemned as being four or five times higher than an efficient market would produce.
Fujitsu was one of five network operators and infrastructure providers who wrote to the communications minister Ed Vaizey at the start of April threatening to boycott the rural broadband projects he is proposing because they said that BT's proposed charges for access to its underground ducts and telegraph poles were "not cost-based".
The complainants - Fujitsu, Virgin Media, TalkTalk, Geo and Vtesse - asserted that some of BT's prices for access and rental of physical infrastructure were four to five times more than an "efficient market" would charge.
At the same time they also wrote to Ian Livingston, BT's chief executive, saying that its proposals on rural broadband would be "a commercial and policy failure" unless Openreach's prices were reduced.
Fujitsu proposes putting its own cabling in a number of communities, using the ducts and poles presently controlled by the BT Openreach division to run the fibre-optic cable which would provide the high-speed connections.
The proposal - which Fujitsu calls "a ground breaking and innovative alternative to BT Openreach" - is only feasible, the company says, if it can prevail on the government to provide it with some of the �530m funding, top-sliced from the BBC, for superfast broadband installation, and match those with new rulings by Ofcom that force down the cost of access to BT Openreach's infrastructure.
BT's response to the complaints was that its proposed prices for duct and pole access compare very well with European averages, and that they are 15% lower than a basket of European prices.
The problem with BT's proposed charges is that they significantly increase the cost of putting in cables. Fibre optic cable is itself now quite cheap - especially compared with copper, whose price has rocketed - but would-be providers of fibre-optic internet in rural areas face a double whammy: BT has agreements for locating its poles and ducts on many pieces of private land for very low rents (known as "wayleave") which no private company could now match; and fibre-optic cable laid by new businesses attracts extremely high business rates per kilometre, compared with BT which pays a fraction of the rate, determined by the Valuation Office Agency. ISPs and infrastructure providers have previously complained about this and suggested that BT should be further broken up, to create a "BT Duct and Pole" division like Openreach.
Complaints to Ofcom about the cost of duct and pole access, and to the VOA about the disparity in charging between BT and other fibre-optic providers, have so far produced no change. Vaizey has chaired meetings between ISPs, BT, Ofcom and the VOA but no results have been announced.
In its announcement, Fujitsu says that its plans rely on Ofcom forcing BT Openreach - the division of the company which looks after its physical infrastructure - to provide access to its telegraph poles and underground cable ducts on "fair, reasonable and non-discriminatory terms".
Superfast broadband delivered by fibre-optic cable has the potential to dramatically transform peoples' lives: studies in South Korea have shown that symmetrical broadband, where upload and download speeds are almost equal, lead to the creation of more content by everyone - compared to "asymmetrical" systems such as those found almost everywhere in the UK and US which rely on copper wire.
Source: http://www.guardian.co.uk/technology/blog/2011/apr/14/uk-broadband-fibre-plans-row
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