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Last week news broke that Fujitsu has plans with TalkTalk and Virgin Media to implement its own fibre network in order to reach 5 million homes in rural areas and provide a competitive alternative to BT Openreach’s infrastructure.

Neil Watson, Head of Service Operations

Neil Watson, Head of Service Operations

In a rather woolly press release, Fujitsu says its network will run fibre optic cables direct to the home, using Cisco hardware to deliver up to 1Gbps symmetrical speeds with an option to increase to 10Gbps and beyond at a later stage. It will also bypass the existing BT cabinets by using underground and overhead infrastructure, enabling the ISPs involved to reach areas where broadband provision is at its poorest.

As well as involving TalkTalk and Virgin Media, Fujitsu plans to offer the network to other interested ISPs on a wholesale basis, providing “truly open access to all ISPs offering the end customer unrivalled choice of services over a single physical connection.” Whether or not TalkTalk and Virgin Media will be granted a preferential deal is still to be determined, but it would seem likely considering their early involvement.

However, this entire plan is reliant on Ofcom successfully forcing BT Openreach to provide access to its ducts and telegraph poles on a “fair, reasonable and non-discriminatory” basis. This has been a controversial topic in its own right over recent years and has been the subject of ongoing industry debate.

Most recently, BT has been criticised for the pricing it has announced for accessing its poles and ducts and unsurprisingly its biggest critics were TalkTalk, Virgin Media and Fujitsu, who threatened to boycott the Government’s rural broadband pilots unless the pricing for access to the BT infrastructure was lowered. Quite a bargaining tool!

Whilst this latest news of the consortium’s plans now sheds more light on Fujitsu et al’s previous concerns, BT continues to insist that its pricing is fair and is in fact 15% less than those charged by its counterparts in France and Germany.

Cynics within the industry argue that Fujitsu and others are using their plans to reach rural areas as a bartering tool with Ofcom. Their aim, it seems, is to encourage Ofcom to put pressure on BT to reduce the prices it charges for access to the ducts, poles and the rest of its physical infrastructure. This would need to be done in order to protect the government’s plans to deliver broadband throughout the UK. Nothing wrong with that you might think. However, the cynics argue that once the lower pricing is agreed, the organisations will use this to become more competitive in areas where they already have a presence (e.g. towns and cities) and potentially even shirk their promises of expanded networks and delivery of broadband to the rural ‘not-spots’.

Piers Daniell, MD of Fluidata has already voiced his concern: “some members of the group are using the issue as an excuse not to apply for the BDUK money when in reality they have little or no interest in bringing broadband to areas with a low population density. Instead, these companies want access to BT’s ducts and poles in towns and cities where their coverage needs expanding.”

However whilst BT has its supporters, it also has its critics. The CMA (Communications Management Association) argued that the letters sent by Fujitsu et al to BT and Ed Vaizey (the Minister for Communication, Culture and the Creative Industries) could be a “tipping point” forcing the Government to ensure proper competition.

“In a sympathetic environment, the letters from the communications providers (CPs) could serve as a tipping point, where both government and regulator wake up to the fact that infrastructure competition is on its last legs, and a serious choice is looming between getting a firm grip on the methods used by BT to deter competition in the access network, and moving towards full structural separation of Openreach.”

In response, BT’s CEO Ian Livingstone claimed “it’s a shame that some of the companies involved seem keener to spend more time talking about this process than actually working on it,” adding “It is highly ironic that we are being criticised by some companies who provide little or no wholesale access to their assets.”

Whilst BT and Fujitsu et al continue to fight it out in the press, one concern that remains is the lack of detail provided so far. Whilst most industry parties will agree that any further infrastructure development should be welcomed and that alternative providers of wholesale access can only be a good thing for competition within the market, many are requesting further details from Fujitsu.

So far all we really know is that they could spend up to £2bn building this network and hope to gain a sizeable chunk of this funding from the BDUK (Broadband Delivery UK) office’s budget of £830m. How realistic that will be remains to be seen. They also aim to have their first retail customer in 2012 and reach 5 million in 3-5 years, which is consistent with the Government’s targets.

In a recent article on ISPReview.co.uk we requested further information stating: “As several ISPReview readers have noted, there’s a lot of marketing fluff in the press release from Fujitsu and supporting comments from both Virgin and TalkTalk. What end users and potential wholesale customers will want to know as quickly as possible is the detail behind the plan. Nonetheless, it’s certainly good news to the Government’s 2Mbps Universal Service Commitment, while competition in the wholesale markets can be ‘useful’.

The two big ‘ifs’ though are Ofcom’s success or otherwise in imposing regulation on BT to provide duct and pole access reasonably and affordably; and how much of the Government’s BDUK office budget can be secured. There’s already much demand being placed on the Government fund so Fujitsu et al may need to dig even deeper into their own pockets.”

So are Fujitsu, TalkTalk and Virgin Media just trying to pull a fast one on BT? Are they using the promise of providing further broadband access to rural areas as a powerful bartering tool to encourage Ofcom to force BT to lower its duct and pole access costs? Or are they truly trying to deliver broadband connectivity to areas currently with poor or no service? We are going to have to wait and see on this one but, with the amount of publicity that has now surrounded these plans, I expect a serious industry and customer backlash if they don’t deliver on their promises.

We feel that any investment in reaching rural ‘not-spots’ can only be a good thing and this combined with the prospect of further competition and more wholesale options in the market is a positive move for the industry as a whole and our end user customers.

Updated: 7th July 2011
Last week the BDUK (Broadband Delivery UK) office announced their tender for a new national framework agreement to help them achieve their objective of delivering broadband access to poorly served areas across the country by 2015. Fujitsu is reported to be “heavily involved” with this tender worth between £750m and £2b which called for 12 qualified suppliers to help them design, build, implement and operate the wholesale networks. This obviously follows the original news that Fujitsu along with TalkTalk and Virgin Media were planning to build their own 1Gbps FTTH network to rival that of BT Wholesale. At the time Fujitsu requested Ofcom intervention to ensure fair pricing for access to BT’s ducts and suggested they would require Government funding. Whilst Fujitsu are yet to comment on this latest news Virgin Media said: “Fujitsu is currently involved in the trial process – using BT’s poles and ducts to test the practicalities of working with Openreach. At the same time there are ongoing discussions as to the cost for this access.”

Have your say!
What do you think about Fujitsu’s plans? Do you welcome the prospect of more wholesale options and potentially reaching 5 million rural customers? Or do you also have your doubts on the true objectives of these plans? Let us know your thoughts by leaving us a comment below.

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