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Next-Gen Broadband: Nobody Wants To Pay For This Round

[With Dianne See Morrison] If the UK’s broadband network is to be upgraded to the kinds of speeds enjoyed in South Korea, somebody’s going to have to pay for it – but BT (NYSE: BT) today said even the existing network isn’t paying its way. The telco was ordered by Ofcom to let rival broadband suppliers install their own equipment in exchanges in 2005, opening UK broadband up to intense competition – but BT now says it cannot make the 10 percent return promised by the regulator without increasing the prices it charges those rivals for the privilege, Telegraph.co.uk reports. Competitors threaten any extra charges would be passed directly on to consumers – analysts Arete estimate an extra £3 on a monthly broadband bill.

The Broadband Stakeholder Group (BSG) has now won ministerial support for its policy campaign to encourage telcos to lay down truly next-generation networks (competitiveness minister Stephen Timms last week threatened regulatory intervention if they don’t). But, though, Virgin Media (NSDQ: VMED) and BT are currently trialling 50Mbps and 24Mbps services respectively, BT is unlikely to consent to open that so-called 21st Century Network infrastructure to competitors again with the economics already failing to stack up.

So who will commit the investment? BT equivalence director, on BBC News today, requires “a commercial incentive that (would) enable us to fibre the nation” but: “We are not facing large numbers of people today who are constrained by their bandwidth.” The authorities may now be sympathising. Ofcom, which opened a consultation on the subject in September, has taken to sitting on the fence – strategy head Peter Phillips, in the same piece, going against not only the BSG but Timms’ own guidance: “We need significant evidence that such a network is required and I don’t think it exists yet.” And even BSG CEO Antony Walker warning against “rash moves” because “[it is not clear that] current bandwidth is a problem”. So campaigners now have a fight on their hands to maintain their argument in the face of such reluctance.

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