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Monday, 30 June 2008

Consumers' needs vs incumbents' greed?

This week's report from WIK showing that the business case for NGA favours the incumbents is worrying on a number of levels.
Firstly, the assumption that the only reason for NGA is an economic (read: profitable?) one. Secondly, that this level of document is precisely the type of report that politicians read and believe is the 'ultimate truth' and hence act on it, and thirdly that once again, the social/economic benefits of NGA are being almost swept under the carpet from a consumer point of view. This despite it being made clear through other research that the best networks are those owned and run by communities, rather than incumbents.

There are several questions which seem to suddenly keep re-appearing in the FTTH blog world, as well as at conferences.

Are national networks essential ie should FTTH be considered the fourth utility?
Or conversely, should we let many flowers bloom on a smaller scale community-run basis? If there is no answer known to this question, because of the many different regional, geographic, fiscaL, etc etc factors which make it difficult to assess whether one specific solution will work in a different place, then should we stymie development and innovation by insisting on a national network run by the incumbents?

After all, for many of us it is hard to believe that the incumbents have so far actually done a good job, so why let the problem continue by encouraging them into a next generation monopoly?

Another question in the blogosphere discussions appears to be about the economies of scale. FTTH build and deploy has dropped so much in capex over the last few years that arguing that only the incumbents can benefit from economies of scale appears to me to be looking at the whole issue of who should be benefiting from entirely the wrong angle. There is no reason for the telcos not to benefit from FTTH, and they will of course any way, but the actual cost (socio-economic as well as the damned frustration factor) for the consumers always seems to be omitted from the equation.

Of course, we would love it if the networks are built in the most cost-efficient manner possible, but not having a reasonable method of communication in the meantime is just not on. The hard evidence/facts about how much the failure to deploy FTTH is actually costing Europe, UK or individuals seems almost impossible to quantify.

After all, how can I tell you even what it would be worth to ME to have infiniband type broadband connectivity as I can't even begin to imagine what it would finally allow me to do? Times that by 60million inhabitants of Britain, the number of businesses, schools, GP surgeries, hospitals, etc and tell me in all honesty that it is still worth sitting on our hands for longer? Or worse, allowing the incumbents to force us into doing so....

But it should be taken as read that it is costing one helluva lot to the GDPs of UK Plc and other nations, and to small businesses, families, individuals, education, health etc etc etc being unable to communicate efficiently. Probably far more if everyone was honest, than the potential cost savings of 'economies of scale'.

Another question which seems to be reverberating round the blogs is about Vivien Reding and whose side is she really on with this week's announcements about encouraging the incumbents into action with a 15% risk return. This would seem to force the hand of politicians, policy and regulation into the pockets of the incumbents, although perhaps the whole recommendation could be read to apply equally to new entrants - one would dearly hope so from this pro-competition EU regulatory body.

With no answers to these questions seemingly out there yet, although many discussions seem to be going on behind closed doors and in blogs about where FTTH is going, one feels, as a consumer, that action is required rather than hot air, moans about lack of factual evidence, a business case etc. The facts are that many of us as small businesses, families, individuals, citizens and consumers are getting fed up with the entirely unnecessary hold ups, and hope that some new entrants take the bull by the horns and just get on with it.

A pilot project here in rural Cumbria should of course be first!! If it can succeed here, it can succeed anywhere in the EU. The mole plough is ready and waiting for you.....

1 comment:

Clayton said...

I think the issue is that regulators at the European and UK level cannot understand networks owned by communities. To them the alternative to the incumbent building the network is that one of the alternative network operators builds it (or part of it). Regulating a network owned by some city and supporting 5000 users is virtually impossible.
Instead, this report allows Ms Redding to push her favourite option - structural separation. The argument is clearly that if only an incumbent can build these networks, and this will create a new monopoly, then we need to apply our favourite anti-monopoly tools to the problem.