BT has been warned by Chi Onwurah, the Shadow Business Minister, that it will not be allowed to create a monopoly with the UK’s superfast broadband industry and may need to break-up into two companies. Onuwurah believes the competition offered by Virgin Media isn’t enough to stop the potential BT dominance leading to a monopoly.
She also went on to say that ‘structural separation is something we are going to have to look at,’ when addressing a Horse of Lords select committee earlier.
A major concern of BT’s rivals is the likelihood of BT being granted vast sums of taxpayer cash earmarked for the nationwide improvement of the infrastructure. The pot available is £980m to improve Britain’s broadband network including upgrading old copper wires to fibre of which £530m will be spent by local councils, during this parliament, to ensure every household gets a basic 2mbps connection. So far BT, along with Fujitsu, are the only bidders for the contracts available from 35 councils that have signed up to a framework agreement run by the government’s Broadband development UK team (BDUK). A further nine councils are running their own bidding process and BT has been awarded both of the contracts issued so far from this second pool.
A BT spokesman said, ‘structural separation was not the answer unless politicians wish to place the whole multi-billion pound burden on the taxpayer. The fact is that the UK is making very good progress with superfast broadband and will be a European leader in a few years’ time. And there was no monopoly as Virgin’s network covers half the country and BT’s is open to all companies to use on an equal basis. Competition is thriving.’
BT is currently locked in a tit-for-tat battle with Virgin Media, with both companies pushing for ever rising download speeds. Virgin Media recently announced that its 100Mbps fibre-optic cable network is now available to over 10 million households in the UK. BT is spending £2.5bn of its own money to upgrade connections between telephone exchanges and street cabinets, replacing copper with much faster fibre-optic cables, in an area covering two thirds of the UK population by 2015.
However, Onwurah argued more investment was needed to ensure that fibre runs direct from the exchange to homes, saying this was the only way to achieve future proof speeds. “Fibre to the home is the ultimate aim. Limitless communications capability is going to transform our lives and save costs.” She has also called for the UK telecoms watchdog Ofcom to do more. Copper prices are currently regulated so BT’s competitors pay a similar price to its own retail arm to access the network however, fibre prices are un-capped in order to encourage BT to invest in the technology.
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