Public Consultation on an EU Initiative to Reduce the Cost of Rolling
Out High Speed Communication Infrastructure in Europe
Response from BT Group plc
Background and Context
BT recognises the importance for the European Commission, national and
local government, to consider all options to facilitate high-speed broadband
deployment. Reducing the costs of civil works forms one part of this picture
but provision of access to physical infrastructure alone is not sufficient to
stimulate investment and innovation.
As Commissioner Kroes’ July policy statement (‘Enhancing the broadband
investment environment’ – 12 July 2012) makes clear, technology neutrality
and non-discrimination are key planks of an overall approach to high-speed
broadband. The UK’s success in this area rests strongly on the concept of
‘open access’ i.e. wholesale access on a non-discriminatory basis. This
ensures that consumers and businesses are always able to access a choice
of downstream providers with competition driving lower prices and innovation
and encouraging take-up.
Our response to this consultation draws on contributions we have made to UK
discussions on use of passive infrastructure.
Executive Summary
Any assessment of the option to open utility infrastructure should examine the
opportunities and risks including any impact on the very large private sector
investments currently underway or planned by telecoms operators, cable and
others.
In addition to established mechanisms for sharing of non telecommunications
infrastructure (for example BT’s own pole-sharing arrangements with
electricity companies), there may be a case for ensuring that it is possible to
extend this approach to general utility infrastructure by legislation - but only if
commercial arrangements do not deliver - in order to ensure it is available if
required.
Although this consultation is focused on access to other (non
telecommunications) utility physical infrastructure, we believe that access to
other telecommunications assets i.e. other than those of the SMP provider, in
a similar manner to that offered by the incumbent telecoms operator is more
likely to help the cost-effective deployment of broadband and broaden
consumer choice. Governments and regulators therefore should take the
opportunity afforded by Art. 12 of the EU Framework Directive to mandate
infrastructure sharing on all communications providers and owners of
telecommunications physical infrastructure to ensure equivalent access.
It is essential to establish a well-structured, professional approach to
infrastructure sharing in which responsibilities are clearly set out and
understood by all parties involved. In addition, this response proposes other
potential policy interventions which would improve rural access to broadband.
There are also a number of areas relating to better collaboration between
local planning and highways authorities and other organisations which could
help to bring fibre broadband to communities across the UK. These are
outlined below under ‘co-ordination of civil engineering / streetworks and
transparency’.
For ease of response we have grouped some of the questions and our
answers together around the potential benefits of infrastructure sharing within
the communications industry and across other utility sectors, barriers to
accessing infrastructure, duct access, infrastructure mapping, streetworks
permitting coordination of civil engineering and readiness of buildings for
NGA.
Finally, although our response indicates BT’s support for infrastructure
sharing where this will be of benefit, we do believe that the economics of
‘passive’ access to physical infrastructure are such that over-reliance on this
as a sole access remedy is very likely to lead to a foreclosure of competition
based on vertically-integrated monopolies. We therefore believe that where
companies provide a service using access to other utilities’ infrastructure, they
should also have to wholesale resulting products in a way that allows other
providers to offer service and therefore supports competition.
Consultation Questions
Potential benefits of infrastructure sharing
1.What are the benefits (including approximate savings) that could be
achieved for NGA roll-out by a more intensive infrastructure sharing within the
EU, including the infrastructure of utility companies?
2.What are the benefits that could be achieved by a more coherent regime of
infrastructure sharing within the EU, including the infrastructure of utility
companies?
4.What are the good practices in the EU and in third countries that could be
identified and be promoted with respect to achieving a more intensive
infrastructure sharing with a view to deploying high-speed communications
networks?
6.What measures could be envisaged to increase the business interest on the
side of the utility companies to provide access to their infrastructure for
broadband investment?
We agree that there is potential to reduce the cost of rolling out NGA if
existing civil infrastructure can be opened up in a suitable way, but we do not
believe that it is a ‘silver bullet’ for lowering the costs of infrastructure
deployment that will speed or extend the rollout of fibre broadband due to the
range of other costs and issues that need to be addressed.
There are already examples in the UK where commercial arrangements are in
place which achieve infrastructure sharing. Therefore regulating / producing
guidance to include other infrastructure may result in additional cost saving
options, particularly in difficult to reach areas for fibre broadband. However we
believe it is important to ensure that they do not:
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Undermine already committed and planned investment – e.g. through
unfair terms or pricing, or removing the incentive the invest
Stimulate Communications Providers to focus on substituting
business/leased lines circuits
Solely concentrate on areas already well served with current generation
broadband or fibre infrastructure (e.g. metropolitan areas).
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It is therefore key for the EU to focus on the relevant policy objectives and
those of the UK Government and how those can be supported by measures
imposed. Potentially these could include coverage targets, homes passed,
minimum contract periods etc for those utilising scarce assets in the long
term.
In looking at possible options, it is important that the full complexity and long
term nature of investing in new networks is fully recognized and there are
many examples of the operational and commercial challenges which can be
cited from the UK’s recent past; for example the experience of the cable
television industry over the past 15 years, Energis or the challenges faced
currently by the South Yorkshire Digital Region project.
The cost of infrastructure access is therefore clearly not the only issue facing
service providers wishing to deploy fibre. There are many other aspects to
deployment which are complex and costly to implement both in start-up and
on an ongoing basis:
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customer facing and network management systems
maintenance processes
the development of open access wholesale products
the costs and the processes associated with customer switching.
To make investment in infrastructure commercially viable the infrastructure
provider requires an efficient operational model that can utilise the
infrastructure, often requiring scale economies to support its investment and
that of its customers.
There are a limited number of infrastructure networks suitable for
infrastructure sharing and these options become even more limited as the
requirement is pushed further into harder to reach areas. Factors that make
use of the various networks identified in the discussion document problematic
include:
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The availability of other utility infrastructure in remote or rural areas
(often there are no sewer networks for example in remote areas)
The proximity of the networks that do exist to both BT’s infrastructure
and the customer premise. A large cost in Fibre To The Premise
(FTTP) deployments is in the ‘last drop’ to the customer premise, and
useable alternative infrastructure is often not available in this section of
the network in rural areas
Breaking out of the existing network at a suitable point for connection
of the ‘final drop’.
As a result of these types of issues we believe arrangements similar those we
have with electricity distribution companies for the joint use of poles are likely
to be the most useful in accessing alternative infrastructure to achieve our
objectives. Although we have already agreed commercial agreements for this
infrastructure for the deployment of copper cables, and are reviewing potential
new agreements for fibre, it may be possible that legislating for access to this
infrastructure could provide possibilities for fibre deployment that benefit or
enable new commercial models or new ways of working to come to the
market if commercial approaches fail. Possible additional interventions which
may help to achieve further coverage are most likely to be based on opening
up access to alternative telecoms network infrastructure such as Virgin
Media’s duct (and potentially its poles); as we have already identified in the
early stages of FTTP deployment that there are deployment areas where
Virgin may have available duct and Openreach (BT’s local access division)
has limited or no availability.
Therefore in general, based on our experience we do not see great benefits of
opening up utility infrastructure beyond the existing commercial arrangements
that are already available, particularly in rural areas where alternative
infrastructure is often unavailable, but would not wish to rule it out, nor to
adversely affect the choice of other CPs in this matter.
The specific issue of duct costs and access to alternative infrastructure for
NGA deployment in the UK was investigated as part of the Broadband
Stakeholder Group (BSG) report on Fibre costings for the UK undertaken by
Analysis Mason .The report identified a potential 16% cost saving figure
nationally for NGA deployment attributed to the use of alternative
infrastructure of both Virgin and utility duct where available1. As such this is
likely to be a maximum saving. However, the report also concludes that:
“the percentage cost saving is greatest in urban areas and lowest in
the rural areas” (Section 1.2.3).
1
Analysys Mason (2008) The costs of deploying fibre-based next generation broadband
infrastructure
There is no specific figure for what saving may be available in rural areas,
where there will typically be no cable duct, and in many cases no alternative
infrastructure available in the vicinity (sewers etc.). Therefore our estimate is
this could possibly halve the availability of alternative infrastructure and
hence in many rural areas materially reduce any possible savings. It is also
important to recognise that the Analysys Mason study considers both the
reuse of existing utility infrastructure and the potential of new aerial
infrastructure (fibre on new poles), and it is important not to confuse the
savings potential of each scenario. This latter approach of deploying overhead
fibre on new pole infrastructure has a number of practical difficulties but may
be useful in ensuring that very hard to reach areas or areas where other duct
assets are congested, can be addressed.
So whilst there is potential for the use of other utilities infrastructure to reduce
deployment costs in rural areas as identified by Analysys Mason and others,
the scale of these cost reductions is not likely to be as high as the 16% figure.
This is a national figure and investments in rural areas are less likely to be
able to use these assets. These savings are also likely to be reduced
significantly or potentially eliminated altogether, by the additional costs
associated with integrating these assets into the existing operations, product
set and systems etc of the investing CP as identified above. It is also worth
bearing in mind that the Analysis Mason study only considered capital costs
and therefore any ongoing charges to use these shared assets would also
need to be taken into account.
BT has already launched its Physical Infrastructure Access (PIA) products
therefore opening up duct and pole networks for CPs who wish to deploy
fibre. For utility operators, we presume it would be rational that they would be
looking to improve ROCE through extending the use of their existing assets
into other markets if it is viable. Potential new revenue streams from enabling
access to their infrastructure would therefore need to ensure that the
achievable rate of return on this activity and the additional costs involved in
enabling infrastructure sharing products to be deployed and maintained were
sufficient to justify the investment, compared to other potential uses for their
capital.
We would expect a utility infrastructure owner to be concerned that they would
be able to protect any commercial returns they received from making their
infrastructure available and ensure that these additional returns did not impact
their existing regulated returns.
Barriers
3.What are the main bottlenecks (practical, administrative, technical or legal)
that operators wishing to deploy high-speed communications networks are
confronted with when accessing existing infrastructures?
We believe that anyone seeking to utilise infrastructure sharing and integrate
it into their existing network will inevitably incur new costs as well as
potentially lose operational control unless changes to systems and processes
were introduced. The additional costs would need to be offset by any savings
through infrastructure sharing. Recent studies, particularly by Analysys Mason
for Ofcom2 into Openreach duct, have highlighted a range of such operational
issues and success factors involved in utilising underground duct networks
and overhead poles; and hence deployment based on the use of such
infrastructure would need to address these.
It is often these types of practical issues which are hidden from the CPs
seeking access as they are dealt with on a day to day basis by the
infrastructure provider who is responsible for installing, upgrading or
expanding its own infrastructure network. These issues often then only
become visible and pertinent for communications providers when they are
begin to utilise infrastructure access in order to deploy their own fibre network.
Typical operational issues encountered by Openreach and associated with
gaining access to underground infrastructure include:
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access restrictions in traffic-sensitive areas
special event restrictions placed by local authorities
health and safety issues (sewage and residual gas)
accuracy of infrastructure drawings
chambers located in dense pedestrian areas
high cable density in chambers (especially in aggregation points in
the duct network)
small chambers entirely filled with earth due to the rain washing the
soil into the chambers - requiring physical excavation to even
survey the asset.
These issues affect a significant proportion of duct assets as shown by the
recent Ofcom study.
Typical operational issues associated with utilising overhead pole
infrastructure include:
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trees obstructing poles
access to the pole itself
fragile roofs
nearby overhead power lines
lower parts of poles being subject to vandalism.
These factors are further compounded by the issue of scale economies both
locally and nationally. For example new entrants into the market with relatively
small market shares in an area, or those who are serving less densely located
entities such as businesses, are likely to find infrastructure sharing less
economic as they will not have the number of customers in any location to
support the necessary investment in equipment to make this a viable
proposition. As a result it will be vital to ensure that other means of access to
the infrastructure are maintained to enable continued market entry i.e. duct
sharing may be necessary but it is not sufficient for continued competition. It is
2
Analysys Mason - Operational models for shared duct access (April 1st 2010)
often the creation of fit for purpose active wholesale access products which
are key enablers for competition.
None of the above issues rule out the use of shared infrastructure as being
useful, as indeed is highlighted by Openreach’s own existing commercial
agreement to use electricity poles. These issues can be and are overcome
where it makes economic sense to do so, however this has implications when
assessing cost savings which might be available through infrastructure
sharing, which would need to take those existing savings into account and
thus not assume they are automatic.
Experience shows that infrastructure sharing through commercial
arrangements or based on industry co-operation is more likely to be delivered
quickly than a legislated solution. However our experience from the telecoms
industry also shows that other providers are generally unwilling to open up
their infrastructure or will only open up wholesale services on bespoke
commercial terms where it is advantageous for them to do so, rather than
equivalent wholesale services in the way that BT is prepared to do. As a result
legislation is probably required, at the very least as a back-stop and an
incentive to parties to reach commercial agreement.
If legislation is needed it is important that any such access obligations are
properly implemented and policed and it would need to be clear which
regulator was responsible for implementing and enforcing any such
regulation. Given that access here is required in order to provide telecoms
services, this would suggest a role for Ofcom. However, other issues covered
in the consultation (such as the impact on utilities’ price control regimes) do
relate to the existing utility regulators, so there may be a need to consider
concurrent powers for regulators in this area.
Duct access
5.What would be the main benefits and disadvantages for broadband
investment if access to ducts were mandated across infrastructures?
Duct access may make a difference at the margin in some localities but it is a
complex matter. For example whilst studies such as those by Analysys Mason
for the Broadband Stakeholders Group3 confirm that the costs of civils
infrastructure are relatively high for new build fibre, the additional costs of
integrating new/non standard infrastructure into an infrastructure suppliers’
systems and processes from a range of suppliers is also significant.
Additionally the existing duct does not necessarily have space available for
sharing; Ofcom estimates 22% of BT ducts are already full and not
everywhere in the UK has ducts – some phone lines are laid through bare
earth meaning that it would be necessary to provide new duct for any fibre
provision irrespective of the fibre owner, further increasing the common costs
that need to be shared between the accessible users. The financial case for
3
Analysys Mason (2008) The costs of deploying fibre-based next generation broadband
infrastructure
multiple fibre installation and the ability of duct sharing to mitigate them is
therefore not generally clear-cut.
BT has already offered access to its ducts in order to maximise the
opportunity for cost savings to all and we expect that others in the sector
should also offer similar rights of access. Since the transposition into UK law
of the revised EU Directives, Ofcom now has greater powers to mandate
infrastructure sharing from non-SMP providers and we believe regulators
should use these powers where there are proven benefits. We also support
the fact that this consultation is looking at the potential opportunities to extend
this approach beyond the telecoms sector to general utilities although as we
have explained previously they are not currently a significant factor in the
planning of our NGA deployments.
Infrastructure mapping
7.How do you assess the importance of systematic infrastructure mapping / of
drawing up consistent inventories of infrastructure? Besides the potential
economic advantages for electronic communications operators, do you see
other advantages that such mapping could entail for citizens, public
authorities or other (economic) operators?
9.What information should be included in such maps with a view to facilitating
cooperation, infrastructure sharing and broadband rollout? Who should be in
charge of such mapping exercises and at what level should it be organised?
10.What would be the approximate cost of introducing systematic mapping?
14.To what extent would inventories of infrastructure be suitable for high
speed communication infrastructure rollout? What kinds of infrastructures
would you consider most suitable for being included in such an inventory?
Who should be in charge of such an initiative? Should the obligation to
announce planned investments apply only to the public sector, or also to
private investors? What time horizon would you consider relevant for the
availability of information about individual planned projects, so that this could
lead to setting up concrete co-deployment projects? What are in your view the
main organizational requirements, including costs, necessary for the
establishment and maintenance of such an inventory?
The extent and scope of the BT duct and pole network has evolved over many
decades and there never was an expectation that it should be built and the
inventory recorded in a way that would satisfy a multi-user environment.
Existing records have been built-up in many cases by local planners and with
local knowledge. Over the years many of these have been gradually
incorporated into IT systems designed for BT network and operational
personnel to access. Needless to say such computerisation is not fully
implemented and to the extent that it has taken place is has proved to be a
complex and very costly task.
Whilst developing the PIA product, BT (through its Openreach division) had
extensive discussions with CPs to determine their information needs to plan
and use the PIA product. We now feel we have come to a pragmatic solution
which allows appropriate levels of data to be supplied on demand to
interested CPs on a region by region basis. Such an approach utilises existing
systems and available information formats, as and when a CP is interested in
investing. This is sufficient to enable planning of physical surveys which are
the de facto test of whether the infrastructure is available and suitable for fibre
deployment. Certainly given the UK experience it appears a highly
disproportionate solution at this stage to require redesign of existing inventory
systems and investment in new systems and processes before there is known
demand and in the knowledge of the complexity and expense of such
upgrades.
The security of data in any form of Infrastructure mapping must also be taken
into account. With the sensitive nature of the information provided any system
that may be created must only be available to authorised users. Any
transaction on such a database must be capable of being identified after the
event should it be required.
It must also factor in that utilities use differing systems for their mapping
requirements and the cost of using a universal system may uneconomic.
An inventory would create an unnecessary burden with associated security
and resilience risks. Collaborative working across sectors is already in place
as evidenced by the UK’s National Joint Utilities Group and the Highways
Authorities and Utilities Committee (HAUC UK). More specifically, the National
Underground Asset Group has been established to create a centrally
accessed database indicating the location of all utilities and highways
authority assets.
Our commercial fibre deployment plans are made public on a quarterly basis
with supporting stakeholder engagement, including planning and highways
authorities.
Co-ordination of civil engineering / streetworks and transparency
11.In your view, which substantial benefits would exist in offering possibilities
to systematically lay new ducts when undertaking (public) works? In your
experience, to what extent would additional potential revenue outweigh the
extra costs?
12.What good practices are you aware of concerning transparency and
coordination of civil engineering works? Should this be mandatory in the case
of publicly financed works?
13.Are you aware of any sources of information concerning planned civil
engineering works? To what extent are they comprehensive (for instance
covering different types of infrastructure) and easy-to-access? Please specify
their scope.
15.What other best practice examples to improve coordination of civil
engineering works are you aware of?
BT is committed to working with other utilities wherever possible and will seek
to do so to minimise disruption and deliver our fibre programme as quickly as
possible:
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Openreach has been working very closely with the power companies
as each street cabinet requires a power connection as part of our NGA
deployment programme
This requires close collaborative working, coordination and effective
management of street works notices
Owing to the reactive nature of some of our work (e.g. when we are
working in response to customer orders) joint-working with other
utilities is not always possible
In most cases, our NGA rollout doesn’t necessitate lengthy street
works because we are accessing existing ducts via our manholes
There are many examples of where we have worked with other utilities
on projects to minimise disruption. We are active members of the
London Cross Rail Joint Utilities Board, and the London Utilities
Partnership Forums for example. We also support the principles of the
UK National Underground Assets Group on exchange of information
We are signatories of the Mayor of London’s Code of Conduct for
Streetworks 2012 which reflects a desire to work collaboratively across
sectors and to raise the standard of road works undertaken across
London and reduce their impact on the travelling public, in terms of
traffic disruption and other impacts.
Permitting of streetworks
16.How do you estimate the costs and period of time needed for a company
to receive all the necessary permits needed to rollout a high speed electronic
communications access network?
17.What measures could help increase transparency and streamline the
process of granting such permits? What kind of permits should be covered by
such measures?
18.What kind of coordination would, in your view, facilitate the most the
permits granting process? How could such coordination be best organized?
How far should such coordination go and what would be the benefits achieved
of the suggested level of coordination?
19.How do you estimate the costs incurred by any measure suggested?
Fibre roll-out, particularly FTTP, is heavily dependent on street works. The
Traffic Management Act allows local authorities to move to a new way of
managing utility companies’ work on the public highway: instead of notifying
plans to carry out street works, a utility company books time on the highway
through a permit, for which it pays a fee. Those authorities using a Permitting
process may also adopt Lane Rental.
Despite the fact that BT does not undertake costly street works unless they
are essential, civil engineering is one of the largest elements of our cost base.
Permit and Lane Rental schemes could significantly increase our roll-out
costs through the complexities of the process as well as charges for permits /
lane rental fees.
It is our belief that authorities should require permits for works on major routes
only; and exempt work to install new infrastructure such as fibre broadband.
Some permit schemes (e.g. in the English county of Kent) do not charge for
minor roads. This template should be applied to all Permit Schemes as a
matter of urgency. This change would ensure a real acceleration of our NGA
rollout.
We are concerned with the UK Government’s current proposal (which is
opposed by utilities and highway authorities’ national representative bodies) to
remove the Secretary of State for Transport from the permit scheme approval
process. This will lead to a proliferation of scheme variations (possibly 170
across England). This will make both planning and deployment extremely
difficult and costly.
Permit schemes give Highways Authorities much control over progress with
our works. This may be justified on major routes but as stated above is
currently being used on all road types in many schemes e.g. London. Clearly
highway authorities are not best placed to make a broader judgement about
the economic and social benefits of our NGA deployment to the local
community.
The need to manage this, and potentially many different local requirements
and conditions which may proliferate on the back of the proposed changes,
will make it more difficult for us to deliver prompt service to our customers,
and could delay our rollout ambitions.
In addition, a NGA cabinet can take up to 10 permits, “Major Works”
designation adds costs, plus planning related charges such as pre-application
fees are now commonplace and seen a revenue-raising mechanisms by some
planning authorities.
Lane Rental
We have numerous concerns around the principle and operation of the Lane
Rental scheme in London. Fees add greatly to the cost of our fibre
deployment and various rules and interpretations add bureaucracy and delay.
Currently, the UK Government has signified an intention to approve three
pioneer lane rental schemes (Transport for London, Kent County Council and
one rural authority). BT would strongly argue that no further schemes should
be approved until the results of these schemes are analysed over an
extended period of time.
Readiness of buildings for NGA
20. What existing requirements under construction laws are you aware of
regarding in-building equipment for electronic communication infrastructure?
Please specify the Member State, region or municipality.
21.What is, in your view, the most suitable and cost effective way to ensure
the existence of adequate and state-of-the-art in-building equipment, while
also securing open access for electronic communications providers?
22. What would be the advantages and disadvantages of an obligation to
equip buildings with open next generation access? How do you assess the
additional costs incurred?
Common standards will become more important with the likely increase of
NGA initiatives, involving a ‘mixed economy’ of telecoms providers,
community organisations and local authorities. These common, national
standards can ensure that a patchwork of ‘technology islands’ does not
develop and that a range of providers can develop scale solutions with
confidence.
Within the home, it is important that developers use common standards and
approaches when installing cabling to ensure relevant devices (and hence
new applications) can be developed and supported independently of
networks, interference avoided etc. The building industry needs to be better
informed about developments in home networking technologies for the
benefits of higher bandwidths to be realised. This will enable customers to
more easily, and cheaply, consume future high bandwidth-enabled services.
Common standards for connectivity in the home environment will make it
easier for developers to pre-provide superfast broadband and for consumers
to use new high bandwidth services.
The Commission and UK Government should support and encourage UK
industry initiatives such as the Connected Home’ project, recently established
by the industry body, Intellect, which aims to identify minimum connectivity
standards for new and re-furbished homes.
Additional cost-saving measures
23.Are you aware of any good practices or measures other than those
discussed above undertaken in order to facilitate the deployment of high
speed broadband access networks? What has been their impact so far? How
would you estimate the cost-saving potential of such measures?
Nothing further to add.
Additional comments
Unlike standard street cabinets, fibre broadband cabinets need a power
supply. We rely on several different power companies to ensure these power
supplies are installed.
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Often this works well, but in some areas the power companies are not
installing the power supplies fast enough or are charging excessively for
the work.
We have asked the UK Government to encourage the energy regulator
Ofgem to support national standards for providing power supplies, to
require power companies to commit to superior standard supply terms,
and to help us develop new ways of working with them, for example by
‘renting’ their engineers.
BT Group plc
19 July 2012