Cable merger revives telecom sector calls for access to network

[nidave]

From MediaGuardian:

NTL is facing a regulatory dispute with telecoms operators over access to its network following confirmation yesterday of a $6bn (£3.3bn ) deal to acquire rival Telewest and create a new force in the UK cable industry.

The transaction, combining the two largest players in cable, will be examined by the Office of Fair Trading, with telecoms groups such as BT and Cable & Wireless watching closely to see whether the regulator will open the door for the rest of the industry to launch services on the new company's platform.

But the chief executive-in-waiting of the new company, Simon Duffy, rejected the notion of opening up the network to competitors. The NTL chief executive cited a precedent set by the regulatory inquiry into the merger of NTL and Cable & Wireless's cable network five years ago, which dismissed rivals' calls for access to the platform.

"I don't think we will or should be asked to do it. This was gone over by the competition authorities [in 2000] and they reached the conclusion that increasing the scale of a cable company did not change whether it had significant market power. It's only if there is significant market power that the issue of opening access [to the network] arises."

Since then, NTL and Telewest have evolved from purveyors of telephone and TV services into a force in broadband internet access. Last year cable accounted for 31% of all broadband connections, behind the 56% recorded in the US where cable companies have already been forced to open up but on a par with South Korea and well ahead of European markets such as France (7%) and Germany (2%).

While the OFT is in charge of the inquiry into the proposed merger, it is expected to call upon the telecoms regulator Ofcom for guidance. An Ofcom source said yesterday that the OFT inquiry is a chance for the first detailed look at the cable industry.

Ofcom's recent 18-month investigation of the telecoms market concentrated on helping BT's rivals get hold of its phone lines. Now that BT has put in place a new business - called openreach - to ensure its rivals can use its lines, some within the industry believe attention should turn to cable.

"It is inevitable that [opening up the cable network] will come on to Ofcom's agenda but we would not presume to be the ones to put it there," a spokesman for BT said. An insider in the internet service provider industry went further, saying: "There is a clear consumer benefit to other providers having access to the cable network."

Only AOL has succeeded in using the nation's cable connections to run its own service. Its dial-up internet customers can access AOL's service through both NTL and Telewest, while it has a broadband deal running with NTL. Freeserve, now Wanadoo, announced an access deal with NTL three years ago, but plans were quietly scrapped.

Should NTL be forced to open thier networks - would it be a good or bad thing?

Should a company who spent all that money creating thier own network be forced to let others use it?

Even in BT's Case companies like bulldog have to crete thier own netowrk (ie add thier own equipment to the exchanges) whould any of these potential customers have to supply any of thier own equipment? Does AOL have any of thier own equpment or do they just pay for bandwith and connection?

Whould 3rd parties have to maintain the part of the network that thier customer is on?Would it be BB or could they offer TV and Phone?

[Ignition]

It could be said that AOL's deal is the equivalent of the BT IPStream service, where ISPs install none of their own equipment besides routers / NAS equipment and receive customer traffic from BT.

Networks are however shared in the US by operators installing their own uBR equipment and having their own downstream and upstream frequencies, could be tricky to manage. In addition to this I don't really see that the cable operators could be described as having SMP due to BT's dominance still in wholesale provision.

If NTL / Telewest were ordered to open up their networks how would it be done? Operators own equipment or would they be forced to offer a wholesale service, and do NTL not already offer a wholesale service, but haven't really had many takers, which kinda proves the point most are happy using BTWholesale.

[Pierre]

Wont happen.

[SMHarman]

Originally Posted by Pierre

Wont happen.

If OFCOM force it to happen, then it will have to happen. Logistically sounds much more complex than BT's lines though.

[Womble]

Originally Posted by Pierre

Wont happen.

I agree, the differance is, BT's network was built with Public Money, when it was the Post Office Hence BT's need to go ahead with 21C! to escape LLU.
Why should it happen?? Bulldog had a network, but chose to sell it to ntl!!

[andygrif]

Originally Posted by nidave

Should NTL be forced to open thier networks - would it be a good or bad thing?

Competition is nearly always a good thing. It reduces complacancy, makes companies work harder to keep customers and makes them develop better products. Compare this to ntl's telephone service: the costs of perifery items such as caller display, itemised billing and connection charges have skyrocketed on a percentage increase scale. This is becuase ntl are complacent that few customers will go through the hassle of switching to a completely different line in their house, or in my case having to have a new line installed by BT.

I don't know how it would work in the case of television, but I guess that a company like Homechoice would love to have access to TV customers with huge video on demand-capable pipes running right into their houses.

With internet, this is the jewel in ntl's crown. They have developed a product that works pretty well most of the time - but as with their TV and phone products, they have not developed the service - instead relying on huge speed increases that the majority of day to day users will never need.

This should be opened up in the same way as BT have been forced to open their networks up.

Originally Posted by nidave

Should a company who spent all that money creating thier own network be forced to let others use it?

Although BT's network was originally funded by tax £'s, it would be reasonable to argue now that the complete network would have been largely replaced or refreshed since it was privatised. Certainly this is the case with BT's broadband product, where the equipement in every exchange in the country was paid for with their own money, not public money. So, IMHO, it is no different to expect ntl to open up their internet product to competition too.

Originally Posted by nidave

Even in BT's Case companies like bulldog have to crete thier own netowrk (ie add thier own equipment to the exchanges) whould any of these potential customers have to supply any of thier own equipment? Does AOL have any of thier own equpment or do they just pay for bandwith and connection?

I think it would be fair to ntl to plan for this in the same way that BT had to gradually give away it's stranglehold on the monopoly. Initially ISPs rented the connection to the customer - now (where it is prudent to do so) some ISPs are starting to place their own equipment in exchanges. A similarly phased plan for ntl would be a good idea.

Saying all of this is fine - but of course we need to remember that OFCOM's chairman is non other than Stephen Carter, ex-CEO of ntl - and already some of OFCOMs decisions have been seen to be quite favourable to ntl and Telewest whilst penalising competitors - so I hold very little hope in OFCOM producing a fair and balanced report and taking into account anything to do with customer choice.

Instead, I predict their report will favour maintaining the monopoly for all three products of the new CableCo. Mark my words!

[SMHarman]

Originally Posted by Womble

I agree, the differance is, BT's network was built with Public Money, when it was the Post Office Hence BT's need to go ahead with 21C! to escape LLU.
Why should it happen?? Bulldog had a network, but chose to sell it to ntl!!

This is a bit of an old argument these days, now we have digital exchanges in all areas (i'm sure some were using pulse dialing when it was privatised) and the building of the VoIP 21st century network it is highly arguable that all that is left of the BT network that was inhereted is the buildings and ducts the equpment is housed in / runs thru.

[scrotnig]

If it was opened up, vast sums of taxpayers money would be needed to effectively buy ownership of the network from ntl - it was built with private money, it cannot simply be taken away from the people who put the money in with no recompense. If that were to happen, private investment in telecomms networks would cease overnight.

I am tired enough of seeing taxpayers money thrown at BT without seeing it thrown at ntl as well.

[Pierre]

Originally Posted by SMHarman

it is highly arguable that all that is left of the BT network that was inhereted is the buildings and ducts the equpment is housed in / runs thru.

Which is the most expensive to replicate.

It is the laying of the ducts and construction of the civils network that is most expensive.

When BT upgraded and continue to upgrade, all they have to do is pull the old cable out and new cable in, of the civils network they inherited and plug in the new kit either end.

NTL/TW had to construct all of their network from scratch blah,blah,blah

[SMHarman]

Originally Posted by scrotnig

If it was opened up, vast sums of taxpayers money would be needed to effectively buy ownership of the network from ntl - it was built with private money, it cannot simply be taken away from the people who put the money in with no recompense. If that were to happen, private investment in telecomms networks would cease overnight.

This is not nationalisation, it is forcing access, at which point UKCable has the right to charge a fair rate for that access, no taxpayer money involved, if Bulldog want to use cable access as well as ADSL access they have to pay for usage or for equipment in exchanges in the same way they pay BT.

Originally Posted by scrotnig

I am tired enough of seeing taxpayers money thrown at BT without seeing it thrown at ntl as well.

Where? The only example I can think of is Highlands BB, a public service requrement where little alternative is available. I would prefer the govt paid this money to BT to get ADSL over the existing copper than paid NTL more £ÃÆ ’‚£Ãà¢Ã¢â€šÂ¬Ã…¡Ãƒâ€šÃ‚£ to dig up the road to ChrisT's house to offer him cable BB.

[wolvotim]

Originally Posted by Pierre

Which is the most expensive to replicate.

It is the laying of the ducts and construction of the civils network that is most expensive.

When BT upgraded and continue to upgrade, all they have to do is pull the old cable out and new cable in, of the civils network they inherited and plug in the new kit either end.

NTL/TW had to construct all of their network from scratch blah,blah,blah

True.

Laying duct in the public highway is MEGA expensive!!! Our company pay out multi millions to our contractors every year just to excavate foot paths and lay ducting. It often costs more than the jointing and terminating of the cables.

[Chrysalis]

I could see this coming and I hope it happens to be honest, the uk needs competition on its cable network, I can understand the need for this to compete with sky but make no mistake this is now a frightening situation on broadband ntl are the big company (above BT) for broadband now.
__________________

Originally Posted by Womble

I agree, the differance is, BT's network was built with Public Money, when it was the Post Office Hence BT's need to go ahead with 21C! to escape LLU.
Why should it happen?? Bulldog had a network, but chose to sell it to ntl!!

The exchange upgrades to support ADSL were not done with public money tho, or do you think enabling over 95% of the country only cost pennies?
__________________

Originally Posted by andygrif

Saying all of this is fine - but of course we need to remember that OFCOM's chairman is non other than Stephen Carter, ex-CEO of ntl - and already some of OFCOMs decisions have been seen to be quite favourable to ntl and Telewest whilst penalising competitors - so I hold very little hope in OFCOM producing a fair and balanced report and taking into account anything to do with customer choice.

Instead, I predict their report will favour maintaining the monopoly for all three products of the new CableCo. Mark my words!

Wow that explains a lot why ofcom has stayed of cable's back then, hopefully if ofcom do nothing the office of fair trading might step in.

[Womble]

Originally Posted by Chrysalis

I__________________



The exchange upgrades to support ADSL were not done with public money tho, or do you think enabling over 95% of the country only cost pennies?
__________________

I think I have miss something!. What I was saying about Bulldog (Cable and Wirless in Disguise!) is that they had a network, but chose to sell it to ntl. Then they have the neck to complain BT are slow to do LLU. I think its a bit of a cheek really!

[BBKing]

Wow that explains a lot why ofcom has stayed of cable's back then

The other reason could be that with ntl/TW already struggling to compete with BT/Sky, any change that costs ntl/TW time and money isn't going to help healthy competition. I've no doubt that, if ntl/TW get into a good financial state, they'll be forced to open up (essentially as BT has done). Until then, no chance. Anyway, it's technically bloody difficult.

On the other hand, there's no chance that Sky will be forced to give up its monopolies on football etc. or allow other organisations to use its satellites, unless the EU force them. Mr. Tony is too much Mr. Rupert's little friend.

[andygrif]

Originally Posted by BBKing

The other reason could be that with ntl/TW already struggling to compete with BT/Sky, any change that costs ntl/TW time and money isn't going to help healthy competition. I've no doubt that, if ntl/TW get into a good financial state, they'll be forced to open up (essentially as BT has done). Until then, no chance. Anyway, it's technically bloody difficult.

It was pretty difficult for BT too, as well as financially dangerous, which is why they ran interference and delaying tactics for many years before being forced into action.

Just becuase a company is not financially sound (which is very much a situation of their own making) is not a reason to not regulate.

Originally Posted by BBKing

On the other hand, there's no chance that Sky will be forced to give up its monopolies on football etc. or allow other organisations to use its satellites, unless the EU force them. Mr. Tony is too much Mr. Rupert's little friend.

You should bear in mind that Sky does in fact open up its network to competitors, technically. They are very cheeky in the way they do it, by charging astronomical amount of money for using their conditional access module, which then prevents anyone from doing it, but it is technically possible to run competing services on the Sky platform.