Infrastructure – Share and Share Alike

DCMS recently hosted a workshop on infrastructure sharing which was attended by a broad range of interested parties, including water and electricity companies, fibre network owners and service providers, landowners, regulators and policy makers.

Speakers from the electricity industry explained how allowing fibre to be laid over on their networks is easier on low voltage local poles than on high voltage trunk routes between pylons.   There is already sharing on 60% of low voltage lines, but much less on high voltage lines.  There are a multitude of operational and safety issues to be considered, all of which can probably be overcome.  However, some query whether such networks would remain economically viable given the costs associated with resolving these issues. 

It remains more difficult and more expensive to obtain a wayleave from a private landowner to permit the installation of telecoms network than to deploy electricity pylons.  Wayleaves are a bit of a dark art and can significantly inhibit investment in broadband networks.  So it is hoped by many that the Government will encourage and facilitate dialogue and co-operation between those investors and the landowners.

Many representatives from water companies were present at the event, some of whom were eager to offer access to their pipes on a commercial basis, but all of whom were keen to stress that most sewerage pipes are unsuitable for housing fibre optic cables, principally because they are not wide enough.  Only those within the larger conurbations tend to be suitable, so this might not be helpful for “final third” projects.  Moreover, sewers do not seem to be available on trunk routes, but only on a local network basis.

BT were at pains to insist that their PIA (Passive Infrastructure Access) product, by which they offer access to their ducts and poles, is available on an Open Access basis.  Moreover, they are adamant that other infrastructure owners (by which they mean other telcos) should make their ducts available on a reciprocal basis.  This is somewhat disingenuous.  Firstly, BT are only offering access to their network because Ofcom have found them to have Significant Market Power in the access network and have imposed a regulatory obligation on them (and them alone). 

Secondly, many other networks will be made available on an Open Access basis, either as a condition of receiving State Aid, or because that is their commercial model. But alternative networks should not have to make their networks available as a quid pro quo to BT who is subject to an SMP obligation, which is asymmetric by definition.

Thirdly, BT draws a distinction between local or “access” infrastructure and backhaul or trunk routes.  It refuses to allow access to its network beyond the local exchange because it has not yet been required to do so by Ofcom.  The Government’s ideological position is:  Where you can share, you should. But BT will only do when regulation forces it.

So what with all the limitations on the use of electricity, water and BT networks, we are looking at a big problem in the backhaul network and difficulty in connecting communities with the internet backbone.  Let’s hope that Ofcom does something to address this when it launches its review of the “Business Connectivity” market later this year.  It’s a shame economic regulators have to work in “silos” and can’t be a little more joined up.

The vexed issue of business rates on fibre optic networks was actually the elephant in the room which was barely mentioned.  However, alternative infrastructure sharing does pose a couple of questions:  Firstly, if deploying fibre network on shared infrastructure is cheaper than digging a new trench, what impact would or should this have on the rateable value?  Secondly, different infrastructure sharing commercial models could have different consequences for rates liability.  An infrastructure owner who allows a broadband network operator to deploy fibre on their property would not, one would think, incur a rates bill – the fibre network operator would instead.  But if they prefer, instead to offer a managed product to telcos, then they would be responsible for the rates bill – he who lights the fibre, pays the rates.

Unfortunately, the Coalition ministers have come up against the Sir Humphreys who are desperate not to disturb the fragile house of cards that is the ratings system.  Plus ça change…

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About Ayres End Consulting
Telecoms consultant specialising in interconnect, regulation & public policy.

2 Responses to Infrastructure – Share and Share Alike

  1. PhilT says:

    Virgin Media are presumably the main target of BT’s “reciprocity” argument. In a VM cabled area their ducting could be of interest to BT and vice versa. Debatable whether VM would not be found to have SMP if the cabled areas were looked at in isolation, “Market 3” ducked the question by saying nobody had SMP in broadband supply but to me the access networks look pretty similar to each other within cabled areas.

    Looking at other networks and taking S Yorks Digital Region as an example, they have an open access model at a network layer, let’s say ethernet for the sake of argument, which satisfies State Aid but I do not believe they offer any duct access ?

  2. Re VM, agree but it’s galling when BT pretend that they are being magnanimous and others aren’t. Re S Yorks, I think you’re right – open access is not necessarily the same as reciprocity. Too early to tell what others will offer.

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