What the Ofcom broadband data tells us about West Oxfordshire

This week Ofcom released the data sitting behind their recent broadband study. The dataset contains over 1.5m postcodes from across Britain, summarizing the local broadband experience.

The file is far too big to play win in Excel but when loaded into a spatial database it becomes a fantastic resource that will take some time to properly exploit. Given last year’s data was in a similar format it means we may soon be able to build up a picture of the evolution of broadband over time as well, empirically showing the advances that the UK is making.

With the data loaded, I wanted to have a quick look to see what it might show. The map below is a snapshot of West Oxfordshire, the focus of the Cotswolds Broadband project I’m helping.

Ofcom mean broadband speed in West Oxfordshire

The goal of the project is to turn West Oxfordshire into the first district with universal superfast broadband by filling in the areas between BT’s, Virgin’s and Gigaclear’s networks, and what the map shows is the distribution of the mean download speeds.

Its important to understand what this map is saying.

What it doesn’t say that broadband in West Oxfordshire is exceptionally poor; just like any rural district there are pockets of very poor and non-existent broadband but most have access to something and some access to very good broadband.

Instead what its highlighting is that the gap between the best and worst is now very wide.

Those people in the brightest green areas typically average more than 30 Mbps with 10% of postcodes across the district containing premises receiving more than 100 Mbps, with 150 Mbps far from unique.

In contrast, a third of postcodes average less than 10 Mbps, the speed increasingly considered the minimum to be properly functional on the Internet today, while 90% of postcodes contain at least one premise with speeds of less than 10 Mbps.

About 10% of postcodes in West Oxfordshire have neighbours where the gap between the best and worst broadband is more than 100Mbps.

This is a problem fully recognised in West Oxfordshire; that some people may consider an upgrade to 5 or even 10Mbps to be sufficient for their needs, but such an increase wouldn’t amount to keeping pace with the majority in society.

When all the planned broadband investments are complete, the map above should be universally green with postcode averaging less than 24 Mbps.

A week in broadband – net neutrality, content and competition

Its been and interesting week to contrast the discussions and shifts in the broadband markets in the UK and the US.

In the US, the Net Neutrality debate is coming to a head as President Obama sharing his thoughts and with the FCC now considering how they might inject some additional layers of competition in an attempt to use market forces to avoid operators fiddling with customers traffic.

At the same time there are UK reports that  BT may be considering the scrapping their Wholesale division in favour of Openreach, reducing the separation between their infrastructure and the services that flow over it.

The timing of the latter reports couldn’t be better timed for the FCC’s deliberations.

In principle the UK has a market which creates a distinction between services and infrastructure; it is true the Europe doesn’t have the scale of problems the US has with net neutrality but our markets are certainly not in rude health.

To contrast the very different attitudes to net neutrality in Europe, its worth remembering that Eircom, the Irish incumbent was proud to advertise traffic fiddling, sorry shaped traffic, as a customer benefit offered at no extra cost to their valued customers!

Casting your mind back to the early dial-up days in the UK, there were innumerable ISP’s; many small, some large, and all with an individual, independent air about them. Remember Nildram? Pipex?

As the broadband market emerged there was significant market consolidation. Its possible, sensible even, to argue that this is a natural phase for any new market as it matures but today we have a very small clutch of vast service providers with a group of tiny, tenacious ISPs hanging onto a low single-digit percentage market share.

The UK’s flavour of net neutrality is less about meddling with content but with the content itself as BT and Sky wrangle over rights to sports with rugby fans currently the big losers.

The question the FCC needs to ask is “Why is this happening in the UK?”

Healthy markets rely on the participants’ abilities to differentiate and innovate. The ADSL broadband market was created such that the only significant differentiators were price and brand, and the only innovation was in the business model – the smartest way to give it away. Unchecked, this can only lead to the “pile it high, sell it cheap” environment with a small number of vast, lean organisations we have in the UK today. This isn’t a criticism of these organisations, either – they have been the most successful in coping with the market pressures.

The move to FttC (BT’s Infinity) has further impacted the scope for competition because its simply not commercially viable to deploy VDSL in competition to the incumbent with any scale. With no physical infrastructure unbundling there are no differentiators left apart from a brand associated with the content you permit over your service. This is the source of the inevitable and harmful battles over sporting rights with fans the biggest losers.

If the FCC are serious about using market forces to regulate net neutrality, they need to consider what the competition will be based on. A non-descript and narrow commodity market will result in a temporary pain relief and a diversion while the new service providers storm, form and then battle for content rights, taking the market full-circle but for more complex and expensive reasons; customers will increasingly become secondary as the competition becomes ever more concentrated and the battles ever more critical to the providers’ survival.

A US market will need to be created based on a set of products which can be combined to create a rich and diverse market, with ample scope for market players to innovate, and with sensible returns possible for all players in the market.

The UK doesn’t currently have this but if the FCC is smart it could start to lead the way if it learns from the UK experiment.

The fall-out for the UK?

If left unchecked, the trend suggests we should expect Sky to get more engaged in fibre infrastructure (they’ve just applied for code powers to dig up the roads) as BT gets more involved in content, and with BT preparing to use its 4G licence expect Vodafone to spend some of their considerable cash pile to get more interested in UK fixed broadband (Talktalk a target, perhaps?).

In other words, the links between content and delivery will grow stronger and the shape of competition more concentrated in the hands of an even smaller group of even bigger players with business models converging on Virgin Media’s (read: Comcast’s) cable model. And as this happens, expect Netflix, Google and Amazon to get more concerned about how their traffic is treated.

The UK’s trajectory is back to earth with a model not unlike the one the US is trying to escape.

Its your business to know your Open Market Review from your Public Consultation!

I’m starting to hear, again, some very confused and sometimes very wrong advice from within the telecoms industry regarding the flow of the state aid process and how it relates to existing network operators.

From the beginning, when an organisation – any organisation – wants to use public money to roll-out broadband it needs to go through a state aid process.

Even small investments, so-called ‘de minimis aid‘, need to go through this process although they may not have to notify the European Commission as the final step – de minimis aid is still aid and needs to obey the same rules as any other aid, it’s just considered too small to have a significant distorting impact on the market so the Commission doesn’t need to specifically rule on it.

For large interventions it’s considered very good practice to carry out an Open Market Review (OMR) and BDUK will typically insist on it. This is not a mandatory or even binding stage, and is simply used by the aid recipient to better understand the landscape in which they plan to intervene. The advice to existent network operators is that it is very helpful to reply to any OMRs that affect your but it is not absolutely “live or die” essential.

As pragmatic advice, I’d recommend that wireless operators specifically do consider submitting to OMRs as it can take longer to agree the coverage, especially for superfast NGA wireless networks. Starting that discussion early maximises the opportunity to press your case.

However, all interventions must carry out a Public Consultation which provides the one and only opportunity for anyone affected by the plans to provide their feedback. The Consultation has to remain open for a month and will contain maps and data which expresses the organisations best understanding of where they feel they can intervene and where specifically they plan to intervene; this will often be informed by the OMR process but is not limited to it.

Continue reading “Its your business to know your Open Market Review from your Public Consultation!” »

Why is the UK so different? It just is but that’s an opportunity for operators

The annual FttH Council Conference in Stockholm published it annual FttH/B league table for Europe which seems to perennially out of scope for having too little fibre connectivity to be counted. The UK is not alone, other major nations like Germany and France also struggle to make the grade. Heavy Reading also continue to predict that the UK won’t achieve what they call “fibre maturity” until after 2020.

This precipitated a number of conversations, as it does every year – why is the UK so different?

So here are some of the conclusions.

UK customers like a bargain

Price is king and other factors are perhaps less important than in some other countries. This has driven our service provider market towards a “pile it high, sell it cheap” model” which relies on scale more than in almost any other market. Internet services are not alone in this – price comparison sites are prospering in finance, insurance, energy and the key and sometimes the only differentiator is price.

This characteristic doesn’t mean we are rational either. Complaints about the biggest ISPs are common but there are alternatives that offer a better customer experience or more consistent performance but they cost a bit more so we suffer albeit not in silence. Again the Internet doesn’t have a special place in our irrationality. We sign petitions to keep our rural post offices and village shops open but do all our shopping online or in a major supermarket because its cheaper.

Continue reading “Why is the UK so different? It just is but that’s an opportunity for operators” »

Everything should be made as simple as possible. . .

The debate about what’s going wrong with the broadband policy is becoming quite complex, messy and somewhat emotional.

For me, the key policy of making the UK the best “superfast” (meaning > 24 Mbps) broadband market in Europe is the right one. Delivering that in tandem with the localism bill and while supporting SMEs couldn’t be better. These are all things that get my total support – and I hear very few detractors (quite the opposite).

The rub for many people seems to be in the delivery – a matter of policy implementation and interpretation. A key example (totem?) is the framework which contains what appears to be little more than lip service to the policy – an opening few paragraphs that give the appearance of supporting the policy followed by a long list of qualifying criteria which, one by one, chip away at the goals until there is almost nothing left – even the stated objective of super-fast broadband seems to have been discarded, or at best re-framed, along the way.

There have been conspiracy theories that this is a stitch up between Government and BT but I don’t support that for one minute. To begin with, I suspect that the framework isn’t something BT would prefer to support but will pragmatically go along with as its what’s on offer.

Einstein is quoted as saying:

Everything should be made as simple as possible, but not simpler.

For me this is a case of a very complex problem that’s been reduced beyond the possible degree of simplicity – the framework assumes a level of homogeneity of technology, scale, business model, financing, risk, partnership and so forth that just isn’t possible – BUT it is much simpler to manage.

The original policy objectives appear to have got lost in a drive to find the optimal process – or at least the one that’s the least bother to oversee.

This isn’t a time for a difficult u-turn – this is a time for politicians to crack the whip and make sure the policy is implemented as stated.

There are very good people inside BDUK, and they didn’t suddenly switch off. Something has happened that group at the top – whether it was the change of management or the influence of KPMG but it is something that can be corrected – but time is not on anyone’s side. One or the other or both need refocussing, and very soon.

12p or a fifth-of-percent

The Broadband Stakeholder Group’s (BSG) Commercial, Operational and Technical Standards (COTS) working group has written to BDUK recommending that they find their way to supporting the development of framework to ensure retail service competition on next generation broadband networks.

This comes about two years after the Digital Britain team at BIS declined a proposal to do exactly that, feeling that it should be formed and funded by the industry at the recommendation of the BSG which, in turn, lead to the formation of the COTS process.

A year ago, when little progress had been made, a submission to the Technology Strategy Broad to build a market clearing system was also turned down, although that may have reflected the sometimes random nature of bidding to the TSB; one judge said the bid hadn’t understood the risks, a second said it fully understood the risks, while the third judge admitted they weren’t qualified to judge the bid.

Attempts to create a clearing system commercially also ran into treacle – enough written about that here already.

The reality is that it was always going to be necessary to create a wholesale marketplace for broadband services should the access market fragment as it has in most markets across Europe. It was obvious two years ago and its still obvious today.

If it were to cost around £1m to build a solution, it would equate to about a fifth-of-a-percent of BDUK’s £500m+ budget were the Government to have funded it.

Or, with about 8m premises in the final third, just 12p per customer were the industry to have funded it.

This really isn’t a big thing – other industries have done it – but, collectively, we seem to be unable to see our way around this.

This uncertainty is having a significant impact on the development of NGA in the UK. Where schemes are developing, they are largely doing it as vertically integrated networks – not out of choice but of necessity. This is bad for the industry and customers alike, and remains a major failing in the BDUK procurement process where an open-access model is legal requirement.

Lets top sweating the small stuff!

Why we should care about the US Internet “Kill switch” proposals

There is a proposal running through the US Senate at the moment which would give the President powers to shut-down critical internet infrastructure, the so called “kill switch”. Apart from any concerns at a distance we might have about free speech and rights, there is an equally big issue which may be more critical to our own homeland security.

In the dawn of time, the internet was a peer network where each organisation with a network they wanted to open up linked, or inter-netted, with others on an equal basis. Since then major providers have moved into a position of some power and the equality of peering has pretty much gone. Small providers often have to club together or pass through multiple hands to get to a universal audience, so a small number of US-based infrastructure items have become critical to us as well as Americans.

Casting your mind back to the Autumn of 2008, you might remember a few days when odd things happened on the internet, where you could Skype some people and not others or reach some websites but not others, while your friends and colleagues experienced the same but it affected completely different sites and services. This was caused by a spat between Sprint and Cogent in the US, where Sprint decided to shut-down its peering relationship with Cogent (see here for a reminder).

Because peering is no longer egalitarian, a significant amount of the UK internet traffic needed to pass through this peering point in order for UK internet users to reach UK services; that’s why you could skype some people and not others, and why some websites disappeared but not others, and depending which way you passed through the peering point determined which services you could access.

I’m quite sure that proposals passing through the US legislature will have more safeguards than they do in Egypt and I’m sure the US President will act more calmly than Mubarak is but surely our national security should be in our hands?

While our diplomats should be ensuring we have assurances and safeguards as the law passes through Capitol Hill, we should also use this time as a moment of reflection, to make sure we have an internet that we can always use and can’t be impacted by the decisions of others far away and beyond our control.

BT showing signs it’s worried about infrastructure competition

BT Wholesale’s Sally Davis was reported as warning the Government not to waste money on small rural broadband projects as a patchwork effect couldn’t possibly work (ISP Review article here). There is perhaps some irony in the example she gives – of the early railways not agreeing standards so they couldn’t work together, given that the railways did successfully put the canal’s out of business and a century later, with standards, multiple rail operators are still vyeing  for customers everyday.

Perhaps its mischief more than irony – after all, BT is heavily engaged in the NICC’s ALA work and with the BSG’s passive infrastructure group, both seeking industry accepted standards for interoperability.

On a more general point, wouldn’t it be very odd if a whole nation went in search of a solution and without any dissent they all came up with the exactly same answer?

And what is it about the telecoms sector that is so unique that means it can only function with a monopoly at its heart?

Properly functioning markets develop choice and variety. Some of those choices may be small, others large; some risk averse, some daring; some targeting niches, some a wider constituency – that’s what markets do and are.

And that’s why JON Exchange is being created – to provide a marketplace for a competitive market.

What the shift towards next generation broadband represents is the single largest threat to BT’s monopoly in its history. If a region opts for an alternative infrastructure its likely that, without some serious soul-searching, BT’s Openreach will lose that area for at least a generation. This has never happened before, so Sally Davis’ salvo is assuredly the first of many to come.

The Government’s job isn’t to defend one company against threats from a wider and naturally emerging market – quite the reverse. If the Government doesn’t grasp this opportunity with both hands there is a very real risk that it will be held to ransom each and every time the incumbent should invest.

A functioning patchwork market is exactly what we as consumers and electors need; its what the market needs – it just happens not to suit the one with the most to lose.

The hub of the argument

At the JON Exchange, we’re very excited by the Government’s announced strategy for superfast broadband today. The feeling that network operators would be used by Government as pawns to bargain with BT again I think is receding; confidence among network operators and builders that its safe to invest should be rising; and JON Exchange is ready to play its part.

The last Government’s first generation broadband policy led to early improvements in speed and geographical coverage but largely ignored the need for a competitive infrastructure. Competition has ever since been focussed on a fairly narrow service layer with infrastructure investments largely limited to sitting on top of BT’s cables, unpinning BT’s dominance in the market. There was a general sense that the Government used smaller, alternative initiatives as pawns to negotiate the deal they always wanted from BT.

The legacy of that policy is that we now have widespread but very basic infrastructure without a competitive market which would have ensured continued investment at the most basic level – in the physical infrastructure to our homes and businesses.

Today’s announcement by Jeremy Hunt signals a more balanced approach which should ensure a fair and competitive infrastructure market embodying diversity and innovation, and if successful will lead to market forces causing naturally occurring investment in the future.

By focussing on hubs as the gateway between infrastructure investment and service providers, the Government appears to be removing the assumption that BT’s exchanges and metro-nodes will be the default locations for new broadband investment. That’s not to say, of course, that BT will be excluded – I’m certain that they will win the opportunity to build and run significant parts of our future broadband ecosystem but the playing field feels like it has been levelled, giving alternative network operators an opportunity also.

The idea of a diverse and competitive market in any other walk of life is normally considered a good thing but the telecoms industry is largely used to a limited scope for competition, largely focussed at the service layer. Where it was permitted, competition generally flourished but the nature of competition even at these levels was often stifled by the lack of diversity in the basic infrastructure. The creation of a patchwork of infrastructures, stitched together around regional hubs and their offerings presented on an open marketplace is likely to change that forever.

Several years ago I called them Joint Open Network Hubs – JON hubs. Others call them village or community pumps. Whatever we call them, JON Exchange excited by the prospect of helping to draw together the various parts of the industry in a vibrant and exciting marketplace.

How successful would Finland’s broadband policy be here?

At the NextGen Road-show event in Edinburgh this week, Professor Michael Fourman gave a fascinating talk on the special challenges for delivering broadband in Scotland. At the heart of his work were some maps which very effectively demonstrated the impact the Finnish Government’s broadband policy might have on some of the more remote areas of Scotland as well as a GIS-based estimate of how much it might cost to deliver it.

Heavily summarised, Finland’s policy says that there should be a fibre back-haul connection within 2km of any community; and they define a community as an area containing at least 70 people per square kilometre.

I was left wondering how effective this policy might be across England and Wales, as well as Scotland.  I don’t have to hand the core network details that Prof. Fourman used to calculate the costs of delivering the policy nor the time just at the moment to build the shortest-distance spanning tree model he used, so I’ve restricted myself to simply looking at where Finland’s policy might reach that the market won’t.

Finland's broadband policy applied to England & Wales The map (click on it to see it life-size) depicts in green the areas which the policy would deliver a fibre to, and the black is the extent of market-led next generation broadband according to DCLG’s 65% NGA model. A first glance says “so what – doesn’t seem very impressive”. However this is where maps have the power to overstate a problem. Using the 2001 census, there would be 11,946,819 (don’t you love computer precision!) English and Welsh people who remained without NGA broadband when 65% of the UK was already enjoying it. Applying the Finnish policy reduces this figure to just 275,451 – or in other words, increases the reach of NGA from 65% to 94% of the population.

The Finnish broadband policy would reach 94% of the English and Welsh population

Of course this is academic without the costs that Prof. Fourman generated, but it is a powerful example of how the village pump model that Rory Stewart MP is advocating. So how many of these green areas are close to a Primary School, Library or GP whose existing broadband connections could be upgraded and converted into a Village Pump?

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