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Carphone and Sky push BT on broadband

Carphone Warehouse and British Sky Broadcasting are pressing BT for improvements to its planned £1.5bn ($2.4bn) superfast broadband network. The two companies are potential customers for the wholesale broadband products that BT is planning.

The network, which will start operating in the new year, will offer customers download speeds that are 10 times faster than existing ones because it is based on optical fibre.

Analysts said, however, that BT will need to strike wholesale deals on the new fibre network if it is to make a return on its investment.

That is because BT’s share of the retail broadband market, at 30 per cent, is small compared to some of Europe’s other former fixed-line phone monopolies.

Carphone and Sky have told the Financial Times that they are looking for improvements to BT’s wholesale fibre products following their involvement in trials in London.

Carphone’s Talk Talk subsidiary and Sky are important target customers for BT’s new fibre products, as they are the UK’s second – and fourth-largest broadband providers. They would use the products to sell high speed broadband to their own customers.

Dougal Scott, Sky’s deputy head of strategy, said: “We’ll continue to work closely with BT to provide input on how the trial products need to be modified. It’s important that future products are attractive to potential wholesale partners if BT is going to see a return on its investment.”

Sky and Talk Talk have concerns that the product does not have sufficient flexibility.

The two companies are looking for a product that they can vary so that they can differentiate themselves from rivals.

The product will be supplied by Openreach, the BT subsidiary that looks after the infrastructure that runs from phone exchanges to homes and offices. In the first half of the current financial year, Openreach reported revenue of £2.6bn, with an operating profit of £586m.

Charles Dunstone, Carphone’s chief executive, said the Openreach product was “not acceptable” in its proposed form.

“The country needs something that is much more flexible because the technology is moving incredibly quickly,” he added.

Ian Watt, analyst at Enders Analysis, said that, without wholesale deals with Talk Talk and Sky, BT’s business case for fibre-based broadband could be “significantly weakened”.

To achieve the increase in download speeds, BT is replacing copper lines with fibre between exchanges and the phone cabinets found on street corners.

BT said: “Following a successful pilot, Openreach is confident its superfast broadband product delivers sufficient speed performance, reliability and flexibility. We will look to develop even greater flexibility should there be commercial demand.”

The average UK broadband speed was 4.1 megabits per second in April, according to Ofcom, the telecoms regulator, but BT’s new fibre-based network will increase it to about 40 mbps.

The company is aiming to complete the roll-out of superfast broadband by the time the London Olympics start in 2012, having brought the target completion date forward from March 2013.

Источник: Financial Times

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