The UK may have voted to leave the European Union, but its regulator is still pioneering new territory that may lead all of Europe to follow it. Its proposal issued this week, after numerous government comments complaining about BT Openreach, will make Openreach a very arms-length company from BT. It could be the first European Union regulator which breaks up its incumbent telco, in order to regulate its broadband market.
But political solutions to technology problems rarely get it right and Ofcom seems to have completely missed the point on this one – instead of “booing” BT as the pantomime villain, and heralding the new and wonderful Openreach, what will happen is that the two companies will reverse their roles and Openreach will become more like a monopoly, which installs all the broadband in Britain and is no longer motivated by giving BT’s retail customers preferential treatment, and would in fact not be incentivized to give anyone very good treatment at all.
Critically there is a technical issue here which would help rejuvenate competition in the broadband marketplace, and its hat has been in the ring for over a year, thrown there by one of the inventors of broadband Professor John Cioffi, and his company ASSIA.
The core issue is that BT needs to cancel the crosstalk on every broadband line through a single server, and so has taken on this job, even where some of those lines are unbundled lines from alternative suppliers and in return has offered virtual unbundled lines. This seems reasonable and an easy way to keep the broadband market competitive.
But we were reminded of a paper put out a year ago by Cioffi, which said that what BT is actually doing is only setting aside 22 MHz of spectrum for improved broadband, instead of using all of it, right the way up from 2 MHz to the 106 MHz which G.fast uses.
Cioffi pointed out last year that by using Software Defined Networks, all of that spectrum could become available to an alternative supplier, and each of them could have their own control console. BT seems to be suggesting that it has to take control of the broadband lines directly and not allow rivals to have access to the full control plane.
ASSIA has one version of what it calls multi-tenanted software (and there are others), and this can be used to offer full broadband control of the line, while BT ONLY manages the crosstalk cancellation and nothing more.
So here we are on the verge of legislating a new broadband monopoly, when there remains a technical solution to prevent such a move. Similar software is available to do much the same in a cellular network where a single base station is used by more than one cellco.
At the time Cioffi said “Each operator would have independent software systems allowing each to manage and support their customers’ quality of experience, enabling all to offer differentiated service products. For example, some might supply gateways with better WiFi. Others might design their networks for reliable 4K TV, with enough capacity even for championship football. Packet sizes and transmission parameters can be adjusted for better gaming performance. All could compete to offer the best customer service. Even better, there will be innovative ideas none of us have considered yet.”
This is just offering broadband using Network Functions Virtualization using protocols such as OpenFlow, which separate the data from the control plane. And a paper can be downloaded from the ASSIA site which explains the “Software-Defined Access Network,” explaining how control of the remote WiFi could also be added into this set up.
ASSIA says it has already been in advanced talks with rivals in the UK and operators in Germany to implement this and has working trials of this multi-tenanted approach.
This approach would not leave Openreach as the sole provider of broadband, since any one of the US broadband providers could offer this multi-tenanted approach at any one DSLAM. This is very similar to the way France incentivized operators to invest in fiber for French MDUs – laying out charges for any operator that brought the fiber to a building, and also laying down an architecture where other operators could also sell broadband off that fiber.
Instead Ofcom has reached the verge of breaking up the incumbent, with Openreach set to become a legally separate company within the BT Group, with its own ‘Articles of Association’. Openreach and its own directors. This is so that they can take decisions in the interests of all Openreach’s customers, and potentially so that those directors can take on board their own investment. The problem with this is that it will mean outside directors have control over BT’s balance sheet, and a full break up would be better.
Ofcom did not push for a full break up due to problems disentangling the two companies including thousands of property leases, and pension plan entitlements. This halfway house move appears to be solving the regulatory problems first, while the company works on solving these problems for a full break up in the background.
In return BT has come back to Ofcom with a proposal to provide broadband to the last 5% of the country that so far it has not reached, under a Universal Service Obligation plan – but there are no details published as to how this might be paid for. We suspect that BT would take the cash from a small tax on all broadband, and spend it on reaching the furthest, most difficult to reach broadband locations.
Having separate budgets within two companies that have the same shareholders, but different boards, makes no sense at all, and sounds unworkable.
What should happen is that a multi-tenanted option is worked out so that rivals can compete with BT, and separately there is a bidding process for Universal Service Funds, which are somehow raised outside of BT, and bid for by any of the existing broadband rivals.
Interestingly Adtran, a US broadband equipment vendor, this week added its own software, which looks like it carries out a similar job to that which Cioffi discussed. Adtran is the incumbent device provider to Deutsche Telekom and is active in its G.fast implementation.
Adtran calls the new software Mosaic and it describes as the industry’s first open Software Defined Access Services Architecture, and it is mostly about empowering rivals to create differences in services on G.fast networks.
Adtran says that its new architecture serves as a foundation for next generation platforms, including its NG-PON2 and G.fast currently being trialed by leading Tier 1 carriers and that it is designed to expedite service providers’ transition to open, programmable and scalable networks.
It would be a shame if Ofcom made an irreversible change to BT, just as multiple software offerings were reaching the market to cope with preserving broadband competition.