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    Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

    This is a discussion on Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing within the Sky news and announcements forums, part of the SkyUser Announcements category; Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing - ISPreview UK The on-going attempts to turn BT ...

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      Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing - ISPreview UK
      Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing-bt-pinata-small.jpg
      The on-going attempts to turn BT into a pinata continue this week as both Vodafone and Sky (Sky Broadband) have taken another opportunity to prod the telecoms giant ahead of Ofcom’s Strategic Review decision, with one demanding a national Gigabit broadband network and the other attacking the operator’s excess profits.

      The national telecoms regulator, Ofcom, has only just closed their Strategic Review consultation and we’re now waiting with bated breath to see whether or not they decide to split BT from control of its national UK telecoms and broadband network (Openreach).

      Over the past few months the incumbent has been predictably battered by their opponents (TalkTalk, Sky Broadband and Vodafone etc.), many of which want to see BT being completely split from Openreach because it would benefit their respective positions in the market.

      The latest criticisms don’t appear to add anything new to the debate, but they’re still worth highlighting. Firstly, Vodafone has updated their study of BT’s financial structure from two years ago (here) and appear to suggest that the operator is raking in an excess profit of £6.5bn more than they think is fair given Ofcom’s regulation.

      Vodafone’s Statement

      This analysis is based on comparing the level of profitability for BT’s regulated services, expressed as a return on capital, against Ofcom’s estimate of BT’s cost of capital. The Frontier analysis shows that over the period April 2006 to 31 March 2015:

      • reported returns on BT’s regulated services overall were consistently above the rate required to compensate investors, as determined by Ofcom. More specifically, in the past 10 years BT made around £18.9 billion profit from regulated services, of this £6.5 billion was over and above the determined cost of capital, of which £770 million was for the financial year to 31 March 2015;
      • there is no clear trend of a reduction in overall returns, despite a number of actions by Ofcom to constrain prices over the period; and
      • there have been some changes over time in the composition of the excess returns, with the excess returns concentrated on those services used by competitors to BT.


      The conclusion to the report is that BT’s returns for regulated services overall have been consistently above a benchmark rate based on Ofcom’s determinations of the return required by investors. This implies that prices overall have been set at a higher level than that required to provide investors in BT with an appropriate rate of return: in other words, prices could have been lower and BT’s investors would have still been adequately compensated. We estimate that BT’s regulated prices would have been 11% lower on average, had BT’s regulated returns been in line it the cost of capital.
      The figure represents an expected increase from the £5bn reported by Vodafone two years ago, which at the time was described by BT as being “ludicrous” and containing “wildly inaccurate” figures (no examples were given). The stance from BT has not changed, although this time around Ofcom will perhaps consider Vodafone’s gripe in more detail.

      Elsewhere Sky has put up another blog (here), which echoes their past concerns about Openreach’s service quality / delays and also suggests that the United Kingdom should be building a more future proof pure fibre optic (FTTP/H) network that could last for decades.

      Andrew Griffith, Sky’s Group CFO & MD of Commercial Businesses, said:

      For the UK to top the global connectivity table, we must aim high. We think the industry should aim for widely available Gigabit broadband which is ten times the best available speed now or fifty times the average speed the UK customer currently gets.

      Many other nations are building fibre networks direct to the home capable of delivering Gigabit broadband. The New Zealand government has accelerated roll-out of fibre-to-the-premise broadband to 80% of the population by 2022. Meanwhile in Japan and Korea, more than half the population already receives connection speeds of more than 100Mbps. However the current industry structure will not deliver the radical step change that would make the UK a future world leader.


      BT itself shows little appetite to take the fundamental step of delivering Gigabit broadband. It just plans to upgrade its existing copper network. The newest technology that it is planning to deploy, “G.Fast”, still relies on existing copper lines that run into customers’ homes. Professor Peter Cochrane, BT’s former head of research and development, calls their vision “wholly inadequate”
      .”
      We don’t disagree with Sky’s aspiration, although it’s always been easier to say these things than to actually deliver and pay for them. Sky also hails Japan and Korea for delivering speeds of 100Mbps+ to more than half the population, which perhaps forgets about Virgin Media’s 200Mbps cable network in the UK.

      Never the less BT’s rivals seem adamant that they could do a better job, although it’s difficult to judge while there’s an on-going absence of hard figures for the kind of investments they’d be willing to make, over what time-scale and then precisely what they’d all agree to actually do. The grass may not necessarily be greener and having more cooks in charge could create other problems.

      Meanwhile BT continues to hint that any attempt to separate them from Openreach could tie the process up in legal battles. Questions also remain over how BT’s debt / pension pile might be apportioned in the event of a split, as well as the impact on consumer prices from all of the related changes (better services cost more money).

      BT gave their own response last week (here) and they’ve also managed to secure some mild support from the Government’s Digital Economy Minister, Ed Vaizey, whom last week warned that such a split would have “lots of potential to backfire” (here).

      Ultimately Ofcom are the only ones who can make the decision about whether or not to refer BT to the competition authorities, which would be a prelude to their break-up. We should all find out soon enough whether or not this is the path they’ll take, although historically they’ve tended to prefer a middle road solution (e.g. force BT to relinquish some control without a complete split).
      Last edited by Scubbie; 14-10-15 at 05:11 PM.


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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      I'll eat my hat if OFCOM do anything at all, they have failed miserably in the past.
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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      pinata?
      what on earth is one of those?

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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      Simply put it's something you can beat the !**! out of for fun.

      https://en.wikipedia.org/wiki/Pi%C3%B1ata
      Scubbie likes this.
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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      One of these
      Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing-pinata.jpg

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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      Not the child, the thing on the string!
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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      Quote Originally Posted by moleman View Post
      One of these
      Click image for larger version. 

Name:	pinata.jpg 
Views:	87 
Size:	15.3 KB 
ID:	5869
      Or one of these...

      Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing-bt-pinata-small.jpg

      Quote Originally Posted by marjohn56 View Post
      Not the child, the thing on the string!
      Spoilt sport

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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      Quote Originally Posted by Scubbie View Post
      Spoilt sport
      Whatever, just get the parents permission first then.
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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      ofcom=chocolate teapot

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      Re: Vodafone UK and Sky Deliver a Last Minute BT Pinata Bashing

      Ofcom won't do a thing they are a waste of space should close them down they have NO Power or what power they do have they don't use it properly.


      Nobody is Perfect.....I am Nobody....Therefore I am Perfect

     

     
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