The free market – free to whom and for what? Not broadband!

“BT could face a legal challenge over proposals to spend up to £600 million connecting a million homes in rural areas with faster broadband, amid criticism that an offer it has made to government represents a “backroom deal” will tighten its monopoly grip on the sector.

Rivals including Talktalk, Sky, Hyperoptic and Gigaclear oppose BT’s proposal for a “voluntary” deal to connect every home in Britain with a minimum speed of ten megabits a second, fast enough to stream movies or browse the web.

While they support proposed upgrades to a minimum national standard, a so-called universal service obligation (USO), they support a different model to carry out and fund them.

An industry source said that several companies had taken legal advice about a potential legal challenge if the government accepted BT’s offer to make the improvements on its own and to pass on the costs to rivals.

The source said: “The law is very clear on how a USO should be delivered. BT and government can’t simply call the USO something else and hope the law doesn’t apply. If BT persuades the government to ignore the legal framework, they could face years in court. That would derail the process and leave customers waiting even longer for the fast broadband they deserve.”

Matthew Hare, chief executive of Gigaclear, a rural broadband specialist, said: “If the government were to go with BT’s voluntary deal, this would effectively stifle competition.”

He said that Gigaclear had not yet considered legal action, “but we strongly believe that a regulated universal service obligation is the only way to guarantee a competitive marketplace. Competition is vital, not only to give consumers choice and access to high-quality broadband, but also to secure the future of this country’s digital economy.”

A government consultation concluded this month, with a final decision on how to proceed likely to be made by Christmas.

Most of BT’s competitors favour a regulated model, in which all broadband operators would invest, with costs recovered from consumers via a levy on profits or another funding mechanism. BT is pressing for an alternative, under which it would make the improvements itself, with the costs of up to £600 million passed on to its wholesale customers, who protest that they would have no control over how the money was spent or the technology used.

Sharon White, chief executive of Ofcom, said that in the event of a voluntary deal, the regulator would apply a “very, very careful approach” to ensure BT would not pocket any difference.”

Source: Times (pay wall)