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Bertram,
Been sifting through BT's reply to Ofcom myself. Must admit that I agree 100% with you. It's not a demand for equal access a level playing field or the right to make a fair profit on a massive investment that others do not want to take on! It is a very weakly worded plea for Ofcom to play ball. It mentions that some calculations have been made incorrectly and that others are being incorrectly calculated by Ofcom because the particular circumstances have never existed until now. Ofcom also said that particular geographical areas would be identified with regard to the regulation reqired due to the levels of competition. It appears that Ofcom have not identified any areas that would allow BT to be regulated more leniently. The reply to Ofcom mentions that the government are in agreement with some of BT's reasoning which would allow loosening of regulation. However I think that the government will wash their hands of it and say "oh it's not up to us it's up to Ofcom" As for Virgin or any other provider not using Openreach network at the moment, how long will that last? It will last as long as it takes them to do the math's and I wonder what the cheapest way of increasing coverage beyond their network will be. This will all impact on BT's ability to get a fair return on the investment made. Ofcom also refer to using dark fibre as well. Regulation until 2026 and then no concrete information for regulation beyond that. Ofcom also state that BT has market domination in ultrafast fibre, this is incorrect as Virgin have more. In superfast fibre BT does however have more. Cost to upgrade Virgin co-axial network pennies in comparison to FTTP from BT which is £300-£400 per home passed. A very weakly worded response/plea from BT which I imagine will be steam rollered by Ofcom. I don't know who worded the statement or signed it off, but it does not frame BT's case or objections in a good light. I don't follow football but it's like sending in the lowest team in the lowest league to face Liverpool on a good day and hoping to get a favourable result. I don't see the SP going anywhere but down from here unless something radically changes at the top. I am a BT shareholder of many years standing, and wish that I could be more enthusiastic about the future of the company, but in the last 5 years the value of my holding has dropped by 80%. I am prepared to wait and see what happens in the coming weeks and months, but I hold out little hope of Ofcom helping BTunless we start playing cards with the big boys and have our sternest poker face on!
Fleccy,
Regarding the comments about increased life expectancy having a detrimental effect on the pension deficit. If you look at the data available for increased life expectancy then you will find that this reached a plateau in 2014 with no further increases since then. There has also been a significant increase in the " percentage of an individuals lifetime which will be spent in poor or bad health". This has been attributed in part to the austerity measures applied after the financial crash in 2008. Life expectancy will play a part in the position of the pension fund as will other matters, but how much is anyone's guess. I suspect that a lot of the legacy damage to the pension fund was done in 1993 when BT let just under 40,000 people retire. Not only that but BT enhanced these pensions so that if you were 53 or above upon retirement then retirees left with a full pension as though they had paid in until they were 60. Not such a good idea when you think about it now. As an aside people also forget the damage that Gordon Brown did to all final benefit pension schemes when he abolished tax relief on them whilst he was the chancellor. He was warned that this would sound the death knell for final benefit schemes but chose to ignore the advice and here we are.
Bertram/SS17,
Agree with your comments All that is needed is for the government to allow BT to compete on a level playing field. Whether or not that will happen is anyone's guess, but you are right about the BOD needing to grow a pair and fight BT's corner. You raise fair points about the quality of service received from different ISP's. This is something that everyone needs to consider when choosing an ISP. The cheapest may not always be the best. However when choosing you must make sure that you are comparing on a like for like basis. BT has it's faults like all companies do ( I use BT as my ISP), but whenever I have had a problem with equipment, the bill or my line then it has been resolved quickly and efficiently. All companies customer service's are not equal and if this is important to you then it should form part of your decision making process when choosing your ISP. Still treading water to see where the SP goes from here before deciding to top up my holding. GLTA!
Croosem,
I don't know what information you have consulted to make your statement, but I disagree strongly with it. Arrogant towards Ofcom and MP's really, you have to be joking. BT has been regulated into the ground by MP's via Ofcom. As for arrogant to other service providers, well they would not exist if it was not for the fact that they can use BT's network at a price decided by Offcom. Which is normally Z x inflation - 20%. Also other service providers show no enthusiasm to spend any monies on laying new cable and duct anywhere except in highly populated high return areas. If fibre for the country had been left to the likes of Virgin, mostly owned by Liberty Global or any of the other whinging service providers who the moment BT tries to get a fair return on it's massive capital expenditure go crying and complaining to Ofcom, then we would be in a much worse position than we are now. BT has now been regulated for decades, the fact that other ISP's still need Ofcom to fight their corner for them should tell you something. I know of a customer out in the sticks that needed £28K's worth of duct and cable to provide service to them. BT are obliged by the USO to do this. When completed the customer did not use BT for any services. Mind you with Ofcom's high rate of return on duct an line rental it was calculated that BT might get it's money back in just over 60 years. I wonder if any of the other Service Providers would like to run their business by completing these type of provide's with such a quick rate of return. Dividend cancelled until 2022, if it restarts then? Dividend cancelled so that monies saved can be poured into Capex. Other Networks falling over with extra traffic except Openreaches which is easily coping with the extra traffic. I don't see other service providers networks being opened up by Ofcom fot BT to use at preferentially low prices. Nuff said.
Fleccy,
"In potentially competitive areas, Openreach will continue to be required to provide wholesale
access to its network. We would maintain flat, inflation-adjusted, regulated prices for
Openreach's entry-level superfast broadband service, which has a download speed of up to 40
Mbit/s. This provides stability and certainty to investors and allows all companies the potential to earn a fair return. It follows a significant cut Ofcom made to the price of this product in our 2018 review. To help the fibre investment case, Openreach would be able to charge slightly more for these regulated products if they are delivered over full fibre. This reflects the additional customer benefits, such as speed and reliability, that fibre offers over copper."
It depends on what Ofcom define a potentially competitive area as . Openreach will still be required to provide wholesale
access to its network in these areas, as well as being regulated to an inflation linked rise which in the current climate means zero, this is of course after Ofcom slashed the price in 2018 that Openreach could charge. However Openreach will be able to charge slightly more for these products if provided over FTTP. What does slightly more look like? As I'm sure that it will cover the extra cost that this CCT requires? However if the customer picks a higher speed package then there will be no regulation. Still sounds like regulation to me.
Lets hope that the higher speed packages are priced a fraction above the regulated one's?
I am on super fast fibre which gives me 78Mb. I only have fibre to the PCP with the remaining 120 metres being an aluminium cable due to the copper shortage in the 70's. This runs three 4K televisions ( with Netflix and Prime), 4 computers and Nintendo and Sony playstations with no problems at all. So is FTTP with the increased provision costs really needed?
Ready to up my holding tomorrow if "The Price Is Right".
Richox,
It's a private company in name only with the Government and Ocom calling the shots. Deciding who can or cannot use the network and what BT is allowed to charge for usage. I don't see BT being allowed to use anyone else's network. However Ofcom are very fair in their judgements. Sorry I meant to say consistent. Consistently in favour of everyone but BT. Everyone could have had fibre connections in the 80's with a product called T-Pon. Thatcher stopped it to allow competition. Ofcom need a kick up the bottom. I don't know if they are elected to their post's or perhaps the government just puts in whoever they want( three ex BT guys on the Ofcom board at the moment). With regard to the SP I am just sitting on my hands at the moment, not sure whether to buy on Monday or wait until the results on Thursday. I could always hedge my bets and go 50/50. Any thoughts?
Could not agree more Bkkbkk. The problem is that whenever BT try to get ahead there are a raft of complaints to Ofcom from the likes of Talk Talk and Virgin etcetera that it will hurt their business. Ofcom are then all over it like a rash. This has continued since Post Office telephones was privatised in 1984. Ofcom state that it is better for consumers to have competition, this would be accurate if the playing field was level but unfortunately it's all one way. I don't see BT using other providers duct and cable, but Ofcom force BT to allow everyone else to use theirs ( I know that other providers pay for this, but Ofcom set the price to be charged). I remember when BT reduced the wholesale price of a product that Talk Talk were using. Talk Talk made a saving on the product but did not feel that they could pass this on to the consumer. That says it all. Until Ofcom are reigned in then the SP will go nowhere!
Fleccy,
Virgin Group has a maximum holding of 20% in Virgin Atlantic. The remainder is owned by Delta Airlines who hold 49% and KLM-Air France which owns 31%, Delta also owns 8.8% of KLM-Air France. This means that any bail out money should be limited to the 20% that the Virgin Group actually own. Let Delta airlines and KLM-Air France carry the can for the rest. Or perhaps Branson could use some of the millions that he makes from franchising the Virgin brand name to companies that have nothing to do with Virgin apart from the brand name. Or worse still he could sell his island. There are lots of small businesses that will go bust in this crisis and most of them are not multi millionaires, so have no way to pay staff wages except to claim from the government scheme. Victoria Beckham is now claiming for her staff. Is that a valid claim? With regard to the BT SP I suspect that they will rise gradually over the next two years as long as Offcom leave them alone.
I agree that the lockdown is working but it would be far more effective if the small minority of the population ignoring it abided by it. I think that next weekend will be critical with deaths unfortunately increasing. The temporary hospitals and accompanying morgues are being put in place for good reason. My worry is that as soon as the restrictions are lifted then some people will see this as business as usual creating a resurgance or second wave of the virus. With regard to the BT share price I hope that some kind of normality is restored. It is a business that has had to fight regulation for the last 36 years. It seems that some sectors are highly scrutinised and regulated within an inch of their lives whilst others seem to have hardly any regulation at all. BT can only cut costs by a finite amount. Wages for staff being the first port of all, second imho would be a dividend cut. I am a BT investor over the long term and do not see a way out or upwards for the SP until something changes in the way regulation is applied in this sector. Everyone stay safe, obey the rules and we will ensure that the risk to everyone from this virus is minimised.
Faultsman, Completely agree with you. They work so hard from home to ensure that the never ending stream of texts and e-mails asking why the job has not yet been completed continue as normal. Oh as well as "why was your van stopped here for 5 minutes" checking the tracker!
C3P0, I could not agree more. Openreach has billions of pounds of assets in infrastructure alone. Fibre even to the Cab is far less labour intensive than copper, FTTP even more so. Reliability will be much better and a lot of problems can now be resolved by electronic intervention alone. Roll out of FTTP is progressing well. However none of this will mean anything until BT is allowed to have a fair and level playing field.
Had that happened we would have had fibre to all parts of the country in the 80's, i think that the product was called "T pon". All that 36 years of regulation has achieved is to allow customers to choose from a plethora of telecomms suppliers who have no wish to install new networks unless these are in high return areas. Leave the loss making remainder to the incumbent. Everyone including end users can then complain that BT have not installed super fast fibre infrastructure in all the smaller/remote/ less populated lower revenue areas. Remember if you live in a remote out of city area then it's likely that you won't have an "A" road or a motorway to your door. That' because it's not financially viable! As for the Offcom board, Ben Verwaayen should know better.
The best thing that could happen to BT would be the removal of Offcom. Still regulating BT so that the competition can exist 36 years after it was privatised. It should be clear by now that this type of regulation does not give more or cheaper choices to consumers. It just allows other SP's to cherry pick high population/return areas for their own networks if they can be bothered to put it in. BT however have the Universal service obligation which forces them to lay duct and services to the remotest of locations, which in a lot of cases is not financially viable but because of the Usb has to be done and then surprise surprise the end user can choose Sky or Talk talk as their provider. Of course after Offcom have ensured that it will take upwards of 60 years to get the initial investment back. Not the best financial model, well not if you want to be a sustainable company.