BT dominates rivals 14:1 on its fibre network

BT’s retail arm holds an overwhelming lead in the fibre market, its results have shown, with regulator Ofcom saying it’s keeping an eye on whether BT’s dominance might need further regulation.

BT dominates rivals 14:1 on its fibre network

Although Virgin supplies fibre connections over its own network, most other ISPs offering fibre rely on services bought from BT Wholesale.

BT has been busy rolling out its fibre network and will continue to do so with the aid of public money, as it is so far the only company to have won contracts for the government funding being doled out by Broadband Delivery UK (BDUK) – which has led to the European Commission investigating the process over competition concerns.

On the BT network, the company’s customer-facing BT Retail outnumbers rivals by 14:1, with companies such as Sky, Plusnet and Zen dwarfed in terms of market share. According to figures revealed in the company’s results, Openreach “achieved around 170,000 fibre connections in the last quarter and has now connected around 750,000 premises”.

While that’s good news for broadband customers wanting faster speeds, it leaves rival ISPs trailing. The company said BT Retail added more than 150,000 fibre broadband customers over the past quarter and the customer base currently stands at “more than 700,000” – suggesting rivals make up a very small slice of the total.

With this and the fact that BT is so far the only company to win business from the BDUK rollout process we are aware that there are questions that will need to be answered

That performance might please shareholders, but it has also reached the attention of Ofcom, which said “it was aware” of BT’s leading position. According to a spokesperson, the regulator is monitoring the company’s dominance and will bear it in mind when it conducts its scheduled three yearly review later this year.

“We’re aware that BT has the greatest market share in this area and will be watching closely to see whether this is just a case of other companies playing a waiting game,” a spokesperson said. “With this and the fact that BT is so far the only company to win business from the BDUK rollout process, we are aware that there are questions that will need to be answered.”

Meanwhile, Virgin announced that its superfast subscribers (over 30Mbits/sec) had increased to 1.3 million connections, from a total customer base of 4.1 million.

Playing catch-up

Whether Ofcom decides it needs to step in might depend on whether other providers start to make more effort to market fibre services, which have often been introduced through software launches and little fanfare.

“It’s no surprise that BT Retail dominates the connections for fibre-based installations on the Openreach network as it has been at the forefront in terms of testing and publicising its Infinity offer,” said Laura Kell, an analyst at broadband specialist Point Topic.

“But these figures mean that 50,000 connections are in place served by other providers, which at least means it is not completely going BT Retail’s way,” she said. “While these other players clearly have some way to go before getting anywhere near BT Retail numbers, we expect their numbers to ramp up as the larger brand names, in particular TalkTalk and Sky, increase their focus on marketing fibre-based offerings.”

Regulation squeeze

BT is no stranger to regulation – the company is already controlled in how much it can charge rival ISPs for access to its pipes. In fact, the company points to tighter controls costing it up to £200 million a year in revenue after new wholesale pricing controls were placed on some products.

“We continue to expect these to have a negative impact of around £100m-£200m on revenue in 2013 and a similar year on year impact in 2014,” the company said in its results briefing.

BT also warned that it expected to have to pay out £145 million to other ISPs over a dispute over pricing for its Ethernet products.

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