Select Committee on Trade and Industry Minutes of Evidence

Examination of witnesses (Questions 240 - 259)



  240. I am talking about the next door building, renting a bit of space.
  (Ms Gilthorpe) Yes. Scarcity of space is a problem. The space might be there but there are costs associated with renting that space and whether or not it is indeed available. If we are, for instance, talking about a 500 metre perimeter, that is a very difficult thing to achieve in city areas.

  Mr Butterfill: It might be cheaper than negotiating with BT at the end of the day and a lot quicker.


  241. Maybe you should declare an interest. This man is a chartered surveyor.
  (Mr Allan) I understand the point you are making. The operators are looking at this, clearly, but you still need to get access from your building to the BT building to put a cable in there. It is something we are looking at, in short.

  242. Can I put it round the other way? BT might turn round and say, "We do not want these guys coming in fiddling with our equipment, getting in the road. We have security considerations as well". There are other sides to this argument as well. I am not suggesting this is an argument for keeping you out, but are you confident that the people who you will be placing in these exchanges as and when they need to go in will be sufficiently well trained and be instructed in such a way as to not interfere with the other people's kit?
  (Mr Allan) I am quite relaxed about this. The last thing I want to do is to run out and have to recruit a pile of new engineers to maintain this kit. If BT were happy to maintain that equipment for us I would be very pleased and I would be happy to pay a service charge to them for doing so. I have no wish to have to find additional people to run out and maintain all this equipment in these exchanges. There are other ways to do this as well.
  (Mr Saunders) The other way of looking at it is that a large number of the vendors who would be interested in our equipment are the same vendors who supply BT. In practice an awful lot of the people who would be going into those BT buildings are already going in to supply services to BT.
  (Mr Allan) BT is currently offering a DSL service for me which is branded as ? but BT offer the service and maintain it. The only thing I want is a service level guarantee so that I can give promises to my customers in terms of the quality of service and deliver it so that I can make sure they get what they are paying for.

Ms Perham

  243. Can I ask about shared access because that is going to be required by the EU regulation on local loop unbundling? Are you all happy with the proposals for shared access?
  (Ms Machin) Yes. We have responded to the Oftel consultative document on that and given our views. Our concern about this is that we understand BT's response is that it will be round about nine months before it will be implemented which we think is an unreasonably long timescale, so we would like to see that timescale addressed but yes, we are happy with the proposals.

  244. Does that go for everybody?
  (Ms Gilthorpe) I have only one comment which is to make sure that BT has the responsibility practically of splitting the copper out rather than other operators so they take responsibility for creating that shared facility.

  245. Can I ask you whether you—all of you—intend to offer telephony services as well as broadband services?
  (Mr Allan) We already do.

  246. You all do?
  (Mr Allan) Kingston does in his area. Cable and Wireless I am not sure.
  (Ms Gilthorpe) Yes, but not to residential customers. We target the business market. Yes, absolutely, that would be our intention, to provide a package to our customers. That is certainly what is being demanded.
  (Mr Saunders) Certainly shared access would play a role in that. One of the concerns is that where space is limited it may not be feasible in the short term to adopt conventional telephony solutions and there may well be a role for BT continuing to supply telephony in the short term while other technologies become cost effective, for instance voice over DSL and voice over IP. I think everybody's perspective is that certainly most of the customers that access DSL technology will want to buy both narrowband and broadband services in a bundle. The question is how do you put that bundle together and what is the most cost effective way of doing it.

Helen Southworth

  247. Cable and Wireless have a major cable network. Are you going to be running out your own cable modem products in direct competition with BT's own residential products?
  (Ms Gilthorpe) Cable modem is something that a number of the cable operators do provide cable TV through and telephony packages are looking at and have started to offer. Certainly it is something that when Cable and Wireless owned the residential cable business within the United Kingdom we were looking at but for the small to medium enterprise market and upwards through to multinationals it is not a technology that is particularly useful in that market segment. More sophisticated services are required for that market place. Cable modems are very good at the residential end but less so throughout the market segment that we target.

  248. Does that mean you are not doing it or that there is not a take-up or you are not sure there is a market?
  (Ms Gilthorpe) We do not target the market for which it would be an appropriate solution. The residential market is not within our portfolio.

  249. What progress has been made towards the unbundling of Kingston's local loops?
  (Mr Saunders) The position on that is that Oftel investigated the situation in respect of Kingston as well as BT at the time of the original consultation on broadband access. Access to band width was the name of the consultation exercise. The conclusion at that stage was that there was no demonstrable demand for the unbundling of the Kingston local loop which in policy terms remains the position. Having said that, the EU position now is rather more clear cut in that they, as you know, have implemented a recommendation which was agreed by the Telecoms Council on the 5 December, which imposes obligations in respect to local loop unbundling on all operators designated to have it as having significant market power under other EU directives. We are currently in dialogue with Oftel as to what that means in terms of KC. I must say at this stage that it is our intention to deliver our own DSL based services and to make sure that other operators have cost based access to inter-connect products on that DSL platform which may well mean that in practice there is no demand for local loop unbundling in Hull.

  250. So you are following the same process as BT?
  (Mr Saunders) Rather more constructively.

  251. Everyone says that.
  (Mr Saunders) We have indicated to industry over a long period that we are quite happy to support other operator services in a flexible way on our DSL platform and indeed we have had dialogue with a couple of operators who have been interested in doing that. We have got at the moment trial tariffs which will be formalised within the next few weeks which are rather more attractive than BT's.

  252. So what demand are you getting or expecting?
  (Mr Saunders) Getting, zero; expecting, significant over time.

  253. Are you able to expand a little on that or is it confidential?
  (Mr Saunders) We simply at this stage do not have a concrete dialogue in place with any other operators either about wholesale access or indeed local loop unbundling. From our own retail perspective I will say that we have got 8,000 residential customers signed up from a base of 120,000 for DSL based services and we intend to continue to roll those out. It might well be that other operators may not regard Kingston as a particularly attractive commercial proposition because of our own success.


  254. Have you got space to accommodate them in your exchanges or is your success such that you have crowded them out?
  (Mr Saunders) We will obviously look at it in a very flexible way but I will say that we have got an awful lot of equipment that is delivering our own services.

  255. So you do not have very much space. It seems to be a problem. Hostels are rather limited at this time of the year.
  (Mr Saunders) But property in Hull is very cheap.

Helen Southworth

  256. What percentage of your customers subscribe to the broadband area?
  (Mr Saunders) The percentage at the moment is probably (giving a figure off the top of my head) round about 8,000 out of 120,000 homes. What is that?

  Chairman: Six per cent.

Helen Southworth

  257. And your target?
  (Mr Saunders) Rather more than that. Certainly we would anticipate that 20 per cent penetration into that residential environment is not unrealistic but that is based upon a broad bundle of services which includes everything from broadcast TV to video on demand to fast internet access to telephony.

  258. And you reckon you can achieve that by pricing?
  (Mr Saunders) Pricing in what context?

  259. How are you going to be competitive?
  (Mr Saunders) We will have a competitive proposition with the other service options that are available.

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