BT shared rural network snub is not as it seems

Everyone agrees that there needs to be some sort of collaboration to meet the extra-ordinarily difficult coverage objectives of the Government, but BT is snubbing rivals’ latest plans?

According to The Times, O2, Vodafone and Three have tabled a plan which would see all four of the UK MNOs pool resources to tackle the digital divide. Shared infrastructure would reduce the financial burden of investing in geographical regions which offer little potential for ROI, due to the sparse or non-existent population.

At a breakfast briefing in London, Vodafone UK CTO Scott Petty laid out the concerns in a relatively simple fashion; sheep don’t pay phone bills. This is the challenge the telcos are currently facing; the vast majority of the UK’s population have coverage, but geographical demands of the government are a different kettle of fish (or herd of sheep). When no-one lives somewhere, what is the incentive to invest in infrastructure to provide coverage?

While this might seem like a reasonable approach, BT is reportedly taking issue with the plan, at least according to The Times.

“BT has already invested heavily to create the widest 4G coverage in the UK, and we are keen to collaborate with Government and industry to extend rural coverage into areas where there is none today,” BT said in a statement. “To this end, we have recently proposed a new model for consideration over the coming weeks.”

It has been widely reported BT is snapping the olive branch put on the table from rivals, but BT suggests this is just PR spin.

Reading into this statement, BT is not objecting to the idea of collaboration, the spin which has seemingly been played over the last few days, but suggesting a different approach. And from our perspective, it is a completely reasonable objection to make.

When you look at different coverage surveys and 4G connectivity analysis reports, EE is regularly crowned the best performer overall, and takes top-spot for most of the regional measurements as well. There is a simple reason for this; EE has spent more money improving its geographical coverage than its competitors.

While this is an achievement which should be applauded, the idea of rural roaming and generic shared infrastructure would erode this competitive advantage which it has been building towards. Don’t forget, EE has not been building out this 4G network because it is run by people who are just nice guys and want to help everyone in the UK. This investment has been made to give the team something to shout about and create an advantage when attempting to secure more customers.

EE wants to be able to go to potential customers and tell them they won’t only have better signal in all the normal places, but everywhere they could possible think of going. It’s a long-term strategic decision to put it in a stronger position than its rivals. Should there be any surprise EE does not want its rivals to benefit from the hard work, foresight and investments it has been making for its 4G networks?

Reading between the lines, this is what the objection is based around. BT is prepared to have discussions on collaboration to provide coverage in areas where there is none but allowing competitors to piggy back on its investments is a commercially idiotic idea. Why would it give away such a competitive edge in an industry where profits are so difficult to come by? It has made investments in commercially unattractive areas, so its rivals should have to as well.

From BT’s perspective, this is simply an attempt for rivals to increase connectivity coverage, but not having to pay for the achievement. Collaboration should be focused on areas where everyone is facing complications, not those where everyone aside from BT has an issue.

Another point to consider is whether a shared network would actually work from a differentiation perspective? The telcos are fighting for subscriptions, but if they are all using the same network in the rural markets, it becomes nothing more than a race to the bottom, eating away precious profits and marching towards utilitisation.

Finally, does such a broad-brush approach to geographical coverage actually work? Does the discussion about generic rural network sharing detract from the critical point, which should be focus on areas which have zero coverage, instead of those which have partial coverage? This is a six of one, half a dozen of the other argument, as while it sounds reasonable to concentrate on the areas which are complete data black spots, try telling that to Joe Bloggs who is potentially being screwed by only having a single provider to choose from.

This is an incredibly complicated argument, most of which has not been considered by the initial blame game which has been building over the last few days. When you take the nuances into consideration, there is no right answer, and neither are any of the suggestions wrong. In truth, something has to be prioritised, and not everyone is going to be happy with the final decision.

It might be easy to hurl blame towards BT/EE for its objection to a collaboration plan, but to do so without considering the commercial realities of the telco industry is incredibly lazy. BT/EE is objecting to this proposal, not to the idea of collaboration, but so would any other business which had built this position.