Piers Daniell

We laughed in the office on the news that Easynet is finally being sold off by Sky as I have been saying it would happen for over a year. Some believed me, some didn’t but my reasoning was sound. Ever since Sky bought Easynet it has been an uneasy marriage of a vast consumer brand and a very business focused one. Easynet was one of the first to get involved with LLU (local loop unbundling) in the UK and were able to launch products way ahead of BT. Something Sky obviously liked when they paid well over £200m for the business even though, by then, they were actually buying an old network and much of it needed to be upgraded.

Unlike O2, who at the same time, paid a fraction of that (£50m) for BE. They had a much newer infrastructure, and after all the upgrades to make it fully national was less than Sky originally paid for Easynet. But when you look at how Sky treated Easynet it was still segregated within the organisation and divisions were created to ensure a nice clean break when the time came to offload it. I think they did very well to get £100m for it, especially as the actual valuable part, the network, has remained in Sky’s hands meaning Easynet are now just a third party with a good supplier agreement. But again, like when Sky bought Easynet originally, it was done by a company who didn’t understand data communications and this time they found some bankers who obviously were taken in. I don’t think the amount demonstrates value for money and it will be a difficult business to float/sell in a few years when the venture capitalists decide they want their money back.

Obviously for us it probably means a bit more competition in the coming months as the business gets some much needed direction, but with no innovation over the past four years they are going to struggle to catch up. While they have an enviable client list, I am sure the customers coming to the end of their dire 5-year terms will be ready to for a change. So good luck Easynet – you are going to need it!

Interesting development over the past few weeks has been BT Openreach actively telling

end users about BT’s new (or old depending on how long you have been waiting for it) 21^st Century Network (21CN). This from your perspective may be perfectly normal, however when you understand that Openreach should remain independent it shows flaws in Ofcom’s control over the carrier.

Openreach was formed to serve all ISPs independently, especially those with their own technology in the local phone exchange. Local Loop Unbundling (LLU) has become widespread over the past few years, mainly due to the demands for new technology which BT has been unable to provide. O2 and BE for example have been delivering ADSL2+ for many years prior to the launch of BT’s 21CN offering. Even now the BT product is second-rate (no Annex-M support). Therefore if they, or any other LLU carrier, need Openreach to visit their client’s site to fix a fault they should receive just that.

At a recent partner meeting with Cable & Wireless conversation turned to BT’s ongoing 21CN rollout. This multibillion pound investment by BT seems to be floundering especially when it comes to converting the legacy phone system onto it. Currently BT have unbundled some 3,000 lines so with a further 29 million to go we can be confident that the expected completion will be way into 2014, a few years behind schedule.

What was interesting was the near unanimous acceptance that BT 21CN will not reach all the exchanges and that realistically they will stop rollout at around 1,100 exchanges. This observation confirms other rumours I have heard within the industry and makes a lot of sense. When you are multinational business with a project requiring such massive investment why take it to areas that will not provide the necessary return. With BT suffering from a dramatic drop in share value, parts of the group loosing vast sums of money and a pension deficit I can not see there being the resources, let alone the desire, to roll out new services to exchanges that do not have the demand.

I suspect any announcement on such a plan will be a long time coming from BT as they will have to withstand pressure from Government on the ‘Digital Divide’ and the partners who have invested heavily in equipment to talk to BT’s new network. Currently only BT Retail and Enta have made the necessary investment into WBC and I am sure will be very upset if BT only provided the same footprint as to most LLU carriers.

Fluidata has always invested in LLU relationships just because the technology is years ahead of BT. We have been selling ADSL2+ with Annex M technology from Telefonica O2 at over 1,200 exchanges for over 18-months now and by the time BT gets to the party it will be time to go home. Maybe this is what BT are slowly waking up to.