Examination of witnesses (Questions 271
- 279)
TUESDAY 19 DECEMBER (MORNING) 2000
MR PAUL
MARKHAM, MR
MARK DAECHE,
MS NATASHA
HOBDAY and MR
PAUL WORMS
Chairman
271. You have seen how we operate, Mr Markham.
Would you introduce your colleagues?
(Mr Markham) Thank you very much for the opportunity
to present our evidence. We are a combined group of both new entrants
to the United Kingdom and existing telecommunications operators
in the United Kingdom and probably represent a diverse set of
business plans ranging from internet service provision to regional
operators of telecommunications through to new DSL start-up companies.
I am Paul Markham. I am the Commercial Director of one of those
new start-up companies called OnCue Telecommunications. I am joined
by my colleagues from Atlantic Telecom, Mark Daeche and Natasha
Hobday, and by Phil Worms from IOMart which is a regional operator
working in Scotland. Our submission to the Committee was also
supported by other operators which are named in the paper, those
being Versapoint, who represent a combination of a new operator
to the United Kingdom with some international experience in the
USA and throughout Europe as well as Easynet who are also a very
large internet service provider operating successfully within
the United Kingdom.
272. It is interesting that you have come together
as a group from a diverse range of backgrounds. One of the things
which we were conscious of is that we have got a diverse industry,
BT and Oftel, and there has been a failure to agree terms of reference
almost. Would it be right to say that there were faults on all
sides, that perhaps there were too many voices shouting at different
levels in different directions, but that perhaps now a consensus
is beginning to emerge? What do you think was the reason for the
disagreements that took place at the beginning? We are not trying
to apportion blame but there have been a lot of allegations made
and we are trying to get a handle on that.
(Mr Markham) The right thing to do is to understand
some of the context in terms of how the process has taken place
to date. The operators clearly got together as a group at their
request and Oftel's request at the end of 1999 to form some various
representative bodies to begin the process of negotiating how
this would take place with BT. The first premise we have to understand
is that this was based upon an environment within which a group
of operators who, as you rightly state, were going to have differences
would negotiate with British Telecom with probably a very slim
and slender set of policy frameworks set up at that time. Therefore
the whole period of the year 2000 has been taken up in the early
part of that with beginning to put some structure in place whereby
those operators come together and share opinions; secondly, where
Oftel in probably, it is fair to say, three-quarters of the first
half of 2000 participated in a low key way within those groups
as advisers, observers, that kind of environment. Earlier on we
talked about the environment within which what has actually caused
the change within the last few months and our opinion clearly
is that that has been brought about because of the enforcement
of the EU directive, whereas up until the year 2000 there was
some potential major disagreement between BT and the operators
in that while BT was marching to a July 2001 time frame for the
start of this project the operators were seeking to bring that
forward by a substantial period of six months to maybe January
2001. You will probably understand that with the scale of this
project and the resources and the issues associated in getting
access to the exchanges, some of which have been talked about
earlier, you really have to start that very early and it is probably
fair to say that a lot of the period of 2000 was spent in trying
to get some of the basics agreed with BT in an environment where
it was exceedingly difficult to get them to agree to those basics,
such as, what space is available on exchanges? These are the target
exchanges that the operators want to go to, and there were substantial
forecasting processes we put together to submit to BT in January
2000, June 2000, September 2000, before we had any indication
whatsoever of BT's willingness to support going out and surveying
sites and finding space.
273. Do you think that Oftel are cracking the
whip with BT sufficiently hard?
(Mr Markham) It has improved and one thing that has
to be said to put the record straight is that from September this
year the operators put to Oftel the proposal in August that Oftel
should take a proactive chairmanship role on these interested
groups. Up until that date that had not been done and I think
Oftel were slightly reluctant to do that prior to a situation
where the condition of entry was in place and there was a likelihood
of which direction the new regulation would go in to give them
potentially the ability to use more mettle and stern powers to
progress some of the issues which frankly took weeks and months
to negotiate. We know because various of us at this table have
been heavily represented in those groups and indeed today, whilst
I am not representing that group formally, I do chair the commercial
group that has been in the heart of that discussion in negotiation
since the early summer, and so I am very well versed in the process
that has taken place to get us where we are today.
Mr Chope
274. Can you tell us exactly what you think
your main concerns are about the Bow-wave method of allocation?
(Mr Markham) In entering into that process the operators
had no indication of which sites had space in them. There was
confusion around the so-called black list which was based upon
a previous product description created together with BT which
had been very difficult to create. Secondly, therefore, that led
to a disagreement which you have rightly pointed to earlier on,
firstly, if you were to build sites with tens of operators wanting
to build sites, which ones would you start first? The previous
proposition suggested in the guidelines had been first come, first
served, ie, at midnight at 1 September, whichever order was taken
off the fax first for hundreds of exchanges got those, which was
purely nonsense. The operators therefore had, through self-regulation,
to come to an agreement between themselves about (a) where exchanges
would be surveyed first, because up until that point in time we
had no survey information, and (b), once they had been surveyed
how would individual space within those exchanges get allocated
to an individual operator? It was fair to say that there was a
significant difference of opinion based upon different operating
business plans that operators had for the type of (a) technical
requirement they felt they needed in terms of space for equipment
and associated power, air conditioning, and those kinds of things,
to go with that, as well as (b) where that should take place and
how it should be allocated. The thing that I referred to earlier
about the presence of operators trying to resolve that between
themselves in a self-regulation, "get together and determine
this yourselves" way was put into Oftel's hands in August
so that we did not delay the process. We got the sub-optimal process
started whereby the non-top priority exchanges were chosen to
go through the first Bow-wave round.
275. How does that compare with other countries?
(Mr Markham) The real issue here is that other countries,
in particular we are talking to Germany at the moment, have started
much earlier and therefore have not signalled to any extent that
the scale of the process and the time frame within which it could
be carried out would be very extensive, and so the fact that the
United Kingdom is behind in the context of opening up exchanges
meant that you had this bow-wave of operators wanting to get in,
which is on the one hand a good thing for competition, but it
spins back to the process because the country is potentially 18
to 24 months behind some other countries in starting it.
(Mr Daeche) We had availability into essential offices
from the beginning of 1998 and there are very well defined processes
in Germany as to how you get into essential offices. For instance,
if I identify an essential office I want to go into I submit a
request to Deutsche Telekom who have 20 days to come back to me
and tell me whether space is available and how much that will
cost and so on through the process until you are actually handed
the keys. From the time that we identify an essential office to
handing over the keys to date is about 21 weeks. The point is
that the process is well defined. What we need in England is a
transparency to the process and to the time and to the resources
that are committed to make that happen. Otherwise I cannot get
a commercial business plan together to make it work.
276. On Friday I had the privilege of visiting
the exchange in Christchurch and one of the people from British
Telecom who was showing me round said he had been to look at this
system operating in Germany and he said that in Germany, unlike
in the United Kingdom, there would not be any provision of air
conditioning, there would not be any provision of back-up power
in the event of power failure, and there would not be anything
like the overall complete service that BT are providing in this
country.
(Mr Daeche) That service may be a little over the
top because heat dissipation, power consumption and so on are
all issues that are addressed within Germany. We look very carefully
at the temperature requirements within our kit and the rooms and
the space that are available and if equipment goes over some heat
dissipation then obviously air conditioning becomes mandatory.
Those issues in fact are addressed in Germany and I find it strange
that you were told that.
(Mr Markham) Indeed I would add to that that the operators
with BT have during this period of 2000 discussed what is a best
start point for an appropriate environment not based upon air
conditioning but based upon a simple air cooling environment,
and indeed without back-up power that is discussed as the basic
product definition in the first hostel point, so we have been
accommodating, let us say, in the sense that to understand that
in order to get this process started it is correct to draw a base
line in terms of what the minimum entry level is which is needed
to operate within those exchanges.
277. Mr Worms, have you any views on this?
(Mr Worms) Not really. My understanding, certainly
in France and Germany, is that there is a defined process and
I think that is the point of the question. To be quite honest,
from where we sit the number of fire extinguishers and first aid
boxes and the number of coats of wall paint are obviously relevant
but there are bigger issues to flesh out.
(Mr Markham) A key point on that is that in the United
Kingdom with regard to the actual timetables to bring the trial
sites on stream through the process of (a) defining in theory
what is expected in the collocation site to (b) understanding
that in practice, particularly in the context of how it relates
to the guidelines set by Oftel on issues to do with, for instance,
recovery of rooms, issues to do with what is space that should
be sought to be used for collocation, a lot of those have not
been worked through until recently and it has only been in the
last eight weeks that we have begun to get a process whereby there
is more proactive involvement. That clearly relates also to the
sense that now we are seeing a situation where the triallists
were chosen in April this year and those trial sites are just
beginning to be handed over during this month and the early part
of 2001, and the practicalities therefore of working with BT to
understand (a) the price at which one is to be a triallist in
one of those sites and (b) what has gone into the engineering
to create that are only just beginning.
Mr Butterfill
278. Can you tell us what sort of kilowattage
is actually required for a typical BT station at the moment and
how much you are likely to add, each of you, as you go into that
room in terms of power requirement?
(Mr Daeche) Not off the top of my head but the size
of the equipment power consumption is minimal compared to the
equipment that will already be in the exchange, for instance,
a switch. We are talking in the main of one rack of equipment
and we are talking of something like ten light bulbs' worth of
heat dissipation for that equipment. It is minimal.
279. So the heat dissipation is not huge?
(Mr Daeche) We operate in central offices across Europe
without the need for air cooling.
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