What’s up with… BT, fair share in the US, NTT Law

• BT’s CEO makes FTTP tax relief appeal
• The fair share debate heats up in the US
• Japanese telcos unite against NTT Law repeal

In today’s industry news roundup: Philip Jansen, who is coming to the end of his tenure as BT’s CEO, has made an appeal for permanent tax relief for fibre broadband network investments in the UK; US senators want the big tech firms to contribute to the Universal Service Fund; KDDI, Rakuten Mobile and SoftBank lead a large group of Japanese companies that oppose the repeal of the NTT Law; and much more!

Philip Jansen’s time as BT’s CEO will be remembered by many in the industry as the fibre broadband rollout era, a move that will no doubt stand the UK national operator in good stead in many ways (economic and environmental). In his final weeks in the job before he hands over to his successor, Allison Kirkby, Jansen (pictured above) has made an appeal to Jeremy Hunt, the UK’s chancellor of the exchequer (the government’s chief finance minister), to make permanent the current temporary UK tax incentives that made the operator’s fibre-to-the-premises (FTTP) rollout an economic possibility. In this blog, Jansen writes that making the tax incentives permanent would be a “game-changer… that would give businesses like BT Group genuine long-term certainty to plan and shift the investment environment in Britain from good to great. I know the chancellor is considering this as one option for next week’s autumn statement. He has said he would like to take this step when the economic conditions allow. With billions of pounds of potential investment at stake, it’s also important to ask whether, as a country, we can afford not to. This one measure could have a transformative effect in getting Britain building: Not only digital infrastructure but much else besides.” One to watch out for, then, when Hunt makes his autumn statement on 22 November. And, given the timing, we might hear more about this when Jansen takes the hot seat in a fireside chat at TelecomTV’s upcoming Great Telco Debate on 7 December.    

Still with BT…. the UK telco has reiterated its plan to reduce its number of active local exchanges from the current 5,600 to around 1,000 over the next six years or so and is starting the process with three pilot exchanges that will be decommissioned next year (one in March, the other two in September). The move is complex as not only is it tied to the sunsetting of copper lines as part of the broader switch to fibre – which in turn affects the way in which fixed-line voice services, in particular, are enabled (the switch to ‘digital’ voice services that run over broadband lines is already underway) – it also impacts the many UK ISPs that, following years of “unbundling” processes, have their own equipment installed in BT’s exchanges. But the move also begs the question of what will happen to the 4,600 exchanges that BT will no longer require for the delivery of its services – that’s a lot of buildings in prime locations that are very valuable. Traditional national telcos used to be jokingly referred to as real-estate companies that offer communications services – in the endless quest for new revenue streams, branching out into estate agency might be an option.     

The so-called fair share debate has been raging in Europe for some time now but it’s a hot topic also in the US, where a bipartisan law, the Lowering Broadband Costs for Consumers Act of 2023, has been introduced by three senators who want big tech players to help pay for rural broadband infrastructure. The act, if brought into law, would enable the US Federal Communications Commission (FCC) to “require proper contributions to the Universal Service Fund (USF) from edge providers and broadband providers. Requiring edge providers to cover associated costs for rural fibre networks will reduce the financial burden on consumers and rural providers while strengthening broadband connectivity throughout rural America,” noted Republican senator Markwayne Mullin in this announcement. Edge providers are, according to the proposal, those that transmit 3% or more of the data traffic running over US communications networks in a year and which generate more than $5bn a year in revenues in the US – essentially, the same companies that have been labelled as the large traffic generators (LTGs) in Europe, such as Alphabet (Google), Amazon, Apple, Meta, Microsoft and Netflix. “Fair contributions to the USF from edge providers are long overdue,” stated Mullin. “Video streaming services account for 75% of all traffic on rural broadband networks. However, unrecovered costs from streaming companies are often shifted and borne by small rural broadband providers. Available, affordable internet will close the digital divide and increase telehealth, educational, and employment opportunities for those who previously went without. Rural Oklahomans deserve the same connectivity as those living in urban areas.” The pressure is building on big tech, but it is still hard to see how fair share rules will be enacted anywhere in the world without protracted and costly legal battles. One thing for sure, though, is that this topic isn’t going away any time soon.  

The potential scrapping of the NTT Law by Japan’s ruling Liberal Democratic Party has sent pulses racing and attracted widespread opposition from more than 180 companies, including NTT’s main mobile rivals KDDI, Rakuten Mobile and SoftBank. The law restricts foreign ownership in NTT, prevents the merger of the telecom giant’s fixed line units (NTT East and NTT West) with mobile division NTT Docomo, restricts the range of business areas in which NTT can operate and obliges NTT to disclose the outcomes of its R&D programmes. The Japanese government is reportedly keen to explore the potential sale of some of its 34% holding in NTT (currently worth about $36bn) to bolster the national coffers, but the national operator’s rivals have published their main opposition points and urged lawmakers to “conduct more careful policy discussions”. “It is crucial that discussions on the NTT Law be conducted in a manner that avoids any potential harm to Japan's national interests and its citizens' daily lives… Rather than abolishing the NTT Law, if revising the law is considered, the signatories believe that the entire industry can hold positive discussions on the future of Japan’s telecommunications industry,” noted the group of rival companies. Read more. 

- The staff, TelecomTV