This sounds like another one of those deals of business convenience, or perhaps a mere technical exercise, but dive a bit deeper and there’s more going on here. Here’s why.
The problem with UK broadband is it has three business models to take on the historic incumbent BT, each with different problems. You can build your own network from scratch (Virgin), you can get into local loop unbundling in a big way (Talk Talk and a few others), or you can simply resell someone else’s network, typically BT’s (everyone else).
Building your own network gives you control, but will tend to lead to investment only in places where people live such as large conurbations. What about people who don’t live there? They have to choose between the other two options, unbundling or resold BT. The former is expensive and that’s before you get to the technically tricky issues of building the core of the network. Orange chose this route and has struggled ever since.
The final option - in some cases the only option for some people - is to buy a resold BT package. From my experience, these offer perfectly serviceable basic Internet access, but lack the throughput, latency and download flexibility to meet the demand for new applications such as movie downloading, online gaming and video. I can’t see that it does the market or the companies themselves much good to simply hand money to BT, charging a tiny premium to the customer.
From the announcement, Orange appears to have has decided to take a hybrid route, effectively integrating itself with BT’s network in a fashion that sounds identical to that of the BT-owned ISP, PlusNet. This is not the same as reselling because the two networks will effectively be the same, which will allow Orange to have real control over what happens to its customer’s traffic when it enters the core of BT’s pile of fibre and switches.
I’m hopeful that it will work because it works at PlusNet (and perhaps Vodafone too), which despite being as inefficient as everyone else when it comes to some aspect of service provision, does deliver generally good latency on its Premium Broadband service. What BT piggybackers such as PlusNet need, however, is some competition.
I sincerely hope Orange is ambitious enough to offer that because broadband in the UK remains too slow, too expensive and lacks the competition to drive real investment beyond the drab utility model.
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