Uncommon Wisdom

Apr 19 2010   12:25PM GMT

BT/Orange broadband infrastructure deal — future indicator?

Tom Nolle Tom Nolle Profile: Tom Nolle

A deal between Orange and BT may be the start of a wireline trend that, at least in Europe, could redefine broadband ISP services. Orange is outsourcing its own infrastructure to BT in return for a virtual network operator (VNO) deal across all of BT’s service geography, a move that will expand the area where Orange can offer service and presumably reduce its ongoing costs.

The new relationship will test a couple of theories: One that broadband consolidation can produce enough economy of scale to make ISP services profitable; and the other that an ISP can be successful as a retail provider who uses wholesale infrastructure to actually deliver service.

Australia and the US are both dabbling with changes in the regulatory framework of broadband, and this new deal may be the best test of whether changes can succeed.

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