After conducting an industry consultation Openreach(BT) has today claimed that ISPs offered “broad support” for their proposal to conduct a “large scale” rollout of Fiber-to-the-Premises (FTTP) ultrafast broadband across the UK, which could in theory reach 10 million premises by 2025.
At present most of Openreach’s network across the United Kingdom remains dominated by slower hybrid fibre (FTTC) technologies, such as their ‘up to’ 80Mbps VDSL2 and the newer ‘up to’ 330Mbps G.fast service (only just starting to rollout), which mix fibre optic cable with less reliable copper lines that suffer signal degradation over distance (i.e. slower speeds on longer lines). FTTC solutions are quick to deploy and comparatively cheap.
On top of that the operator is also in the process of deploying their 1Gbps capable “full fibre” network, which uses significantly more expensive Fibre-to-the-Premises (FTTP/H) technology, to reach 2 million premises by 2020 (mostly new build homes and businesses). However the Government and Ofcom have been calling for more FTTP and so in July 2017 Openreach launched an industry consultation (here).
The consultation proposed a strategy that would aspire to reach 10 million premises with FTTP by around 2025, which they estimated could cost £300-600 per premises passed (total of between £3bn to £6bn); plus £175 – £200 to connect a customer. However they warned that this could only be done with support from the industry (ISPs) and key regulatory changes.
Openreach’s List of Enablers for Larger Scale FTTP
- Greater collaboration, including new investment, risk and cost sharing models.
- Agreement on how mass migration of customers onto the new platform can be achieved (Openreach proposes that all customers should be migrated over to the new network as quickly as possible after it has been built in a given area).
- Reducing logistical barriers, like improved planning and traffic management processes.
- Agreement on the right way to spread the costs of a FTTP investment.
- A legal and regulatory environment which encourages investment.
The challenge here is with the difficulty of marrying the industry’s many competing interests and turning that into some sort of workable agreement, which is essential in order to avoid future legal and competition disputes. Ofcom has similarly said that a “key test” of their new regulatory approach (Strategic Review agreement with BT) will be whether or not Openreach can “do a co-investment deal with another operator“.
Openreach’s update doesn’t announce a specific agreement and instead sets a more general tone for their future direction, which still has many hurdles to overcome. Apparently “most” of the ISPs that responded (e.g. Sky Broadband, BT, TalkTalk, Vodafone etc.) said they “expect Britain’s existing broadband technologies to provide enough speed for the majority of consumers,” but no consensus was found on when Gigabit speeds will be needed.
Nevertheless the ISPs did agree that “ultimately a large-scale FTTP network will be a necessity” and, given the time-scales involved in building that network, there is said to be “strong support” for Openreach to start the engineering work required “sooner rather than later“. Several ISPs also expressed interest in sharing the risk of investment, albeit in return for “preferential terms on the infrastructure that’s built.”
However Openreach has so far not been able to reach agreement on how the investment costs can be fairly recovered, as well as any required changes to the regulatory environment (e.g. changes to business rates and wholesale rules/charges) and the operator says that it is also working to prove that it can build FTTP “at scale for a competitive cost” (their on-going rollout should help with this).
Interestingly Openreach said that ISPs “acknowledge that charging a large premium for ultrafast services alone is unlikely to succeed, but question how much more customers will be willing to pay for the same headline speeds on a better platform.” Rival ISPs may be unwilling to accept a solution that doesn’t enable them to offer a mass market affordable package or support some degree of wholesale control to help differentiate their products
The consultation also found strong support for a “switchover” approach to FTTP that would migrate all customers onto the new platform – and retire the old one – as quickly as possible after it has been built in a given area. But they warned that the “operational complexity and cost of such a programme would be significant.”
Openreach now intends to develop a new network strategy based on the feedback, which they hope to publish by the end of 2017 and this will then be subject to a further consultation.