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Does Fibre on Demand break Ofcom rules on broadband contracts?
Thursday 04 April 2013 11:57:41 by Andrew Ferguson

The Fibre on Demand product has generated a lot of interest, though probably very little from those who are looking for the cheapest broadband deal, most interest is coming from those who work from home and businesses who want the reliability of a full fibre connection, in addition to the improved speeds and at a price point considerably less than current Ethernet and leased line services.

There are some points often missed when talking about the new Fibre on Demand service and a big gotcha is that Openreach has a three year minimum term for the product and is only offering the 330/30 GEA-FTTP product currently. The three year contract appears to breach Ofcom guidelines that say that for consumers the longest broadband contract should be two years.

So is Ofcom likely to step in and force a change? Well we would be very surprised, Openreach has been pretty clear when talking about Fibre on Demand that they are aiming it at the business community, which is more used to longer term contracts for various services. We asked Openreach about the minimum term, and they pointed out that communication providers can repackage the product, so that a two year term is possible by structuring the monthly rental price accordingly.

There are some common questions about Fibre on Demand, which we put to Openreach:

  • My cab is not FTTC enabled, but next door is on a different cab that offers FTTC, can I order FoD?
    When CPs (Communication Providers) check the availability of FoD for a premise the Openreach systems will check whether the premise is served by an FTTC enabled cabinet. If the premise is not served by an FTTC enabled cabinet then the CP will not be able to raise an order for FoD.
  • I am on an exchange only line near to a street cabinet will I be able to order it?
    Exchange Only lines are not served by FTTC enabled cabinets, so your CP would not be able to place an order for FoD to be delivered to your premise. We are of course exploring alternative solutions for exchange only lines that currently cannot support fibre broadband.
  • There are two cabs offering FTTC in my area, but I am served by one that is a 1km away, when a closer one is available, will FoD be run from the nearer cabinet?
    To provide FoD we build the fibre network from the NGA Aggregation Node to the premise, not from a cabinet. We will build from the nearest Aggregation Node to the premise.

The high costs on installing fibre on demand are obviously a barrier to many, but the long minimum term may also dissuade many small businesses that only have short term leases on premises. The monthly costs are not going to be small either, the price cut of the 330/30 service to £38+VAT from Openreach will help, but we will be very surprised if any provider offers the product for less than £80+VAT a month, this is because of all the other costs involved such as the wholesale network between the fibre handover node (exchange) and the providers own network, and the extra admin of handling the original installation. We would not be unduly surprised if we saw monthly prices of £130+VAT and that would still include usage limits.

The hope that Fibre on Demand might lead to full FTTP becoming more widespread amongst the home worker and tech startup community may fade once the reality of the costs become apparent, the general economic climate means that many people are reluctant to avoid long term financial commitments. Perhaps in 5 years time the picture will be different, as Openreach may be seeing enough take-up that prices can be nudged down, and by 2028 we just might be seeing FTTP becoming a price option that is very close to the cost of a new copper based line.

We sincerely hope the politicians do not use Fibre on Demand to claim the UK has full fibre (FTTP) access (once fully FoD launched will be available to over half the UK, and two-thirds in 2014, rising to something like 85% to 90% in 2015). If the install fee was in the £150 to £250 region with monthly costs in the £40 to £50 region and a more standard 18 to 24 month term applied we might support their claim, but as the new product stands it is just another option alongside Ethernet based services, beyond the reach of the normal household budget and many non-IT related small firms.

Comments

Posted by mikejp over 4 years ago
NB Two-part post due comment length restrictions

Help! As a simple person, doesn't number three negate numbers one and two?

1) ......... the Openreach systems will check whether the premise is served by an FTTC enabled cabinet. If the premise is not served by an FTTC enabled cabinet then the CP will not be able to raise an order for FoD.

2) Exchange Only lines are not served by FTTC enabled cabinets, so your CP would not be able to place an order for FoD to be delivered to your premise...........

Posted by mikejp over 4 years ago
Part 2

3) To provide FoD we build the fibre network from the NGA Aggregation Node to the premise, not from a cabinet. We will build from the nearest Aggregation Node to the premise.
Posted by ryant704 over 4 years ago
I don't get it, on the first 2 questions they refer to the cabinet then on the 3rd question they just ignore it...
Posted by neil123 over 4 years ago
FTTX NGA aggregation node is typically very close to a Openreach Cabinet and is typically under a box in the ground.

Openreach doesn't deal with end users they deal with CPs.

Neil.
Posted by andrew (Favicon staff member) over 4 years ago
The presence of the FTTC cabinet is a filtering system to avoid lots of orders from people who have no AggNode nearby.
Posted by GMAN99 over 4 years ago
"We sincerely hope the politicians do not use Fibre on Demand to claim the UK has full fibre (FTTP) access (once fully FoD launched will be available to over half the UK, and two-thirds in 2014, rising to something like 85% to 90% in 2015)"

Tricky one, if there's a product and its available, technically it counts. When do you start including it in the figures, when people start buying it? That can't be right. FTTC uses homes passed, FTTPoD will do the same?
Posted by GMAN99 over 4 years ago
I do understand your point though, like I say its a tricky one.
Posted by andrew (Favicon staff member) over 4 years ago
There is no way that a home should be counted as passed if it JUST has the aggregation node.

The 8 to 12 homes that have the manifold installed once one person has ordered FoD, maybe, but they still have a steep order and monthly charge to face.

Posted by Horizon911 over 4 years ago
GMAN99, I agree.

Fibre will be available and as yet, the price is unknown to us the customers. To suggest its a failure before its even started, is a little premature.

BT and Sky, at the very least, are rolling out full linear IPTV services. If they market a triple play fibre on demand package at the right price, this could take off on in a shot.

As the article says, the CPs will repackage the Openreach product, ie perhaps 330/30 will be split into three bringing down the price for the CP and customer.
Posted by undecidedadrian over 4 years ago
To be honest if I could get an install charge in the £500 region I would sign up for a 3-5 year contract.

The ISP's and OR need to make money on FTTPoD and they can't just make a loss on the product otherwise it will have no long term prospects.
Posted by GMAN99 over 4 years ago
Hmmm so how can it be worded then? Full FTTP will be available to millions who want it.

It has to be measured somehow
Posted by andrew (Favicon staff member) over 4 years ago
Not sure that splitting 330/30 into three will help much, you still have the £38+VAT and WBC or backhaul cost to add.

Plus to meet consumer law the three year term has to be costed over two years or falls foul of Ofcom guidelines and EU law.
Posted by driz over 4 years ago
I would be OK with a 3 year contract if my contract were with Openreach, and I was able to pick my ISP independently of that contract.

Not prepared to be stuck with the one ISP for 3 years though.
Posted by mikejp over 4 years ago
"The presence of the FTTC cabinet is a filtering system to avoid lots of orders from people who have no AggNode nearby." - any chance of that in English, Andrew - and what about my query? How is that explained?

If you are not served by a FTTC cabinet, bad luck, but FTTP has actually got nothing to do with cabinets?????
Posted by Horizon911 over 4 years ago
@andrew, the CPs already have the backhaul costs from the exchange, FoD, I don't think, adds additional cost to what they already have to pay for.

CPs will no doubt sign much longer contracts with Openreach than three years. And with CPs offering triple play FoD products, I'm sure they make their pennies somehow.
Posted by Horizon911 over 4 years ago
@GMan99, No of course its not full FTTP. I was just saying that the article appeared to infer that FoD was dead in the water before it has even launched.

No one knows, including CPs, what the costs to cutomers of FoD products will be. Until we know that, no one can say how sucessful, or not, FoD will be.
Posted by andrew (Favicon staff member) over 4 years ago
We know the cost of installs, standard fixed of £500 plus variable.

We know its £38+VAT per month for three years for the 330/30 product. If BT Retail can do it unlimited for just a few pound more than their existing 160 Meg service then I am willing to be surprised.

Posted by andrew (Favicon staff member) over 4 years ago
But the price of other providers who offer FTTP is in the realm of £100 per month, without the extra complications of Fibre on Demand.

Just being realistic, rather than making people think it will be appearing for £39.95 a month including VAT in 3 weeks time.
Posted by Horizon911 over 4 years ago
If someone like Sky operates like they have with their satellite business, ie subsidising boxes and install costs, FoD viable to customers. As undecidedadrain says, at £500 install costs, I'd bet that would interest a lot of people.

And as for contracts, if you have just paid £500 install for FoD, there doesn't need to be three year contracts. You've paid the dosh, so its unlikely you will jump ship anytime soon.
Posted by Horizon911 over 4 years ago
@andrew, I agree. I don't see FoD being available for a stupid price. But with the likes of BT getting premiership football rights and their long term intention of distrbuting tv solely down their fibre lines and ditching freeview altogether, I am sure BT and Sky and possibly others, can make a FoD triple product available at under £100 per month.
Posted by Horizon911 over 4 years ago
@mikejp, FTTC was the method that BT chose to make fibre available and afforable for the masses. A stepping stone, if you will. This enabled BT to put fibre much closer to people's homes and still make money.

Of course FTTC is nothing to do with FTTP, but as said, it enabled BT/Openreach to put fibre closer to people's homes and be commerically viable.

Number 3 does not negate the other first two points.
Posted by andrew (Favicon staff member) over 4 years ago
Triple play from Sky already costs very close to £100 a month, once you add up their product pricing for Movies and Sports. So add the costs of FoD and other than selling it to pubs, not sure what market is, and for big sports events a live feed over satellite is cheaper.
Posted by Horizon911 over 4 years ago
Lets wait and see what the CPs do with FoD, if anything. Then we can argue whether its expensive, cheap, a total waste of time etc at that time.

With ultra hi-def tv round the corner and more people using iplayer (VoD) services, a fast fibre line will become the norm in the not too distant future, not the exception.
Posted by MCM999 over 4 years ago
Meanwhile those of us on EO lines and surrounded by FTTC enabled neighbours continue to be stuffed. BT continue to "think about a solution" whilst ignopring the obvious. Sticking a cab and an FTTC twin outside an exchange isn't going to help the significant number of users with long EO lines. For example our late 1980s development of 75 properties in central London where the exchange is over 2Km away.
Posted by adslmax over 4 years ago
BT Wholesale shouldn't selling FoD for home users who already got FTTC. Pointless.
Posted by FTTH over 4 years ago
Does the Cab really not feed FoD?
If they are not housing the GPON ONT in the street, then what is the point in going through that phase.. Crazy.
Essentially everyone will transition to FTTP and the cabs will be pulled out?

Madness.
Posted by tommy45 over 4 years ago
@Horizon911: If BT retail or Sky where to offer FOD @ an affordable price they would certainly get plenty of orders,And yes they wouldn't need to provide 330mbps at first, it's as speed isn't for most a priority 100-150mbps would sufice, as long as they maintained an unlimited product failing that one with a realistic usage cap, of say 400gb peak per month and unmetered off peak, I for one would sign up as it would provide hopefully a low latency free from all the issues that my adsl has suffered from
Posted by adslmax over 4 years ago
It will worrying times for all FTTC cabinet to burn out and congestion easily if FoD using a feed from their FTTC cabinet.
Posted by Dixinormous over 4 years ago
@FTTH the ONT is on the subscriber's property. If you're thinking of the OLT that lives in the serving exchange, not the cabinet.
Posted by Dixinormous over 4 years ago
@adslmax FoD doesn't share capacity with FTTC - there is plenty of documentation available.
Posted by andrew (Favicon staff member) over 4 years ago
The fibres feeding the FTTC cab is point to point.

The fibre of FoD is GPON.
Posted by callmeleroy over 4 years ago
Eo lines ignored just because it makes admin more convenient #btlolz
Posted by bezuk over 4 years ago
Worth pointing out/confirming with Openreach that FTTPoD is completely off limits to those of us in flats/apartments, even if served by an FTTC enabled cabinet.

I get this from the last paragraph here: http://bit.ly/Z4Vld5

Not sure how they're going to get anywhere near 90% by 2015 unless they find a solution for flats. I'm sure the % of the pop that lives in flats is higher than that.
Posted by andrew (Favicon staff member) over 4 years ago
The 90% by 2015 is for a 25 Mbps or faster service, or 30 Mbps depending which week it is.

So can generally be met by FTTC.

Posted by dandodex over 4 years ago
@callmeleroy Eo lines ignored just because it makes admin more convenient #btlolz

Exactly, this was my fear, all non-EO lines in central London will be FTTC enabled by end of year, big pockets of EO lines all over central London (estimated at 10%), none would be further than 100m from an NGA aggregation point. Admin decision to ignore them.
Posted by dandodex over 4 years ago
What happens with central London? 10% of lines estimated to be EO. No BDUK funding for us. The Superfast Urban Broadband Fund will do FTTP around Tech City (Old Street) and install some WiFi in Westminster.

It appears like there is no plan for EO lines in London while money is spent in BDUK solutions for rural britain.

Virgin Media doesn't cover my street either. Shall I move from EC1V to the Highlands to get good broadband?
Posted by andrew (Favicon staff member) over 4 years ago
EO lines may appear ignored, but they have done some trial work in Cornwall so know what to do, and there is a smaller 48 line DSLAM as an option.

The amount of work going on means that the easy jobs are being done first, so if I was to guess not until 2014 will EO lines see much progress.

Who knows once FoD has settled in they might allow it for EO in some cases
Posted by bezuk over 4 years ago
The combination of EO line and flat (especially new builds) will continue to be problematic.

I'd love to know how many people are affected by this nationwide; at least 8 new build blocks in the town centre where I live are all EO - 500-1000 homes.

I've pointed out to the Superfast Surrey project that they won't get to the promised 99% unless they find a solution for these properties and am waiting for a response.
Posted by nerdmeuk over 4 years ago
@adslmax "BT Wholesale shouldn't selling FoD for home users who already got FTTC. Pointless."

Really?

My neighbour is served by a recently replaced pole and gets > 20Mb, we get < 3 Mb. There is no way that Openreach are going to update the late 70's/early 80's underground copper (aluminium?) while-ever they still consider it 'serviceable'. FTTP from our iminent Aggregation Node will cut all the dodgy cabling out. We'll just have to see when our cabinet goes FTTC if things improve but I would seriously consider FTTP on the basis of a medium/long term investment.
Posted by chrysalis over 4 years ago
Note openreach gave answers that contradict themselves, if a neighbour can get FTTC but you cant, FoD is decline dyet they state its not built from the cabinet, so the question is why does FTTC have to be available on the cabinet to order?
Posted by andrew (Favicon staff member) over 4 years ago
Because it helps to filter out those who are miles from cabinet

Particularly in the early part of rollout
Posted by herdwick over 4 years ago
The technical solution for blocks of flats is simple - FTTB and a VDSL DSLAM in the basement or ethernet networking built in.

Openreach have a "greenfield" FTTP solution the developers could take up.

What we need to get away from is the developer / builder riding off into the sunset leaving Openreach to find a solution that suits them best.
Posted by cyberdoyle over 4 years ago
What about the excess construction charges for homes a couple or 10 km from the cabinet/AN.
has anyone managed to get a quote yet? These properties will count as having access to FOD but will never manage to afford the charges? The people who can get it for £500 probably wouldn't need it yet, their fttc will be an upgrade that will pacify for a year or two.
Posted by GMAN99 over 4 years ago
There are people on FTTC that are 10km from their cabinet?

Where?
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