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Latest BT Results reveal ambition for 2 million FTTH premises
Thursday 05 May 2016 08:06:32 by Andrew Ferguson

A year ago BT Group announced the ambition for 10 million premises passed by ultrafast broadband using and now a year later and after Openreach survived the once a decade Ofcom review the group has announced more investment in Fibre to the Home. The new investment means that Openreach now has the aim of rolling out FTTH (FTTP) to two million premises by 2020, this is on top of the 10 million expected to use

The roll-out is going to be aimed at new build estates and high streets and business parks, and we believe the roll-out will be in addition to any FTTH deployed via the various BDUK projects. Speed wise with the Gigabit FTTP trial underway in Bradford we should hopefully see 1000 Mbps as an option aimed mainly at the SME sector, with targeting speeds of 300 Mbps to 500 Mbps.

While it could be suggested that the announcement is a response to Virgin Media making a 1 million FTTH commitment, the actual press release suggests that BT see the two roll-outs as complimentary and lays down the gauntlet for other operators to also invest and thus further increase the footprint of FTTH in the UK. The level of investment is reported to be £6 billion which covers both the FTTH and deployment and reveals the scale of the task ahead, even though the VDSL2 and fibre cabinet roll-out has moved fibre closer to some 25 million premises already via 75,000 cabinets.

So what does 2 million premises mean for the overall UK picture? As things stand today Openreach has FTTH available to around 260,000 premises so just under 1%, the extra roll-out will raise this to around 7%, and once the Virgin Media roll-out and other FTTH operators are taken into account the UK looks set to be on course to FTTH coverage of 12%. The technology neutral ultrafast definition (100 Mbps and faster) will benefit from the roll-outs and therefore we are expecting to maybe see the UK hit 75% by 2020 well up from the current 50.2%, the exact figures will all depend on how much all the different networks overlap.

On the more traditional results area, Openreach now has some 5.9 million premises connected to its GEA network of VDSL2 and FTTP, which is 23% of premises passed. The grant level is lower than previous quarters as £229m of grant money has been deferred due to the previously announced claw back mechanism. Capital expenditure for the Openreach arm was £376m, this is after gross grant funding of £54m (lower grant levels than last year due to £78m of grant money deferred due to the claw back mechanism).

BT Retail may have have upset some with the price increases last week and this is now rubbed in with the news that profits are up in the retail arm, apparently driven by areas like BT Sport and broadband. BT Sport the service that no one seems to admit to using has regular audience figures of 1 million for football matches, with a best audience figure of 2 million. The financials detail that two of the reasons for the price rises at BT Retail are improved engineer response times with a better care level purchased from Openreach meaning BT Retail customers should see an engineer 24 hours faster than previously and also moves to employ 1,000 more call centre staff in the UK for both BT and EE customers has cost implications. In figures BT TV has 1.5 million customers (up 66,000 in the quarter) and added 94,000 customers in the quarter, with 204,000 net additions on the Infinity range.

Openreach added 130,000 broadband connections in the quarter, and with upgrades there was 415,000 new VDSL2/FTTP connections in the quarter, 201,000 of the fibre connections were with providers outside the BT Group.

The first reactions from BT competitors is in and there seems to be a stark contrast to what Sky was saying a week ago about being comfortable working with Openreach.

"Today's statement shows that BT continues to see copper as the basis of its network for 21st century Britain. Despite BT's claims, it is clearer than ever that their plans for fibre to the premise (FTTP) broadband will bypass almost every existing UK home. This limited ambition has been dragged out of BT by the threat of regulatory action, demonstrating once again why an independent Openreach, free to raise its own long-term capital, is the best way for the UK to get the fibre network it needs.”

Andrew Griffith, Group Chief Operating Officer & Chief Financial Officer, Sky

To date neither Sky or TalkTalk have purchased the GEA-FTTP products from Openreach, this is thought mainly to be down to the small foot print and extra costs involved in paying for the cable link needed between the Openreach handover and the LLU operators network. This may change as with newer kit coming into play network operators will be able to buy just one link to cover VDSL2, and FTTP customers we believe with 1 Gbps and 10 Gbps options.

The question raised by the Sky statement is if other operators feel the same, how is the money to be raised to pay for the work to roll-out FTTP to the existing UK homes, and should this roll-out overlap with Virgin Media and others or explicitly avoid those areas? The other option is for CityFibre and others to expand their roll-outs and target homes rather than the core target of business and local authority contracts.

The full BT announcement on the extra investment is on the BT Group website and the full detail from the financial results is also on the BT site.

Update 12:30pm CityFibre has issued a response to todays news. It is an interesting response, particularly as which if the announced plans work out should deliver 300 to 500 Mbps to 10 million homes and be a foundation for further FTTP roll-out in 2020 to 2025. It is possible the two million premises of FTTP with a focus on high streets and business parks might bring competition to the model CityFibre has been busy carving out, but in the commercial world this should have been very obvious and is probably why CityFibre has generally only deployed its core fibre network to areas where a key tenant is on board, e.g. local council making extensive use of the network to connect council buildings on massive LAN.

"This announcement is simply a reluctant response by a sluggish incumbent to the tightening noose of regulatory scrutiny. While intended to grab headlines on infrastructure commitment, BT's announcement is largely signposting continued deployment of outmoded technology.

While any business constructing pure fibre infrastructure for our nation's homes and businesses should be encouraged, focusing on the entrenchment of an incumbent operator overlooks the essential contribution of alternative infrastructure builders like CItyFibre.

It is only through the growth of alternative operators and the stimulation of a truly competitive infrastructure market that the UK will see the innovation and better value services it so badly needs."

Greg Mesch, CEO at CityFibre

In a world that is easily dominated by Fibre to the Press Release we look forward to spotting actual live customers carrying out speed tests on all the different competing networks. For the BT Group they are in a difficult place, since do nothing they are beaten up, do something and its either not enough or they are being predatory and blocking competitors - so in the PR sense its an impossible battle to win.


Posted by TheEulerID 6 months ago
It never looked likely that BT would sit back and let VM claim the title for having the largest FTTP deployment with their Project Lightning announcements to deliver fibre to at least 1m premises.

There is also politics all through this in no doubt Ofcom will want to be able to point to credible FTTP targets.

I suspect that this might also be something of a disincentive to alternative network deployments on a truly mass basis, even with an improved PIA. Sky have effectively decline to play.
Posted by CarlThomas 6 months ago
Given they can afford £1.4 billion a year on Premier League rights alone if Sky are so disgusted they could try investing themselves.

VM are doing it. Hyperoptic and others will be using the modified PIA product.

Euler - spot on. Political response to VM alongside trying to pre-empt altnets using the improved PIA.
Posted by CarlThomas 6 months ago
All that said it's largely putting numbers onto previous vague references. It's not actually announcing anything new. Business parks, high streets and new builds.

The obvious implication is that brownfield residential will be, so it sounds way better at first impression that it actually is for home users.
Posted by TheEulerID 6 months ago
The current rate of housebuilding in the UK is around 150,000 a year. Unless that 2m properties is going to take until almost 2030 (at the current rate of build) it can't all be new builds and business parks are small numbers if you are counting premises.
So I expect some retrofit in certain areas, if only to keep the numbers up.
Posted by CarlThomas 6 months ago
New homes plus business parks plus commercial centres may well go some way towards the target.

I'm sure there will be a very limited overbuild, though I suspect that when you add 'high streets' which can certainly include a lot of commercial zones into the mix it will do a lot to get towards the target.
Posted by john (Favicon staff member) 6 months ago
There are of course a lot of residential flats above high street properties which could benefit or be counted towards the premises passed number also.
Posted by jumpmum 6 months ago
2m is better than none and indicates that at last the policy has changed for new builds from Copper to Fibre. I detect the Hand of the new OR CEO, Clive Selley, in this.
The existing 260k passed is quite a figure already, far more than anyone else and I suspect more than all the rest put together. I would love to know the take-up ( and what the spread of speed packages taken was).
Posted by andrew (Favicon staff member) 6 months ago
@jumpmum Plan was to work on the package/take-up figures independent of what any of the providers say. So far for services like VDSL2 and Virgin Media initial observations suggest our insight would not be massively wrong.

One issue with FTTH is if you offer a slower e.g. 20 or 38 Mbps service (e.g. Hyperoptic entry level and Infinity 1) since connection speed will nail that many will not feel the need for faster until they own a UHD TV or two plus want to download 50GB games really quickly.
Posted by Nightglow 6 months ago
It's sprat to catch a mackeral!
BT is just doing this to keep OFCOM happy,as BT don't want the Openreach split to happen.
Posted by doowles 6 months ago
BT simply are not going to do any FTTH rollouts until forced too, they are clearly betting on getting them through the next 10 years.

And what new build properties are you talking about? I checked last year all 17 sites in my area with new houses. Not a single one of them had any kind of fibre from virgin or or BT.
Posted by CarlThomas 6 months ago
@Jumpmum 260k is indeed quite a figure, it's pretty pathetic compared to our peers and looks far worse still if you strip out how much of that was subsidised by the taxpayer.

I believe Hyperoptic are at about 200k FTTB.

As far as others go, well, everyone else doesn't have ducts and poles already there, they have to dig which is the expensive part - see VM and how much they are spending on 4 million premises.
Posted by TheEulerID 6 months ago

In February Openreach announced that (subject to some caveats) that they will fund FTTH for new housing developments. This might include some elements of co-funding with developers if the costs of getting fibre to the site is disproportionate to the number of properties.
Posted by themanstan 6 months ago

Developers control the site...

They don't even have to select BT or VM as a supplier for telephony/broadband. They can choose a another... such as SeeTheLight, which provides FTTH, but with the caveat it is a total monopoly and you can't choose any other supplier.
Posted by mklinger 6 months ago
You can be sure that those that currently do not get superfast broadband will still be missed out.
Posted by 21again 6 months ago
I don't mind BT providing Ultrafast BB as long as they use their own/shareholders divi money and don't get any money from the public purse. As BT fsnboys keep saying don't forget they are a PRIVATE company. If you can get FTTC then the individual should be prepared to pay a bit more for their line rental as should those subscribing to BT TV, (rant over) :P
Posted by chilting 6 months ago
Why has it taken BT so long to roll out FTTP to new build estates?
This is something that should have been installed for new estates from the time when the local exchange got fibre.
Posted by themanstan 6 months ago
Because developers choose which services are put in... not BT...
Posted by CarlThomas 6 months ago
I imagine the fact that as recently as 2015 BT were telling developers FTTP in new build was still a trial wouldn't have helped.

Developers choose the service but it's up to Openreach to sell it to them. They only really got their act together and starting pushing FTTP in 2015.
Posted by CarlThomas 6 months ago
@themanstan IFNL build the networks and sell them open access. SeeTheLight are a retail provider that use them.

IFNL also connect into Fluidata's Service Exchange Platform and Fluidata sell wholesale access. They are the BTW to IFNL's Openreach.

Posted by _Mike_B_ 6 months ago
@themanstan "Because developers choose which services are put in... not BT..."

Yeah and that's where it's wrong. With new builds Ofcom should have regulated this properly years ago. FTTP should have been mandatory 10 years ago on new builds.
Posted by TheEulerID 6 months ago
It is not within Ofcom's powers to regulate what builders do. The are a market regulator and can only work within their legal remit. Planning regulations are properly the responsibility of local and central government, which is where those rules are defined. Ofcom could, of course, lobbied on that (maybe they have), but they can't dictate to builders.
Posted by godsell4 6 months ago
Planning for consent for new builds of 3 or more properties should have some conditions attached. Such as to assure the availability of FTTC of +30Mb/s or better. And Yes this should have happened years ago.
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