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New EU study on Gigabit deployment costs highlights labour variations
Monday 10 October 2016 12:00:53 by Andrew Ferguson

The big headline figure of €249 billion to deploy Gigabit FTTH or DOCSIS 3.1 across Europe is from one of the latest publications by the European Commission (research carried out by Analysys Mason) can be downloaded for free from the EU Bookshop.

Scenario E is the residential coverage with 1000 Mbps download speeds, the other scenarios explore different deployments, for example scenario A is the cost of deploying Gigabit connection to universities, schools, business parks and SMEs of at least 50 employees, SOHO and smaller SME would be connected via either wireless or fixed line solutions.

The report does consider the impact of existing commercial roll-outs, and thus the sum that the EU would need to find if commercial plans across the EU 28 don't change substantially would be €172 billion.

The standalone figure for the UK seems to be around €29-30 billion and thus has not changed much compared to the original 2009 figures that many still quote, though it is not clear how much of this would need be spending what the commercial operators achieve. The report does highlight that DOCSIS 3.1 (the next standard for existing cable broadband networks) is 10 Gbps capable and with UK commercial coverage for DOCSIS 3.0 sitting at just under 50% and increasing. Unfortunately this usually means the cheaper urban areas are almost totally covered already and the hockey stick of rising costs as you become more rural come into play, with urban areas managing to cost around €800 per premise, suburban €1000 and rural €2250.

The report while not giving a breakdown on the cost of labour in different countries and the time needed to install various components of a FTTH network does integrate these into a cost to deploy a metre of ducting in various countries. Romania is the cheapest at €13/metre, Poland €23/metre, Spain €59/metre, UK €62/metre, Belgium €108/m. These costs highlight the need to re-use existing ducting where at all possible and or alternatively opt for an aerial deployment that brings the EU wide total down from €249 billion to €116 billion.

The exceptional work of B4RN and its volunteer army demonstrate what can be achieved and how volunteer labour that is not worrying about profit and loss but rather serving a community can keep costs extremely low. The question for policy makers is whether there is some way to reproduce this on a scale that can deploy millions of premises of FTTH in a timescale that keeps people happy.

Comments

Posted by CarlThomas about 1 month ago
If you listen to BT you'd think it's E249 billion for the UK alone.

Not sure these reflect pre-existing ducting. BT can do millions of premises for well under 500GBP a pop where there's relatively new ducting in place.

Sky/TT managed to come in at 500GBP per prem in suburban areas with civils. VM budget 660-ish per prem for their build.
Posted by CarlThomas about 1 month ago
Just noted these numbers do reflect re-use of existing ducting. I was thinking replacing the copper in the ducts would be helpful. Can even use it to pull the fibre.
Posted by TheEulerID about 1 month ago
@CarlThomas

Utter, utter, utter nonsense. BT have never said anything remotely close to that figure. The problem isn't getting a return on a £200+bn, it's getting a return on £20+bn with about £3bn turnover on consumer.
Posted by TheEulerID about 1 month ago
@CarlThomas

And just how do you think you can pull out the existing copper and maintain a service whilst you get that fibre network working? That would take months. That's even given it's not even possible to do it on regulatory grounds.
Posted by TheEulerID about 1 month ago
Also, as your idea to pull fibre through using existing copper is such a good one, I suggest you patent it. Astonishing no other telco has decided to do it that way. So obvious.
Posted by Michael_Chare about 1 month ago
Does anyone know how much duct sharing between two different companies there actually is in the UK? My impressions is that it is not very popular even if legally possible.
Posted by andrew (Favicon staff member) about 1 month ago
Duct sharing currently is a small thing.
Posted by andrew (Favicon staff member) about 1 month ago
Also note that if report was written when you could get 1.3 Euro for every pound, then it makes a big difference to the 1.08 if you are lucky now.
Posted by TheEulerID about 1 month ago
The odd thing looking at other parts of the report is that the costs per rural property in the UK are estimated as being less than half that of Germany.

Indeed the costs for the UK rural area seem to be much lower than any comparable country.
Posted by andrew (Favicon staff member) about 1 month ago
All depends on how you define rural too, e.g. the last week has shown some using a definition that means 9% are rural, another 10.9%, another 23%.
Posted by gah789 about 1 month ago
Read the report a bit more carefully. The headline figures all exclude the cost of the final drop. They talk about 80%,.. coverage but that is only to the node or distribution point. Since a large part of the cost of fibre, esp in rural areas, is in making the house connection the totals are substantially underestimated.
Posted by CarlThomas about 1 month ago
@TheEulerID evidently your sense of humour fails when it comes to BT. It was sarcasm.

Using copper to pull fibre is being played with as far as twisted pair goes and is a settled technology with regards to HFC networks.

Apologies if I offended your sensibilities pointing out BT have zero interest in any serious investment in the UK. They could of course have been engaging Ofcom to retire copper but instead prefer to sweat it indefinitely, and took a technology, G.fast, and devoted R+D to reducing its performance in the name of deploying it more cheaply.
Posted by CarlThomas about 1 month ago
Keep looking through the report. You might be able to find some more to justify your own mindset.

BT made their decision to focus on shareholder dividends and mobile rather than investment in fixed line. They aren't the first and I'm sure won't be the last, though why random private consumers pop up to white knight for them is beyond me.
Posted by Somerset about 1 month ago
@Carl - so the 66% FTTC is not serious investment?
Posted by CarlThomas about 1 month ago
CapEx of less than £100 per premises passed, and covered basically from existing budgets? Not really.

The two cabinets here are bringing in incremental revenues of around £40k per year. The first one is probably paid for, the second most of the way there.

Even on considerably lower uptakes it's still averaging 30%+ nationwide, the initial 66% will pay for itself in very quick time.

By normal telecomms standards an insanely fast ROI.
Posted by andrew (Favicon staff member) about 1 month ago
Whats take-up rate in your area then?

Maybe more time should be taken to determine demand and only deliver to areas with proven high levels of demand.
Posted by CarlThomas about 1 month ago
Disclaimer: I am in a bad mood with my own VDSL at the moment.
Posted by CarlThomas about 1 month ago
The node serving here is on Huawei 288 line card 11 I believe, on a PCP passing ~630 premises.

Take up is well ahead of BT's expectations nationwide so evidently there were no issues with how demand was determined in the first place.
Posted by Somerset about 1 month ago
@Carl - so fast rollout and speeds not an issue for the majority?
Posted by TheEulerID about 1 month ago
@CarlThomas

Yes, I did know it was sarcasm, and my approach to fatuously presented arguments like that is to throw it back at face value. If you want to engage in a serious debate, put in some realistic figures. One of (an average) of £1k per household passed is a decent starting point.

If you can get a near 100% take-up and command a premium of (say) £6 per premises you might (with financing costs) get payback in 20 years.

Posted by TheEulerID about 1 month ago
@Carlthomas

However, unless something profound changed, there is precisely no chance of getting anything approaching 100% take-up. VM could undercut prices for example. Even 50% take-up would mean that payback period (when you take finance costs into account) would be heading out to the infinite.

Of course in the long run there would be a decrease in costs (if business rates don't undermine it), but in the long run we are all dead.

Posted by TheEulerID about 1 month ago
@carlthomas

Then there is your suggestion that BT could somehow work with Ofcom to retire copper. Really? Have you read any of Ofcom's policies? Their stated intention is to encourage as much alternative network infrastructure as possible and force OR to spend even more on opening up passive infrastructure.

Ofcom have shown precisely no interest in anything that might cement OR as an operator of fibre. They want to dilute OR's share of the infrastructure market, not strengthen it. What sort of message does that give to banks and shareholders that would have to finance this £20bn+?
Posted by TheEulerID about 1 month ago
@carlthomas

Finally, you seem to be under the illusion that BT directors can just arbitrarily decide to invest money without, apparently, any consideration to finance. It doesn't work like that. Investors - banks, shareholders and investment funds - have to be reasonably assured or they won't play ball. At the moment, Ofcom is perceived as actively hostile to investing in BT/OR, so such money will not be forthcoming.
Posted by TheEulerID about 1 month ago
@carlthomas

Just to provide some evidence of Ofcom's policies, here's one from Sharon White who sees 40% of the market to have an alternative fibre provider (presumably she's discounting VM as it's almost all hybrid) within a few years. Try justifying investing £20bn+ against that stated target when there's VM to consider too. (It almost doesn't matter that this is very probably unrealistic - and there is a BT commissioned report about that, hence easily dismissed by many).

http://www.telegraph.co.uk/business/2016/07/05/ofcom-faces-high-court-action-by-cityfibre-over-claims-it-protec/
Posted by PhilipVirgo about 1 month ago
I note all the debate about copper. The UK problem is that we do even know how much of the BT is not even copper - but copper coated aluminum. The BT "business" case for replacing that with fibre, i.e. bypassing GFAST, depends on whether anyone else (e.g. Virgin, Gigaclear, Hyperoptic, ITS etc.) will make more from stealing the captive customers than BT loses.
Posted by New_Londoner about 1 month ago
@PhilipVirgo
Sources? I'm very sceptical given some of your previous pronouncements in your column, through that obscure "industry group " etc.
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