Openreach increases price of fibre on demand FTTP product
Fibre on Demand FTPP which is on offer from Openreach in a selection of locations around the UK which can already get a FTTC based is not a cheap service to install but with its previous wholesale price of £38+VAT it was just about in the realms of the home workers and others who are happy to pay a premium for a premium service. Unfortunately it would appear that after some number crunching on the actual cost of installations done to date Openreach is putting the price up from the 1st May 2014.
- The three year contract currently carries a £38+VAT monthly fee, this will increase to £99+VAT.
- The fixed connection charge will increase from £500 to £750.
- The variable one-off distance based charge will increase to £3.50 per metre from the current £2 per metre. This is the radial distance to the aggregation node that your FTTC cabinet is connected to, so generally near the fibre cabinet.
This means whereas previously around half of UK premises could be expected to pay in the region of £700 to £1500 for the initial connection, this rises to a range of £1,100 to £2,500.
Whether this will kill the demand for Fibre on Demand is down to how much the SME community value a 330 Mbps download speed (30 Mbps upload) with the reliability of a full fibre connection. We should point out as ever, that in areas where native FTTP is installed by Openreach (i.e. no FTTC and only FTTP as the super fast option), the pricing remains the same and this native service does not have the large install fee.
The cynically will look at the Super Connected City voucher scheme which allows for a voucher of up to £3,000 to cover the initial cost and suggest that the price rises are a move to ensure Openreach gets a bigger slice of the pie, but the cities voucher scheme does have some strong competition from fixed wireless and other FTTP/B providers so it seems a dangerous gamble if that is what Openreach is doing.
Installing FTTP for a single user is an expensive game, particularly since with GPON, this means deploying a splitter and other passive hardware, so we hope that maybe Openreach can come up with a discount scheme where if 2 or 3 properties or businesses that would be served by the same fibre manifold were to apply through the same provider that a discount on the individual costs would be possible. We need to point out that the costs of the hardware and civil works are nowhere near fully borne by the first person to order on a specific drop point, each manifold supports 8 to 12 customers so likely that the costs reflect perhaps one seventh of the costs (an estimate).
We are informed that demand for FTTP on Demand to date has been low with an extremely low volume of orders. These price rises are not going to help at all, unless you are a venture capitalist looking at investing in a FTTP operator to bring some ultrafast competition to parts of the UK.