Openreach, better as part of BT Group PLC or go it alone?
Just under a week ago the BT Group released its last financial results and a few selected journalists were invited to meet with Joe Garner CEO of Openreach to ask any pertinent questions. We were amongst the 8 or 9 invited and while we don't have the short hand skills of some we have some notes worth sharing.
The financial results for Openreach are a mixture of regulation reducing revenue balanced by the growth in fibre broadband connections and a pretty full Ethernet order book, as it seems businesses have woken up to this option as a way of getting a business grade connection which should ensure reliable and fast 24/7 operation. The growth of fibre based service volume means they will become increasingly more important.
Fibre on Demand (FoD, FTTP you can order for a custom price if already served by a fibre cabinet) has been on hold for sometime, and as the original 30th April deadline had passed we asked whether new orders were being taken and it unfortunately for those looking to turn some savings into an ultrafast connection it seems FoD is not coming back just yet. The problems as reported by the few we have seen have it installed centre around multiple site visits for surveys and slow installation, mean that changes to the FTTP roll-out which are part of the G.Fast trials this summer will be assessed and used to re-jig the product - though we would urge caution as some may expect lower pricing and we get the feeling this is not likely. The sort of changes under evaluation are ways of blowing the fibre, connectors to reduce the need for splicing, pretty much all aimed at reducing the amount of labour needed.
The issue of a full split of Openreach away from BT came up, and given the General Election polls were open purdah was in full effect this was a difficult question to field, but Joe Garner does not see this likely but then one can never say never. What is clear is that even if someone with the power was to decide to split Openreach away we are not looking at a few months, but possible a number of years before it actually happened, and given the pace of the telecoms market that is an eternity. One point raised by Joe, is that the current equivalence rules mean that the large number of small providers are served by Openreach the same way as the big ones, but a pure standalone unit might need to be less equivalent and lean towards favouring just the biggest providers.
The issue of Tech City broadband speeds and the City of London went around the table and looking at Tech City itself the download speed test average of 9.8 Mbps is lower than across the Islington Borough the postcode falls within, but the upload of 3.2 Mbps suggests people are finding connectivity. Of course while a 1 person start-up may be fine with a FTTC connection, if you are an office of a few people making heavy use or uploading lots of media then dedicated Ethernet/leased lines are the way to go and some of the newer buildings are addressing that, but at a price that is in line with nice modern offices.
The City of London is famously the least served part of London in terms of FTTC, but shows that people are getting good speeds, a factor of the availability of the alternate options like 4G and/or Relish and others (the Borough comprises of just a few thousand households, but many more businesses). The City of London has a high proportion of Exchange Only lines, but the density of exchanges means that only 1.2% are estimated to get below 5 Mbps which may also help (NOTE: A slight caution on this figure, as for apartment blocks the vertical distance has not been taken into account). It needs to be pointed out that while we see large academic institutions using our speed test we do not include these in our speed test analysis unlike some other testers with the result that averages can be skewed, and similarly for the large companies with leased lines.