Broadband News

Low prices for FTTC to encourage more roll-out of Full Fibre

Ever since Dido Harding some time ago lead a call for lower FTTC pricing it was likely that we would see Ofcom act, and as part of its much wider Wholesale Local Access review the regulator is proposing to regulate the price of some Openreach products with changes starting in 2018. As usual these are proposals so industry can feedback on issues this may cause, in this the deadline in June 2017.

"Ofcom has today announced measures designed to promote investment in new fibre networks and ensure that customers are protected from higher prices.

We are proposing to maintain our policy of pricing flexibility for Openreach’s fastest broadband products, including those based on BT’s own network investments in full-fibre and its new G.Fast technology.

We plan to protect broadband customers and promote competition, by cutting the wholesale price that Openreach – the part of BT responsible for its network – can charge telecoms companies for its popular superfast broadband service, which has a download speed of up to 40 Mbit/s.

We would expect these savings to be passed on to residential customers through cheaper prices. This promotes competition in the superfast broadband service most used today by consumers, while companies construct their own full-fibre ultrafast networks to compete with Openreach.

Extract from Ofcom press release

Ofcom believes that by making the most popular FTTC/VDSL2 speed of 40/10 cheaper at the wholesale level it will encourage more full fibre providers to roll-out and compete, but this presumes that the public will be willing to make what is likely to be a wider price jump from the basic FTTC services to the entry level product for the new full fibre networks. The change is good if your plan is to encourage those people who have not upgraded from ADSL or ADSL2+ onto the FTTC platform, but we are still searching to see how this guarantees more investment from Openreach competitors into full fibre.

Current Monthly Price for GEA-FTTC 40/10
All exclude VAT
Proposed Monthly Charges
 2018/192019/20 2020/21
£7.40 £5.52 £4.75 £4.40

So without a doubt people will be asking what happens to providers selling 40/2, 55/10 and 80/20 products (and the one no-one seems to sell yet 18/2)? Well its not clear, no mention is made in the press release but the 300+ pages of consultation seem to suggest that the price drops will also impact 18/2 and 40/2 but given the confusion we will chase Ofcom explicitly to determine if this is the case.

Update 10:25am We have had a very quick response from Ofcom and they have confirmed that the only product having its price regulated is the VDSL2 40/10 service. The slower 40/2 and 18/2 VDSL2 products are not affected by the regulated price cut and neither are the 40/2 and 40/10 GEA-FTTP products.

The main outcome is that without regulating the retail market, Ofcom by not regulating downwards the price of 55/10 is making BT Consumer Infinity 1 look expensive, thus making it easier for Sky and TalkTalk to win custom in the competitive retail market. Though how competitors like Hyperoptic and Virgin Media will feel is another matter.

There are further improvements proposed to the metrics that Openreach has to meet working on an escalator from todays metric to the goal in 2020/2021:

  • Today 80% of repairs need to be done within one to two working days this will rise to 93%
  • Plus 97% of repairs to be fixed no later than six or seven working days
  • 80% of new line provisions are within 12 days, improve this to 90% within 10 working days
  • 90% of connections are made on the agreed date, improve this to 95%

Hitting the increased repair and provision metrics along with a main GEA product price point where it appears there is little or no profit means if Openreach wants to keep making a profit it will need ensure that its G.fast and faster full fibre products are widely available and at a price that people are willing to pay for, e.g. if a 40/10 product sells for £20/m to the public the G.fast or faster full fibre option cannot be two or three times the price, since a big jump will be something people find hard to justify.

One outcome now we have had clarification is that it seems likely that TalkTalk and PlusNet may stop selling the 40/2 product and switch to a 40/10 version thus improving the upload speeds for the public while potentially lowering the monthly cost.

For those in the 1.5% of the UK (and its growing) where until now the GEA-FTTC products have been the same price as the GEA-FTTP products at the same speed points there is the possibility now that FTTC areas may have cheaper pricing, and while FTTP does offer a more reliable connection and the connection speeds are as mentioned in the adverts people are likely to be upset to be paying more than someone down the road. Of course Openreach is free to continue price matching if it wants, but that might draw complaints from competitors in the full fibre sphere.

"Ofcom is finally delivering its promise to support full fibre investment and competition that will help close the UK’s embarrassing fibre gap.

This review is a major step forward. It provides the incentives for investing in full fibre networks that compete with BT. In addition to the measures announced today, we urge Ofcom to follow through on its proposals to improve access to BT's ducts and poles, and if Ofcom gets that right it will give us the tools and incentive to continue our investment in full-fibre infrastructure across the UK, and deliver it further and faster."

Mark Collins, Director of Strategy and Policy

Maybe we have the wrong view of the public in that we expect millions to be happy with the cheapest entry level product that will support web browsing and TV streaming for some years, as CityFibre seem very optimistic that cheaper wholesale pricing from Openreach is a step forward. Of course a full fibre product competing in an area where VDSL2 speeds are slow e.g. in the 5 to 12 Mbps area is likely to win lots of customers, and if todays move means ADSL2+ moves more quickly to vanishing like dial-up then that is good, as if the spectrum from ADSL2+ can be recovered VDSL2 will go faster and reach further.

Comments

The price in 19/20 in the table is wrong (decimal point or annual rather than monthly?)
How does making the lowest priced package that is already used by most people cheaper help with Ofcom trying to get the UK to the top of the league for broadband speeds? It just makes it even more likely that people will opt for that package - they don't seem to understand the law of unintended consequences.

  • ian72
  • 5 months ago

@Andrew Staff
"905 of connections" = "90% of connections.

  • PaulKirby
  • 5 months ago

Also "2020/2012" = 2020/2021 ?
And is that price of £47.50 for 2019/20 correct?

  • PaulKirby
  • 5 months ago

Buggy typing all fixed, and comment from CityFibre and clarification from Ofcom i.e. GEA-FTTP 40/10 not affected.

  • andrew
  • thinkbroadband staff
  • 5 months ago

"e.g. if a 40/10 product sells for £20/m to the public the G.fast or faster full fibre option cannot be two or three times the price, since a big jump will be something people find hard to justify."

As someone still yet to make the move to fibre of any kind, I look at it like this...if those people near enough to the cab were getting the full 40meg speed, I wouldn't be happy paying more than another £10 on top, to get the same speed (based on £20+10)

  • joe_pineapples
  • 5 months ago

This could backfire quite badly as I fully imagine Sky, TalkTalk, etc, to use this to kick off another round of price cuts and purely price competition.

Given the apparently higher than expected take up there is probably a case to be made for changing the pricing on all FTTC, rather than just the lower tiers, I'm not sure what the plan is with this.

  • CarlThomas
  • 5 months ago

VDSL should only be sold at connection max. Ofcom should be removing the artificial crippling of tech that is added purely for extorting money.
Unfortunately seems nothing will happen until at least 2021.

  • thinkunbiased
  • 5 months ago

Will be interesting to see what happens to all those TalkTalk customers on fixed price contracts. Power industry suggests people won't see price drops until end of contract term, so could be a nice profit boost for a while at TalkTalk.

  • andrew
  • thinkbroadband staff
  • 5 months ago

They should have also forced a significant price cut to lines only supporting ADSL.

ADSL is never going to "vanish" as long as there are EO lines, and the regulated pricing model just does not provide OR an incentive to upgrade them as quickly as they can, but rather invest into more expensive products not affected by the cap.

  • hvis42
  • 5 months ago

This move is nothing to do with the last few percent of superfast coverage, but all to do with competition in the urban majority of the UK I believe, i.e. where we can expect to see BT,Virgin and new full fibre services competing with each other. Might be wrong, but that's my view, and Ofcom may view the USO as the answer for the rural areas.

  • andrew
  • thinkbroadband staff
  • 5 months ago

Reduce costs to end user - like the cap on line rental did Ha
Why do I think that OFCOM haven't got a clue and why should Openreach invest in even more FTTC when the prices are liable to be capped in the future

  • Oldjim
  • 5 months ago

Will Zen become cheaper as a result?

  • Aaron_01
  • 5 months ago

Zen 40/10 products may well get cheaper but not till the changes kick in i.e. 2018 onwards

Other costs may go up that counter the price cut though

  • andrew
  • thinkbroadband staff
  • 5 months ago

I don't see how OR can leave the faster FTTC products at such a big cost premium to the 40/10 product as it will create a huge disincentive to for what are often relatively modest increased in speed.
I would also like to see what assumptions Ofcom have made to come up with this level of pricing.
As for encouraging FTTP, then what has further embedding a low cost wholesale product got to do with that?

  • TheEulerID
  • 5 months ago

Firstly, have Ofcom not seen the incredible cheap deals on offer?
Secondly, 40/10 is far too low - it is entry level not taking the UK forward.

If I were openreach I'd be looking to sell up. Why invest in infrastructure only to have the means of recovering your costs cut out from under you?

  • Fellwalker
  • 5 months ago

40/2 was dreadful ;I had to move to 80/20 to get decent upload speeds. But even so it isn't fast because of the far end of any activity.
Until web sites respond quickly faster broadband is pointless. I'm fed up with waiting for all the cxxp that has to finish downloading before I can use a web site. If I download a file, image or pdf the speed varies from good to "I thought this speed went away with Freeserve".

  • Fellwalker
  • 5 months ago

If they want to encourage FTTP, then they should offer the FTTPoD services for the same Monthly cost as native FTTP. I would pay a £1000-1500 connection fee if I could get the BT Infinity 4 at the retail price, I imagine many others would too

  • lincsat
  • 5 months ago

The second sentence of the "Update . . ." section just does not make sense.

[quote]
The slower 40/2 and 18/2 VDSL2 products are not affected as is the 40/2 and 40/10 GEA-FTTP products.
[/quote]

  • burakkucat
  • 5 months ago

I'm with lincsat. I would pay a hefty connection fee but paying £150-£200 a month for 3 years on top of that is too much.

  • steve14
  • 5 months ago

Ofcom do not have a clue, another government regulator that is about as useful as a bucket with a hole in it. the price of broadband is not the main problem, it is the rip of line rental and i do not care if they put it all in one price, in fact that makes it worse as providers can put the price of line rental up and we would not know. in fact if providers have to drop BB prices, I bet that is what they will do.
while I know some people may want full fibre, Iam ok as i am, even if I could get a faster speed i would not bother.

  • zyborg47
  • 5 months ago

This will just go the same way as line retal with OR charging less and the retail price staying the same or going up and the ISPs making more money. As OR will get less money how are they meant to be investing in (expensive) faster BB when most ISP will prefer to sell the regulated product to make higher returns themselves. This seems designed to just hurt OR.

  • jumpmum
  • 5 months ago

Hopefully the updated segment makes sense to more people now.

  • andrew
  • thinkbroadband staff
  • 5 months ago

@steve14 and lincsat, start a CFP with some like minded neighbours to get FTTP.

  • godsell4
  • 5 months ago

steve14 and lincsa the figures you have suggested assume you are rignt on top of fibre node / cabinet if you are not suggest you expectation of what you would be willing to fund would significantly increase

  • fastman
  • 5 months ago

ofcom have got it wrong again, they are so on the wrong path its unreal, how they think reducing openreach's revenue encourages them to invest is beyond me, and they trust the CPs to pass on price cuts voluntarily? they not learned from the line rental debacle.

  • chrysalis
  • 5 months ago

@chrysalis, the problem is they are not investing, what they are doing is making sure the infrastructure is there where they will make the most money, this is why tax payers money had to be used for smaller parts of the country and then Bloated toad benefits.
My phone line was going to be replaced 15 years ago and yet it have not been. Just a shame that the separation of BTOR do not go far enough.

  • zyborg47
  • 5 months ago

Hi Broadband Watchers
I would think this is down to the low take up on the FTTC,s across the U.K.on the spare ports and customers still sitting on ADSL ports as they give a reasonable service at a low cost and a larger profit to the ISP,s.

  • Blackmamba
  • 5 months ago

Take up isn't low.

It's high by international standards, it's well above Openreach's expected levels and indeed above those discussed by TalkTalk and others subsequently.

There's a full DSLAM and another over 2/3rds full here. There are over twice as many people on FTTC as ADSL, and I'm sure this is a scenario repeated in other places.

  • CarlThomas
  • 5 months ago

Andrew, I've seen BT Retail provision 18/2 for customers upgrading from ADSL2+. I've seen this in urban areas where the ADSL2+ speed would have been about 12Mb, so only an 6Mb increase. But it isn't on their website for sale as such.

  • Icaras_
  • 5 months ago

@ Blackmamba - http://btplc.com/Sharesandperformance/Quarterlyresults/Investormeetingpack.pdf Page 99

Just reiterating what Carl has said. Take up and coverage of FTTx in the UK is some of the highest in the world.

  • AndyCZ
  • 5 months ago

Big wow, less than a couple of quid saving initially.

If you want prices to be reduced greatly, then you have to look at the cost of back haul.

Those savings will not be seen due to other costs rising within ISPs.

  • bib1963
  • 5 months ago

This is doing absolutely nothing to help those of us with ADSL on EO lines (as @hvis42 mentioned above), who are already paying more for ADSL than most people pay for FTTC, while trying to cope with inadequate broadband.

  • sheephouse
  • 5 months ago

Hi Sheephouse.
When your EO lines are upgraded I would think you will be removed from your Exchange ADSl and given better service either fibre to your home or on FTTC so keep on watching local developments. Watch TBB maps and you will see the overview results on the affloading of AdsL to FTTC/P and at a later Date G/ Fast and may be long line FTTC and go with your chosen ISP.

  • Blackmamba
  • 5 months ago

There is something else in the consultation that Andrew may have missed & certainly didn't comment on: A proposal in section "6.25 We propose that BT may request our approval that it is no longer required to provide LLU in those specific areas where it intends to deploy a new technology, such LRVDSL." This includes areas where LLU is already working!

  • jumpmum
  • 5 months ago

Did not cover it word for word, but final sentence on removing ADSL2+ covers that area

The question is whether the cost of deploying LRVDSL to areas that don't already have VDSL2 would be worth the investment. New regulated pricing increases pay back period substantially, and in my view is all about urban areas and not about rural which are a side act for Ofcom

  • andrew
  • thinkbroadband staff
  • 5 months ago

Hi Blackmamba, yes, when we are upgraded we should get FTTP - we have a 60% chance of being included in Gigaclear FTTP through Fastershire BDUK by the end of 2019. Installation costs if we are lucky enough to be included are >£600, activation £200, and then £100 per month for a business connection. And I'm not on a long line, so would have >17Mbps if we had ADSL2+.

  • sheephouse
  • 5 months ago

As usual it ignores the much larger issue of those stuck on the slowest ADSL, Unless this is made very unprofitable for Openreach to maintain i.e. near free supply to consumers or resellers then this situation will surely simply persist. This is where Ofcom need to be creative and not simply headline grab

  • pug205rally
  • 5 months ago

@pug205rally

OR already cross-subsidise those lines as, by their very length, are costly to maintain. Even if they had to make them free, it would still probably a smaller loss than spending several thousand per household (these are the most expensive to connect households) with wholesale revenues of as low as £14 a month (line + basic BB service).

  • TheEulerID
  • 5 months ago

@Blackmamba No-one is going to be removed from ADSL when their exchange only line is converted to going via a cabinet.

There is no mass programme to force people off ADSL, the closest thing is the odd bit of LRVDSL, where ADSL can be retired from individual cabinets.

Most definitely no-one is going to be forced onto FTTP for the foreseeable. They will be offered the option, hardly anyone is being 'offloaded' from ADSL and you will not see a significant impact on the TBB mapping.

  • CarlThomas
  • 5 months ago

On BT only exchanges, LRVDSL should be made available, why cant OFCOM choose to allow this at the earliest possible chance?

  • godsell4
  • 5 months ago

@TheEulerID

Not every remaining ADSL line is long - many are EO, such as mine which runs at the full 8Mbps/832Kbps. Since ADSL Max was installed at my exchange 11 years ago, I don't think OR/BT are burdened by the cost of subsidising ADSL when I'm paying over £40 per month for it. There is no incentive for OR/BT to change the situation, as there is no alternative broadband available.

  • sheephouse
  • 5 months ago

@sheephouse

Or do not get money for ADSL. They yet around £7.60 a month. Full stop. That's it. Including retail revenues which have precisely nothing to do with the access network in terms of revenue is simply ridiculous (it does pay for backhaul, interconnects and so on, but that's not an OR matter).
The retail side is subject to competition. Nobody expects TalkTalk to hand extra money to OR. Why do you think BT Consumer should?

  • TheEulerID
  • 5 months ago

@sheephouse

Same boat. I run 8128/832, I'm on an EO line, and I can't get anything else. I currently pay £54/month for it, purely because I need the 832 upspeed and a decent ISP (Zen).

  • jimwillsher
  • 5 months ago

@TheEulerID: "£7.60 a month. Full stop. That's it. Including retail revenues which have precisely nothing to do with the access network in terms of revenue"

Steve, this is a bit misleading here, isn't it? All of Openreach, the BT retails businesses, and the access networks belong to BT Group. Ofcom has clearly decided not to spin off Openreach, all the revenues go to the BT Group.

  • JNeuhoff
  • 5 months ago

As has been mentioned already, this is mere tinkering.

Until 100% of the UK is moved to FTTC I'll take no notice of Ofcom and their cohorts BT/OR.

We had top ADSL speeds on a rock solid line, we then had ditto on ADSL2+ but in Dec 15 the village centre had a BB ltotal loss: all came back bar a handful. I'm one of that handful: speed is never better than 14 and the line is so degraded that BB outages in the evening are constant.

Dealing with BT (line provider) is like nailing jelly to the wall.

We're told that as we're EO we will NEVER EVER get FTTC.

  • Dodman
  • 5 months ago

@TheEulerID - £7.60 per month plus IPStream backhaul charges - which are significant. And the remaining retail charges go to the same company. My point is that Ofcom are not providing OR/BT with any incentive to change the status quo in areas where ADSL is the only option. They just are encouraging competition in areas where there is already competition.

  • sheephouse
  • 5 months ago

@sheephouse
You're both right, but the money for the access network portion is still only the part that goes to Openreach.

As for rural areas...
Last year, I thought Ed Vaizey was the one minister who gave more emphasis to the needs of rural areas vs the urban mantra of competition.

Unfortunately, since May gave the job to Matt Hancock, the focus has very much returned to competition ... as well as to "full fibre".

Ofcom, of course, work to guidance from the ministers, and just reflect what the government want.

  • WWWombat
  • 5 months ago

@Dodman
EO lines are being converted. Both FTTC and PCP cabinets are being put outside many exchanges, and "nearby" EO lines get to benefit.

For more distant EO lines, AIO cabinets are being added, as well as being used for "infill" within existing cabinet coverage areas.

It is an activity that costs more, so needs more subsidy, so tends to come later in the various BDUK projects.

You might still never get FTTC. Not simply because you are EO, but because the money ran out.

  • WWWombat
  • 5 months ago

Hi Broadband Watchers.
In Surrey 18months ago there was a special ( Openreach crew ) that was diverting EO lines to go via a Cab not in the Exchange building boundary so they could be diverted to a FTTC if the customers required the service. This effects the AdSl churn rate ( houses sold changed hands etc) When this was done the post codes/address advertised new port options. Exchanges Dunsfold and Runfold I am watching for Passfield (Hants) to be cabled and changed.

  • Blackmamba
  • 5 months ago

Hmmm.
I just checked one of the BDUK contracts - it happens to be Oxfordshire.

It defines a "Force Majeure Event" to include "acts of the Crown or any Regulatory Body".

A "Force Majeure Event" can go as far as to allow for termination of the contract.

If BT believe this to qualify as a "Force Majeure Event", then they are obligated to write ASAP to the LA(s) to let them know, and work with the LA(s) to mitigate the effects.

So, even before BT respond to Ofcom, they probably have to write to the LA(s) to warn them of an impact. At minimum, I'd expect the take-up clawback to be affected.

  • WWWombat
  • 5 months ago

@Wombat Yep agreed with your statement about Hancock vs Vaizey, Vaizey was trying to do the right thing and not pander entirely to the likes of TalkTalk and Vodafone.

  • godsell4
  • 5 months ago

@WWWombat - yes, there is an FFTC cabinet outside my exchange, and many EO lines have been rerouted. However, I've been told that OR won't redirect any line that won't get at least 24Mbps, due to UKBD funding restrictions. I'd get around 18Mbps, which is almost 3 times what I get now, but it isn't allowed.

  • sheephouse
  • 5 months ago

@Sheephouse if you are in a bundle of lines (and EO work is done on a bundle basis usually) and none of the lines will see a good uplift then they may not do it, but could put a cabinet deeper into network at a later date.

Some areas have seen this happen, so a lot depends on where a project is, targets and money available.

  • andrew
  • thinkbroadband staff
  • 5 months ago

Hi Sheephouse.
Make sure you have the distance ( Yards and meters) from the FTTC to your Post Code and the master socket in your home and the post code ties with the results on TBB. Maps in all respects this you can use for future reference.

  • Blackmamba
  • 5 months ago

Blackmamba, my postcode isn't very useful wrt broadband speeds, as it covers just over a mile from end to end. As it happens, the exchange is at one end and I'm at the other, so the distance is around 1500m. Rerouting via the FTTC cab would add 100m, so FTTC would be slower than ADSL2+ (upload would still be faster and that is a major factor for me). Either would be faster than ADSL Max! Should hear by the end of May whether Gigaclear will include our area for FTTP by the end of 2019.

  • sheephouse
  • 4 months ago

@BM - why do I need a distance measured in yards?

  • Somerset
  • 4 months ago

Hi Somerset.
The original cable pairs were measured from the OLD Cab to the DP in yards to the DP block and the resistance on pair one would be checked on a new development and when the customers was provided the total line tength was recorded (850 Ohms) and was on their records. From this is the reason why I measure in imperial from the FTTC to the Post Code GPS which is very easy with 1Pad at very reliable and quick.

  • Blackmamba
  • 4 months ago

@BM - '1Pad' Classic!!!!

You will find that measurements have been metric for at least 40 years.

  • Somerset
  • 4 months ago

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