Openreach to massively reduce GEA cablelink fees
The GEA cablelink is a small but critical part of the Openreach VDSL2 and FTTP puzzle that comprise the GEA product range and while a one off cost of £2,000 may seem small, once you add up the cost of needing to pay that in some 1,200 locations if you want to provide full national coverage via your own backhaul network (as oppossed to buying aggregated links from BT Wholesale) then the sums soon start adding up.
On 6th October 2017 the Openreach price list indicates that the old 1 Gigabit fibre GEA cablelink will drop in price from £2,000 down to £790 and more importantly the 10 Gbps version will drop even more from £10,000 down to £1,800. The 10 Gbps price point is the most important moving forward as it makes adding capacity to deal with GEA-FTTP customers and G.fast customers who may have 160 Mbps to 330 Mbps connections and FTTP should soon have a 1 Gbps option a lot cheaper.
It will be interesting to see if the LLU operators use this price change to start selling the GEA-FTTP products and with counties like Herefordshire, Powys and Gwynedd all having 10 to 11% coverage and increasing. The LLU providers if they don't start selling GEA-FTTP soon run the risk of losing ADSL2+ customers who are keen to upgrade to faster services. To date lots of the rural areas getting FTTP have been exchanges that were never unbundled but that is changing and places like Bristol are starting to see growth in the GEA-FTTP footprint.
The GEA connection (£49+VAT) and migration fees (£11+VAT) have been fairly static for a while, but what many don't realise is that the original 40/2 product has not changed its £6.90+VAT per month price since 2009. The GEA-FTTC 40/10 product is due to see a drop in pricing in 2018 so its current £7.40+VAT per month that has been in place since 2011 will soon change, and its this anticipated drop that has seen TalkTalk switch its customers to the better upload version, leaving Plusnet as the last of the large providers using the bargain basement service - which if prices change as expected will be more expensive than the 40/10 service in 2018.
All the figures in this article only cover the Openreach segments of the network, so BT Wholesale adds its costs for running its network and similar for TalkTalk and Sky, put simply even though providers core networks are cheap to run they are expensive to setup and scaling them to ensure a reliable and consistent service across this core fibre network does cost money.
Another welcome change in October is that Openreach is dropping the held to term charges, so the minimum contract term for a new GEA-FTTC connection will drop from 12 months to just one month. Its unlikely that we will see the biggest operators drop their 12/18 month terms as they use these periods to spread the cost of hardware and acquisition, but we might see more 1 month rolling contract options with higher setup fees to cover the hardware cost from the small to medium providers.