Broadband News

TalkTalk to invest to help build 3 million full fibre premises

Another week another three million premises of full fibre has been announced this time by TalkTalk as a key part of its latest financial results.

The location of the three million homes and businesses is unknown as are any time scales for when they will reach the 3 million target, but we presume its a lot faster build rate than the expansion from 14,000 to 54,000 premises in York which is set to finish in 2020. The new build involves setting up an indepedent company with Infracapital who are an equity investment arm of M&G Prudential, with TalkTalk operating as a founding wholesale customer and funding of 20%.

The immediate effect of this is that the dividend is temporarily reduced as an initial £200m is raised and as we guess a sign of commitment the Executive Chairman and other Directors are to contribute up to £40m. No contracts appear to have been signed but what is described as 'heads of terms', which in non city speak means things have been agreed in principle.

Of course more full fibre is welcome news, and this new rush has been many years in coming and for those saying rule changes and other factors are the reason why, while they may have a part to play, the fact that superfast roll-outs are almost over in the urban areas of the UK and as TV viewing as emerged as the killer app broadband operators are keen to roll-out networks that should provide a TV platform as reliable or more reliable than the existing cable TV network and while the broadband is unlikely to be a big source of profit for many years, the profits in the short to medium term will come from selling access to movies and boxsets. Another factor is that the revenue from telephone calls has vanished and from 2006 onwards the profit was not the broadband but from the call revenue.

What is most interesting is that the York full fibre trail was in partnership with CityFibre, but this latest announcement does not mention them and means that while the Gigabit City labels of CityFibre give a clue as to where Vodafone is likely to go with its 1 million premises, there are no clues for the TalkTalk roll-out. By creating this new venture it also makes it easier to be acquired and the equity investors to get their return once the full fibre market starts to merge, this might be a decade away but the experience from the cable franchise market suggests we will reach that point eventually.

After more than two years wasted by many operators who were campaigning for the full seperation of Openreach from the BT Group, we are now looking at a situtation where the only major broadband retailer outside BT Consumer who is not embarking on their own full fibre roll-out is Sky and thus we are looking at a scenario where Openreach is regulated heavily but only has 1 or 2 major wholesale customers, while competitors have masses more freedom to do as they wish, either operating vertically integrated networks or wholesale services on their own terms. One almost thinks that the campaign for a split was more about limiting what Openreach can do to respond to these networks rather than creating a services that would be attractive to retailers. We predict that if Sky announces a full fibre build or intent to be a big customer for one of the competing networks that BT will be looking for lots of rule changes in the areas the new networks are emerging, e.g. full commercial freedom in areas where cable and a full fibre operator are present.

Predicting the coverage levels for full fibre broadband across the UK is becoming impossible now as we expect there to be massive overlaps, but the danger with the overlaps is that the nimby factor will have some residents blockading the second or third operator to bring their trenching machines and fibre down their street. To some extent there is already a steady trickle of complaints over the Virgin Media expansion and in some areas where full width re-instatement is insisted upon expansion may stop in some areas. 

For any public funded roll-outs in procurement in 2018, e.g. Wales and Scotland the indicators are very much that if there is not a high proportion of full fibre involved the procurement could be described as a failure.

We strongly welcome this commitment by Talk Talk to take full fibre broadband to 3 million homes and businesses in the UK. This investment will make significant strides in giving Britain the connectivity we need to be fit for the future. It's fantastic to see Talk Talk stepping up to the plate - we want a healthy, vibrant, competitive next generation broadband market and are working hard to deliver the investment and good jobs that comes with it.

DCMS Secretary of State Matt Hancock

Back to the TalkTalk of today and its Q3 financial year 2017 results, their added some 37,000 on-net customers during the quarter, which is the fourth quarter of growth after a turbulent period and the fixed low price plan (FLPP) means that they have 1.8 million customers in contract (61% of the retail customers) and people are fixing their prices for longer periods 18 and 24 months, rather than the shorter 12 month. This is not that surprising as wage growth for many is still a dream and fixing the cost of utility bills helps with budgeting and a Friday night in with a boxset binge is vastly cheaper than a night out.

The VDSL2 (FTTC) services are growing with 89,000 additions in the quarter and for customers joining TalkTalk 40% of new customers take a fibre based service. There will be a few York FTTP customers but no specific numbers are given other than to say customer satisfaction is high and churn levels are minimal, given how good FTTP is meant to be one would hope for zero churn levels, but the network does overlap in places with other superfast and ultrafast options so it does have price and bundle competition.

Comments

Are we going to be stuck with a provider if they are all building separate fibre networks? Or are we going to be able to choose which ISP we want?

  • steve14
  • 4 months ago

There is talk of wholesale, but too early to say what choices would be available.

TalkTalk Wholesale does have a large number of smaller providers selling its services already, so likely to see them, would you see say Sky, Vodafone maybe, BT Consumer I'd say an absolute no.

  • andrew
  • thinkbroadband staff
  • 4 months ago

Will this reach rural areas such as mine, where Openreach have already laid FTTC (I am 1.5Km from my cabinet using a mix of copper/aluminium), Virgin have indicated they will eventually link up houses close to their new trunk, and there is the potential of B4RN Cheshire extending into my area? I currently get 8.1Mbps down, 1Mbps up, and some others on my exchange get much lower. Connecting Cheshire currently don't have a plan for their 4th phase yet, so may include me to bring me over 10Mbps, but I am not holding my breath on that.

  • mollcons
  • 4 months ago

Even if Talk Talk built a full fibre network here I would not use it. but then I doubt i would use any full fibre network unless it is the same price as what I am paying now, I do not need anything faster than 38Mbs, i just need it to be reliable.

That is not to say that other people do not need anything faster, but some people think they do when they really don't.

  • zyborg47
  • 4 months ago

@Mollcons I would not make a bet on it, TalkTalk is in this for ROI and not meeting any Government targets.

@Zyborg47 The York UFO service is just £21.70 per month fixed for 2 years, one speed Gigabit, so cheaper than their VDSL2 products. This new roll-out who knows, but given take-up is critical expect similar, with OTT services making the profits.

  • andrew
  • thinkbroadband staff
  • 4 months ago

Its won't be anywhere near here. Currently 3.1Mpbs down,0.3Mpbs up.

  • brianhe
  • 4 months ago

After the fact it took 2 weeks and 3 engineers and large amounts of faff with their call centre to sort out a simple broken line joint outside our house, I wouldnt trust Talktalk to run their own Wholesale network as far as I could throw them!

  • crocks999
  • 4 months ago

@zyborg47 Nothing wrong with wanting something that is faster than you need. Also in my experience with anything computer related, what seems fast now, will be slow in the not too distant future.

  • steve14
  • 4 months ago

@crocks999 TalkTalk already run their own wholesale network. It's used by Andrews and Arnold among others.

This doesn't matter. It's going to be PON so isn't 'real' FTTP. At least, that's what the more zealous people tell us :)

It will be interesting to see where this goes. I'm not convinced there are all that many areas that would be able to deliver a return with Openreach, Virgin Media and multiple other operators. Vodafone and this venture avoiding mutual overbuild would make sense.

  • CarlThomas
  • 4 months ago

We're in an unusual position out here in the sticks. There's no FTTC here so it's either a painfully slow connection or FTTP which has just gone live in our area. We'll switch to FTTP once our current contract runs out but, for us, the lack of competition in the FTTP market is pretty stark. At the moment it's a home run for BT.

  • Halogen57
  • 4 months ago

@ Halogen57

Zen are competitive with BT now for FTTP. Plusnet is the cheapest (but you need to sign up to ADSL then join the FTTP trial).

  • AndyCZ
  • 4 months ago

We created a shortcut to show the Openreach FTTP package provider packages we have https://www.thinkbroadband.com/packages/fttp-broadband

Once PlusNet stop this weird existing ADSL customer only game, they will start to appear on the list too.

  • andrew
  • thinkbroadband staff
  • 4 months ago

@Andrew, well the chance of us getting full fibre here is pretty slim anyway, i was shocked when we had FTTC when we did.
Saying that even if it is cheaper or the same price, if it have anything to do with Talk Talk I would leave well alone.

  • zyborg47
  • 4 months ago

@AndyCZ, @andrew thanks for that. Didn't know about Plusnet

  • Halogen57
  • 4 months ago

FTTC arrived here beginning of January and is being used by some of my neighbours. However, TalkTalk, my current provider, insist that it is not available and similarly Utility Warehouse, whereas I know that Zen, Plusnet, BT, John Lewis Broadband and Sky are all able to access it. It's like getting blood out of a stone to get sensible feed back on why there is this apparent restriction but at last I seem to be talking to people who can really delve into this at OpenReach. TalkTalk too appear to be looking into this. So much for millions getting full fibre from TalkTalk!

  • BryanP
  • 4 months ago

Sorry to see you're having problems ordering FTTC via TalkTalk but what does this have to do with TalkTalk deploying their own FTTP?

The most likely course of events with regards to FTTC availability is that TalkTalk don't have a connection to your cabinet, so don't offer FTTC there.

Utility Warehouse I imagine use TalkTalk so have the same caveat.

If it's available through other providers the solution seems obvious.

  • CarlThomas
  • 4 months ago

@CarlT TalkTalk don't have specific connection to the cabinet but they do need to install their own connection/equipment at the exchange as they use their own backhaul. Some exchanges won't yet have this - Sky do the same thing but sounds like they have already enabled BryanP's exchange if they are offering service.

  • ian72
  • 3 months ago

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