Chancellor hints at Government setting a copper switch off date
We are already in a period of consultation in the telephone industry around the switch off of the old voice network (WLR PSTN) network thus moving millions of WLR lines to a new voice over broadband service, but plans may have to accelerate if a full copper switch off date is set. The voice over broadband (VoB) service that will replace WLR will work over copper, part fibre or full fibre.
The Chancellor Philip Hammond is rocking the boat and doing his best to promote the vision the Government has of 50% of the UK having full fibre access by 2025 and 100% in 2033 and in a meeting on Monday in the UK Parliament, Ross Hawkins a BBC journalist for the BBC Today programme heard the Chancellor touting plans to announce a copper switch off date (clip from BBC Today show 17th July available online - 1 hour and 18 minutes into show)
We will use the full range of tools available to Government including announcing a date for copper switch off...Quote from Chancellor as repeated by Ross Hawkins, BBC
This is not the first mention of copper switch off, in a speech to the CBI back in May the topic was raised.
Full-fibre networks are faster, more reliable, and cheaper to operate than their copper predecessors.
Over a million premises already have direct access to them 70 % of those connected in the last 18 months alone.
But if we are to achieve our ambition of a truly high-speed economy, and keep up with our competitors, then we need a step change in our approach.
So I am now setting a new target to see full-fibre to the premises connections being available to 15 million premises, that’s the majority of homes and businesses, by 2025.
This is ambitious and it will require industry to connect more than 2 million additional premises a year for the next seven years.
We won’t do that by government diktat.
We will do it by creating the conditions for the market to deliver and we will use all the tools at the government’s disposal to ensure that target is met and we’ll go further, by committing to finish the job – and deliver a nationwide full-fibre to the premises network by 2033.
Running both copper and fibre networks indefinitely will not benefit either the consumer or the industry.
so we must start thinking now about that switchover and how to sharpen the incentives for industry to move customers away from copper and on to fibre.
And Matt Hancock, the DCMS Secretary, will set out our strategy to deliver these ambitious targets in the Future Telecoms Infrastructure Review, later this Summer.Chanceller talking at 2018 CBI Annual Dinner
The Today programme featured Clive Selley from Openreach talking about the cost implications of a copper switch off, with the CEO suggesting that a full switch off would mean a price increase of around £5/m per line at the wholesale level. Currently FTTP services are priced the same as the equivalent speed FTTC services, but if FTTC is available there is a £1.60/m price premium due to the forced price reductions by Ofcom in the wholesale cost of the GEA-FTTC 40/10 service. It may be that Clive Selley was referring to the extra cost for those who currently consumer ADSL/ADSL2+ based services in upgrading to a FTTP product, which seems likely given that the 18/2 GEA-FTTC service is £4/m at wholesale prices.
A lot will hinge on the timescales involved, and given the complexity involved in a copper switch off that is going to affect some 20 million to 30 million premises a lot of planning will be needed and serious questions around areas such as burglar alarms and copper lines used for emergency phones in lifts. We suspect the Chancellor may announce a target date, but this cannot be before 100% of broadband lines are on full fibre and the problems in particular arise for those who have no interest in broadband (hard to believe but there are people) and need to have fibre rolled out to them and since this is a switch-off of copper this means not just to the edge of the pavement but actually into the home. Other questions arise too, i.e. are dormant lines e.g. homes where phone and broadband is via the coax of Virgin Media does Openreach have to replace that copper line with a fibre one, or can it skip that home until someone orders a service that needs their network? Another area is stubborn landlords blocking work to upgrade existing copper infrastructure to full fibre infrastructure.
The decisions are also not all down to Openreach, the MPF LLU operators such as TalkTalk and Sky need to be on board, currently TalkTalk has stated it is going to continue its MPF voice service after 2025, i.e. DSLAM in telephone exchange to terminate the voice line.
At a time when rivals to Openreach are finally scaling up to deliver millions of premises of full fibre, if the Government was to seriously push Openreach via the regulatory instrument that is Ofcom for copper switch off it is no surprise that CityFibre seems keener for the current situation to continue.
Switching off the copper network is a vital part of moving the UK to a full fibre future, but leaving decisions on how it is done in the hands of the incumbent risks imposing costs and delays on consumers.
As Clive Selley’s comments on the Today programme make clear, Openreach’s approach to the switchover would result in unnecessary and unwelcome price rises for both consumers and internet service providers.
To put consumers and businesses at the heart of the full fibre upgrade, the Government needs to harness the competitive benefits of new market entrants and set out a carefully managed copper switch off process that prevents Openreach from hijacking the migration process, as this would re-establish its monopoly position and hold back the UK’s digital economy.Greg Mesch, CEO of CityFibre
A copper switch off (and possibly removal to make duct sharing easier) is something needs to be discussed, but the cautionary notes about recreating monopolies is important. Though with Virgin Media coverage likely to reach 60% in the next few years, the monopoly position of Openreach for the local loop is on the wane, but we do have monopoly worries both around Openreach and the new fibre networks, i.e. the broadband landscape in terms of pricing, speeds, peak time performance and packages may be a lot more fractured with local franchises dominating.
Rolling out full fibre is not free of costs and it would be amiss to not raise a comment about a note in the CityFibre release where they said "CityFibre can bring consumers the benefits of reliable gigabit connectivity, without requiring them to pay more for it", which seems to be a way of saying hey we can do full fibre without the costs Openreach are talking about. A lot of this is down to the model that CityFibre operates on, i.e. key anchor tenants (e.g. council) to make a metro network profitable, and then business fibre to other businesses in the area and partners to ensure that eventual full fibre roll-out down residential streets is kept to a minimal cost with high uptake. Also as a new entrant with lots of investment available they don't have the regulatory baggage that comes with Openreach or the pension commitments. Currently the York UFO TalkTalk service is cheaper than the FTTC services from TalkTalk, but if CityFibre and other partners are to roll-out to 1 million premises and then onto 5 million it seems unlikely that the low prices will continue, or the old model as was seen with satellite TV is get people onto the platform and slowly increase the price over the years, since once you've gone full fibre you do not ever want to go back to a partial fibre or copper service.
To conclude, announcing a copper switch off date will be a popular move but the question is how will it be implemented and with the UK lagging in the full fibre league tables what we don't need is lots of shouting and arguing but rather implementation of full fibre networks at a pace that means we see new areas of 10,000 premises popping up every day.
Everyone now awaits the Future Telecoms Infrastructure Review and what tools it sees as being most useful to ensure that the targets are met, the 50% which is going to be more than 15 million premies due to the construction of new homes in the next six years is possible but a lot of that depends on what happens in terms of take-up and regulatory decisions between now and the end of 2021.
Update 6:30pm Changed iPlayer link so that it jumps to correct time point, remember you need to be logged in to the BBC iPlayer for it to work.