We have worked out how much of the UK will have a Gigabit option in 2025
Predicting the future is always difficult but with the launch of a Digital, Culture, Media and Sport Select Committee that is looking into 'broadband and the road to 5G" it is the right time to deliver some worked examples.
Remember for all these scenarios there are the additional questions about what the Government will deliver with its £5 billion that it has earmarked for something like the final 10% to 20% of premises that it thinks will not be reached commercially. It is worth pointing out that while £5 billion is more than any of us can imagine as a pile of cash, 20% of UK properties is some 6 million premises and thus £5 billion equates ot funding of £800 per property, which is a lot lower than the believed intervention cost of many of the properties seeing FTTP made available as the BDUK projects finish up.
Before sharing the scenarios, it should be pointed out that while the degree of overlap is based on patterns already seen what the market does, Ofcom regulation and Government prodding could very easily mean bigger overlaps or smaller.
- Baseline Scenario: 57.9% Gigabit Coverage Dated end of 2021 and Virgin Media has finished its DOCSIS Gig1 roll-out and no more FTTP has been delivered commerically or otherwise.
- Scenario 1: 63.3% Gigabit Coverage Dated end of 2021. Virgin Media Gig1 roll-out is complete. Openreach has rolled out FTTP to 4 million premises with overlaps of 50% to other FTTP or Virgin Media networks. CityFibre has built to 1 million premises (up from the 186,000 today) with a similar overlap rate compared to Openreach. Plus another 200,000 premises of full fibre from other operators that is not overlapping. This should be the realistic worst case scenario for 2025.
- Scenario 2: 79.7% Gigabit Coverage Dated end of 2025. Virgin Media Gig1 complete. Openreach has finished building FTTP to 15 million premises and an overlap rate of 70%. CityFibre has built its 5 million target with the same overlap rate of 70%. Other providers have built to 0.5 million premises once you allow for the overlaps with other networks.
- Scenario 3: 88.9% Gigabit Coverage Dated end of 2025. Same amounts of FTTP built as scenario 2 but the overlap rate has been reduced to 50%. We believe that an overlap rate of just 50% based on what we already know about the FibreFirst rollout and CityFibre Gigabit cities is too optimistic.
- Scenario 4: 73.9% Gigabit Coverage Dated end of 2025. Same amounts of FTTP as scenario 2 but overlap rate increased to 80%.
The work under BDUK contracts, the phase 2 contract in Wales and R100 work in Scotland is accounted for in the Openreach 15 million FTTP figure, i.e. we expect very little overlap in the rural areas, though it is possible we may see this happening in market towns if Virgin Media continues to build at around 145,000 premises per quarter.
The biggest challenge facing the Government is not the amount of funding but rather will awarding those contracts change what is happening commercially. If the BDUK contracts had not occupied BT and Openreach so much between the end of 2012 and late 2018 it is very likely that the commercial roll-out of FTTP at the pace of 100,000 or so premises each month would have started earlier. Though the couple of years when the future of Openreach and its position in the BT Group was political/financial battle also played a large part in why it was not until April 2018 that the Fibre First programme was announced.
A little snippet to end on the baseline scenario generated our usual local authority list and the top 10 places for Gigabit coverage with the cable network fully running DOCSIS 3.1 and no more full fibre built between now and the end of 2021 is:
THESE ARE GIGABIT PREDICTIONS FOR THE END OF 2021:
- City of Kingston on Hull 98.7%
- City of Bristol 95.6%
- Barking and Dagenham 95.4%
- City of Portsmouth 95.3%
- City of Nottingham 94.8%
- Richmond upon Thames 94.6%
- Redbridge 94.1%
- Waltham Forest 94%
- Middlesborough 93.6%
- Luton 93.6%
We some people are not too happy about Virgin Media Gig1 with its 1108 Mbps download and just 50 Mbps upload being included in the 2025 target, but the plan is to switch to DOCSIS 3.1 for the upload before 2025. The switch to DOC3IS 3.1 will allow for higher upload speeds. Also remember in the various scenarios there is also a lot of overlap between Gig1 and full fibre servies, something which are setting up tracking of during March.
The next million pound question we need to answer is what speeds will people be buying in 2025 and the reality we believe is less about what speeds people think they need and more about what they want to pay. In short if we also want to see large numbers using Gigabit services and not just buying a 40 Mbps service that is across full fibre the price for Gigabit services will need to fall to whatever £25/m today is worth in 2025 money.