ft.com | BT unveils £1.5bn super-fast broadband plan | By Andrew Parker and Ben Fenton in London | Published: July 15 2008 08:33 | Last updated: July 15 2008 22:45
BT unveiled plans on Tuesday to roll out a new UK fixed-line network offering broadband speeds five times quicker than those currently available.
The former fixed-line telephone monopoly, is to spend £1.5bn on a fibre-based network covering 10m homes that will mostly enable download speeds of 40 megabits per second, compared with the existing 8 Mbps industry benchmark.
BT has been spurred into action by Virgin Media, the cable television company, which plans to offer speeds of up to 50 Mbps to 12m homes by next summer.
Virgin Media will have a head start on BT, because the phone company will not start deployment of its super-fast broadband network until 2009-10. It is hoping to run the network past 10m homes by 2012.
BT has also been under pressure to commit funds to a super-fast network by the government, which is concerned that otherwise UK competitiveness could be damaged. Countries ranging from Japan to the US have already begun to install fibre networks.
reuters.com | Tue Jul 15, 2008 9:55am EDT | BT Announcement Represents First Major Step Towards Next Generation Access in the UK, says Analysys Mason
Matt Yardley, Partner at Analysys Mason, Comments on BT's
Large-Scale Fibre Investment
At last, BT has decided to invest in fibre on a large scale. This
is great news for the UK, and will remove some of the awkward
questions about why are we languishing behind many other nations in
the provision of high-speed broadband. BT's announcement is primarily
about VDSL/FTTC, with some limited FTTH. Financially, this is a
sensible step for BT, and should not preclude a move to more
widespread FTTH in the longer term.
In our view, the total investment of GBP 1.5 billion for 10
million homes looks reasonable, although the press release states roll
out "...to as many as 10 million homes by 2012", so actual coverage
may be lower. The Broadband Stakeholder Group (BSG) is currently
investigating the costs of FTTC and FTTH on a national basis, and
importantly, how costs vary with geography.
There are two other aspects of the announcement that are worth
First, it is not yet clear what BT's statement on the role of
regulation and fair return on investment will mean in practice. BT
appears to be asking for more symmetric regulation, whereby other
fibre operators will also be required to wholesale their services.
Ofcom is expected to provide details of its proposals for regulating
NGA in September this year. It will be fascinating to see to what
extent, if any, Viviane Reding's recent comments on a 'risk premium'
for NGA investments factor into Ofcom's thinking.
Second, we expect there will be greater emphasis than envisaged on
the issues associated with sub-loop unbundling (SLU). This will now be
a very important consideration for alternative operators' future
strategies. To date, SLU charges have not been the subject of as much
regulatory scrutiny as LLU charges. This is now likely to change.
However, it is not clear to what extent BT will be promoting a generic
Ethernet access product (as being developed for the Ebbsfleet FTTH
deployment) over VDSL/FTTC.
The reference to iPlayer is also interesting, especially as many
of the issues around delivery of video services relate to backhaul,
not access networks. Lower charges from exchanges to core network will
be good news for local loop unbundlers, but it is far from clear how
bitstream-based ISPs, which still support a large part of the
broadband user base in the UK, will be affected. It is possible that
the gap between the LLU and bitstream cost base will get wider.
Finally, BT's announcement suggests both urban and rural areas
will benefit. This may be true in the long term, although it seems
unlikely that there will be significant rural deployment for the GBP
1.5 billion figure indicated. This raises a wider public policy
question: What about the remaining 60% of homes?
BT states it wants to work with local and regional bodies to focus
investment, which makes sense. It is also consistent with
recommendations in our report for the BSG on public sector
intervention in next generation broadband. However, there may be an
even greater role for the public sector in stimulating investment
beyond the initial 40% coverage, and almost certainly a larger role
for the public sector, compared with what happened with the initial
roll-out of first generation broadband.
Comment by Matt Yardley, Partner at Analysys Mason.
How Realistic Is BT’s Fiber Broadband Plan? Om Malik, Tuesday, July 15, 2008 at 2:00 PM PT
Update: My good pal, Dave Burstein, who writes the influential newsletter DSL Prime, wrote in to point out why the news is spin. “There is nothing in the announcement that wasn’t discussed by Christopher Bland with Andrew Parker a year ago,” he wrote. Dave tracks the industry closely, so I’m not surprised he found the “spin” in the news. He also pointed out that by 2012, less than 1 million will be on fiber, and mostly new fiber.
And Andrew Odlyzko, the authority on broadband and networks, in an email to me noted that the incremental 100 million pounds in capital expenditure increase for this promised network upgrade is a mere 3 percent, and even that is contingent on regulatory relief from Ofcom.
Q: Is this investment dependent on Ofcom creating a new regulatory framework?
A: Yes. The right regulatory environment is vital for anyone seeking to invest. The funds required are extremely large and companies need confidence that risk-taking can be appropriately rewarded.
itpro.co.uk | Analysis: BT's fibre plans go national | By Stephen Pritchard,
How will BT's plans to spend £1.5 billion on a national fibre network affect businesses - and are they too little, too late?
The news that BT is willing to ignore the credit crunch and invest some £1.5 billion - including £1 billion of new money - in a national fibre-optic broadband service should be a boost to businesses and consumers alike.
“The question now is what happens to investments from alternative providers in DSL services in the local loop,” said Pete Nuthall, analyst for European telecoms at research firm Forrester. “There is little incentive [for them] to continue their expansion plans. They might want to look at saving money by using wholesale services from BT.”
Delivering on demand
A further question is whether Ofcom and BT will be able to agree an acceptable regulatory framework that will, in the words of BT chief executive Ian Livingston, “make sure that anyone who chooses to invest in fibre can earn a fair rate of return for their shareholders”.
Ofcom has already welcomed BT’s announcement, but the regulator will have to strike a balance between allowing BT a sufficient profit margin to roll out its new network and ensuring that other ISPs are not driven out of the market by fibre.
“Local loop unbundling is a big issue for Ofcom,” said Anthony Walker, chief executive of the Broadband Stakeholder Group. “There is a debate that has to happen across the industry.” Options, he suggested, might include sub-loop unbundling, where rival service providers run broadband connections from BT’s fibre cabinets, rather than from exchanges, to businesses or homes.
But in the short to mid term BT’s moves could also have another, paradoxical effect: that of increasing the broadband divide. “In the shorter term there could be more variation (in internet access). The challenge is narrowing that down,” said Walker.
The Broadband Stakeholder Group – The UK government’s leading advisory group on broadband has responded to BT’s announcement that it is to invest £1.5 billion in making next generation, fibre-optic broadband available to up 10 million homes by 2012.
The group are welcoming the announcement as it had already aired its views that a scheme like this was vital for the development of the UK’s industry. In April 2007 the BSG independent advisory group published a ‘Pipe Dreams Report’ in which it was stated that there was a two-year window to “create the right environment for next generation deployment in the UK”.
Commenting on BT’s announcement, Antony Walker, CEO of the BSG said “There has been a question mark hanging over the UK telecoms sector for the last 18 months about how we move to next generation broadband. Today’s announcement is by no means the whole answer, there are still questions about the regulatory framework and how we extend services to more rural areas, but it is a very significant step forward.” Walker also said that he hoped that Ofcom could “move quickly to create a regulatory framework that both enables large-scale investment and ensures effective competition”.
The BSG sees the new proposed development from BT as being so important it is claiming it to be the start of Web 3.0.
The BSG welcomes today’s announcement from BT that it plans to invest £1.5 billion in making next generation broadband available to up to 10 million homes by 2012.
In April 2007, the BSG, - the UK’s leading independent advisory group on broadband - published its Pipe Dreams Report that stated that there was a two-year window to create the right environment for next generation broadband deployment in the UK.
Commenting on the announcement, Antony Walker, CEO of the BSG said “There has been a question mark hanging over the UK telecoms sector for the last 18 months about how we move to next generation broadband. Today’s announcement is by no means the whole answer, there are still questions about the regulatory framework and how we extend services to more rural areas, but it is a very significant step forward”.
BT’s announcement comes in response to increasing competition from cable and new mobile broadband services and growing demand for bandwidth from consumers. Walker described it as “a positive sign that the transition to next generation broadband can be market-led. The key question now will be whether Ofcom can move quickly to create a regulatory framework that both enables large-scale investment and ensures effective competition”.
The BSG believes that the move to next generation broadband will be at least as important as the move from narrowband to broadband. “It will bring about a revolution in the capability and quality of services and will enable the next big development of the internet. You could think of it as the catalyst for web 3.0”.
| BT's Superfast Broadband: Call or Bluff?
My first paper as a Yankee Group NGA analyst was published during my holiday. It's entitled BT's Superfast Broadband: Call or Bluff? It was written in collaboration with my colleague Camille Mendler and it analyses BT's July NGA announcement. If your company is a Yankee Group customer, you can access this piece on our webiste or through your internal market intelligence contacts.
If you're not, time to lobby the right people!
telco2.0 blog | 4 Aug 2008 | BT fibre roll-out: Do the numbers add up?
BT is at last moving on fibre. This is of interest because BT don’t own a cellular network, and their current residential copper access network is functionally separated — a very ‘Telco 2.0’ horizontal model. Is it possible to make money on new network builds without complete vertical integration and a monopoly on services?
We dig into the numbers, and work out whether BT’s shareholders should be concerned, or delighted. (...)