Tory leadership favourite makes 2025 FTTH commitment

Former-Foreign Secretary and the favourite to be the UK’s next Prime Minister Boris Johnson has undercut DCMS and Ofcom commitment for full-fibre by eight-years.

Writing an op-ed piece for The Daily Telegraph, Johnson (BoJo) has suggested his government would commit to delivering fibre-to-the-home (FTT) broadband connectivity to 100% of the UK population by 2025, beating out current commitments by eight years.

“Think what we could achieve if the whole country had the same lightning access to this essential tool of progress,” BoJo stated. “If the Spanish can do it, why can’t we? Let’s say goodbye to the UK’s manana approach to broadband and unleash full fibre for all by 2025.”

As it stands in the Future Telecoms Infrastructure Review (FTIR), the UK Government has targeted full-fibre broadband for all households by 2033. This might sound like a ludicrous amount of time, though it is the final 10% which is envisioned to be the most difficult. There has been progress in upgrading the UK from copper to fibre, though the UK does seem to be falling behind other European nations.

According to the latest statistics from the Fibre to the Home Council Europe, 1.5% of UK subscribers have adopted fibre services. The industry is suggesting 7% availability of fibre services, while the Government is targeting 15 million premises to be connected by 2025. Steps forward have been made, albeit smaller ones than the likes of Spain, Latvia, Lithuania and the Nordics.

The issue with connecting all of these homes is down to the commercial gain for the telcos. When you get to the rural regions of the UK, delivering FTTH, or even fibre-to-the-cabinet, is not commercially attractive. Not only do you have to worry about the raw materials, there is the complication of civil engineering and the difficulties of navigating the red-tape maze of local authority governance.

This is why the Government is not worried about the first 90% of UK premises, but it is the final 10% which everyone should be concerned over. To connect these final premises, the telcos would have to be encouraged with public funds, as the commercial gain is seemingly below-par.

“But when I mentioned another priority of mine – almost casually – those farmers smote their weatherbeaten hands together and roared their assent,” said BoJo. “They want better broadband. They are indignant at the current failure to provide it – and they are absolutely right.

“A fast internet connection is not some metropolitan luxury. It is an indispensable tool of modern life. You need it for your medical prescription, for paying your car tax, for keeping up with the news and with your family and friends. It is becoming the single giant ecosystem in which all economic activity takes place. It is the place you find bargains. It is the place you find customers.

“It is not only the place you can find a job. It is the means by which you can be interviewed, and your talents uncovered, without incurring the cost of a rail ticket. If your area has a truly fast broadband connection, that area will be a better place to live, to invest, to set up a business; and that area will have a better chance of retaining talented young people and allowing them to start-up businesses and bring up their families.”

Undercutting Government objectives is of course a good way for a leadership hopeful to gain column inches and woo party members, many of whom will live in the more affluent rural areas, but is it actually possible? BoJo has already faced criticism because of dubious claims, just think back to the £350 million a week savings which was emblazoned across the bus during the Brexit campaign.

Telcos can of course be coerced into getting on with their jobs faster than they would like to, but this is an arduous process; the telcos have become masters of stubbornness. And as you can imagine, BoJo has been light on details as to how this accelerated rollout would be achieved, simply stating it would require more government investment.

So here is the question; does BoJo genuinely believe he can speed-up the transition to a fibre diet, or is this another suspect claim which will lead to another member of the general public taking him to court?

Europe missing its ultrafast targets

With only 20% of European customers adopting broadband services over 100 Mbps, the European Commission is falling behind its own targets with six months to go.

While the targets are certainly ambitious, the European Commission has decided it would like to have 50% of all broadband customers across the bloc subscribing to 100 Mbps by 2020. With only 20% subscribing to an ultrafast service, it looks like it is becoming a big ask as we head towards the mid-point of the year.

There will of course be numerous reasons for a lack of adoption. Some will suggest the telcos are not deploying suitable infrastructure to enough people, while others will say they are charging too much. That said, a more sensible explanation is that irrelevant as to how cheap a 100 Mbps service is, it is still too much; why would a normal person need such speeds today? Without the applications, customers would be paying for redundant speed.

What is worth noting is that connectivity is improving on the whole. The availability of ultrafast broadband has increased to 60% across Europe, up from 57% in 2017, while there have been gains on the mobile side as well. The DESI Report claims that 4G coverage is now almost universal in European homes, while rural coverage is also increasing.

We’ll be ready for 5G by 2020 – Reliance Jio

Reliance Jio owner Mukesh Ambani has stated India will be fully-4G by 2020, and is setting his eyes on the 5G euphoria already.

The statement of intent adds to a remarkable couple of years for Reliance Jio and the Indian digital economy on the whole. Starting from nothing in December 2015, Reliance Jio has risen to become arguably the most influential telco in India, dragging the country’s digital economy into the 21st century. A little over two years ago, India was in the digital baron lands, though now the Indian digital appetites are as insatiable as those in ‘developed’ nations.

“India has moved from 155th rank in mobile broadband penetration to being the number 1 nation in mobile data consumption in the world… in less than two years,” said Ambani at the India Mobile Congress, courtesy of Live Mint. “This is the fastest transition anywhere in the world from 2G/3G to 4G. By 2020, I believe that India will be a fully-4G country and ready for 5G ahead of others.”

Paying complements to the pro-active approach to stimulating the digital economy from the Indian government, Ambani is continuing the ambitious expansion of the Reliance Jio business. 5G is what will attract the headlines, most notably after a few telcos highlighted 5G is not a top priority for some nations at Broadband World Forum last week, but the broadband ambitions are just as important.

Tackling the 5G euphoria and increasing broadband penetration across the country perhaps work happily alongside each other when you consider the importance of a fibre network in both cases. The JioGigaFiber proposition, announced during the company’s AGM in July, promises FTTH connectivity in a market where broadband penetration is roughly 10%. ‘Fibering up’ the country is critical for 5G, and Reliance Jio has already started the mission.

“India will be among the largest digital markets in the world,” said Ambani. “Every enterprise must have an ‘India First’ vision to participate in this market. We will need to reinvent to grow and nurture this market to its full potential. This will be a win-win for the entire industry, for India and for the entire world.”

One interesting question which remains is whether the lessons taken from the Jio-effect can be implemented into other nations which are struggling in the lowly places of the digital league tables.

Open Fiber banks €3.5bn for Italy FTTH push

Open Fiber has raised €3.5 billion from a pool of commercial banks, Cassa Depositi e Prestiti and the European Investment Bank (EIB) to fuel the firms FTTH push across Italy.

The investment will be pooled together with resources made available by shareholders and recent profits to bolster spreadsheets to $6.5 billion. The plan is to expand the firms fibre footprint to 19.5 million homes, both in urban and rural regions.

“The financial market has shown great interest in the Open Fiber Industrial Plan,” said Elisabetta Ripa, CEO of Open Fiber. “The transaction involves the most important Italian and international credit institutions. This is an important sign of confidence in the project, in the wholesale only model and especially in the Open Fiber people who have done a fantastic job in recent months.”

“The presence in the pool of lenders of several foreign financial intermediaries of primary importance is, implicitly, a sign of confidence in our country, significant in a phase of nervousness of the markets; the operation is also a new demonstration of the growing attention of the markets for the validity of the business model adopted by Open Fiber and other innovative European companies, the most suitable to meet the need to realize, with long-term investments, the infrastructures new generation network for the Gigabit Society,” said Franco Bassanini, President of Open Fiber.

Open Fiber has been making the right noises in recent months, though the Italian market on the whole might look like a very different place before too long. And not a moment too soon for customers who have been experiencing average broadband download speeds of 15.1 Mbps.

Aside from the fibre assault here, board reshuffling and arguments with the Italian government have meant the fixed business unit will be spun off into its own separate, though still 100% owned, business. The move is very similar to the BT/Openreach separation in the UK, though some might hope the same shambles isn’t experienced in Italy.

FTTH on the up, but UK still lags miles behind Europe

Ofcom has released the Spring edition of its Connected Nations report, revealing there are now more UK consumers who have access to FTTH connectivity than those who struggle to get a 10 Mbps connection.

In terms of progress since the last report, which was released in December 2017, the number of homes which have access to superfast broadband, 30Mbps or higher, now stands at 93% of homes, up from 91%. While this statistic is moderate for today’s digital economy, what is less encouraging are the number of homes who have access to full-fibre connectivity. This number is now 4%, or 1.2 million homes, which pales in comparison to the continent.

“There have been further improvements in the availability of broadband services across the UK,” the Ofcom report reads. “However, more needs to be done to provide all consumers with access to decent broadband and to encourage further investment in more reliable, faster full-fibre broadband services.”

Looking across the English Channel to the continent, Spain has passed 17.5 million homes with full-fibre connections, with roughly 33.9% of the population subscribing to the services. Spain has the highest penetration across Europe, but it isn’t the only Spanish we’re lagging behind. According to the Fibre to the Home Council Europe, the majority of the continent are ahead. Latvia apparently has more than 50% of the homes passed with fibre at the top of the list, while Lithuania and Sweden exceed 40%. Only Poland, Czech Republic, Italy, Germany Croatia, Ireland, Serbia and Austria are worse than us.

Looking at 4G services across the UK, 57% of geographic area is covered by all operators, up from 43%, while 13% is not covered at all. This is down from 22%, but is still quite a large number for a nation which is not necessarily the largest around. Indoor coverage is a bit better for 4G at 68%, but these numbers are still not incredibly encouraging.

For a country which constantly preaches about its supremacy on the global economics stage, harbouring ambitions of leading the next era of the digital economy through dominating the AI field, the foundations are severely lacking. We certainly hope this report has found its way onto desks at the Department of Digital, Culture, Media and Sport, as a reality check is probably needed.

San Francisco building own Open Access Fibre network for $1.9bn

A report has emerged from City Hall in San Francisco which assesses the final details for the city to build its own fibre network, passing 100% of homes and businesses, for $1.9 billion.

While there will be likely be hundreds of conversations around the US on how fibre can be delivered to the home, most of which will be nothing more than blue-sky thinking, this is one we like. The city already has the appetite for fibre after false-promises from Google Fiber last year, and the attitude of the ISPs when it comes to net neutrality might force the hand of the city. $1.9 billion is also not a huge amount when you actually think about it.

This would certainly be an approach to connectivity which would raise some eye brows, and one which could start a trend across the states. This would be a network which is designed and managed on principles which are governed by the opinions of the local population not federal regulation. The city has promised it will close the digital divide, ensure net neutrality principles are maintained and privacy concerns are addressed.

Even the emergence of such a scheme perhaps demonstrates how bored the US people are of the current telco industry. Service is highly prioritised in the urban or affluent areas, it is expensive, customer support is usually poor and fibre rollout plans are staggering. To ensure fairness throughout the city, a free Wifi service would be offered in public areas, while low-income residents would qualify for subsidies to make connectivity more affordable

Add into the mix that the people of California are not happy with the way net neutrality rules are being relegated to the footnotes, and the idea of a publicly funded and owned network becomes more attractive. State Senator Scott Weiner has already introduced Senate Bill 822, which aims to re-establish net neutrality rules across the state, though by owning its own network San Francisco would be able to enforce its own governance policies on ISPs.

The network would essentially function in similar manner to Openreach in the UK. The infrastructure would be owned and managed by the city, who would provide an ‘OTT’ service to the ISPs over the same lines. A two-tier data highway would not be allowed, and ISPs would also be forced to request ‘opt-ins’ from customers for any data collection or dissemination. It sounds like a great idea for those who oppose the current path of the FCC.

The only concern here would be the price. In the telco world, $1.9 billion is not a huge amount any more, but when it is public funds it is a monstrous amount of cash. However, the report notes that the benefits of a full fibre network should outweigh the investment. The digital economy is booming in California already and a full-fibre network would only accelerate this momentum in San Francisco. Add in the idea that 12% of the city lack internet access at home, a number which raises to 15% when you measure public school students alone, and the merit of the scheme becomes more promising. There are still a huge number of questions to be answered, for example whether it would be a lit or dark fibre network or the nitty gritty details of funding, but progress is being made.

The ISPs will of course not like this idea, as it creates a level playing field (everyone will use the same infrastructure) which encourages a pricing race to the bottom and forces the development of a customer service environment which actually cares about the customer. Genuine value adds will also have to be considered as holding customers to ransom as the only provider in an area will not exist anymore. You should expect some sort of lobbying or legal action to disrupt development.

That said, looks like the balance of power will be rightly back in the hands of the purchaser. You can read the full report here.

UK offers fibre vouchers for consumers and SMEs

The UK government has announced yet another scheme designed to boost fibre penetration but this one might actually be useful.

£67 million has been made available to be converted into vouchers that are designed to help with the costs of connecting to ‘full fibre’ broadband. The voucher value threshold for consumers is £500 and for SMEs it’s £3000. The official name of the initiative is the Nationwide Gigabit Broadband Voucher Scheme (GBVS).

Of course politicians find it impossible to redistribute public money without positioning it as an act of personal altruism. “We’re backing Britain’s small businesses by investing £67 million to bring full-fibre broadband to more businesses up and down the country,” said UK Chancellor of the Exchequer, Philip Hammond. “This means faster, more reliable broadband access as we build the digital infrastructure we need to make our economy fit for the future.”

“Small businesses are the backbone of the British economy and now they can turbo-charge their connectivity with gigabit speeds,” said DCMS Secretary of State, Matt Hancock. “By building a full fibre future for Britain we are laying the foundations for a digital infrastructure capable of delivering today what the next generation will need tomorrow.”

Here’s what the release has to say about how to get hold of this wedge:

Businesses and residents can get vouchers from suppliers who are registered with the scheme. Vouchers may only be used to support the cost of eligible connections. Suppliers can offer vouchers to both new and existing customers.

Where suppliers are able to provide qualifying connections to single SMEs, vouchers will be made available to cover up to £3,000 of eligible costs.

The only way residents can benefit from the voucher scheme is as part of a local community group scheme, which must also include small businesses. Residents and businesses taking part in a group scheme are able to join together to pool the value of their vouchers. Within this group the total value of vouchers used by businesses must always be greater than the value of vouchers taken by residents.

In some areas the value of a single voucher will not fully meet the installation costs of a gigabit capable full fibre connection. Anyone in this position can also benefit from the group approach outlined above.

So it looks like a fair bit of hassle for consumers to get their half a grand but then again it’s worth it if you can pull it off. Let’s see what the uptake is like before we get too excited.

In other UK fibre news Openreach has announced a recruitment drive, resulting in a flood of political approval. The fixed line wholesaler is going to hire 3,500 trainee engineers over the next year and will open the first of 12 new fibre engineering schools in Bradford.

“It’s great news that Openreach is creating 3,500 new permanent jobs rolling out full fibre broadband,” said Hammond, who starting to look obsessed with fibre. “This digital infrastructure will be welcomed by families and business across the country, and these new highly skilled jobs will be a boost to our talented workforce as we build an economy fit for the future.”

There were also extensive quotes from Openreach but they were largely pieces of self-promotion banging on about how committed to laying fibre to even the most remote parts of the country and how important it is that these hires are nice and diverse. But credit where it’s due – there does seem to be a decent amount of commitment to improving the country’s fibre infrastructure, which can only be to the national benefit.

Here’s a photo of some of the larks Openreach recruits have to look forward to.

Openreach recruitment

Iliad profits grow as it looks across to Italy

It’s easy to get distracted by the whole Vivendi/TIM saga, but Iliad is another French business looking towards the land of pizzas, Vespas and slicked back hair for future fortunes.

Looking at the financials first, the French telco had a positive 12 months adding just short of one million subscribers to take its total market share up to 19% of the French market. On the broadband side, the business is looking pretty positive as well. Iliad currently boasts of 6.5 million broadband subscribers, 556,000 of which are FTTH, up from 310,000 at the end of 2016. Looking at the spreadsheets, total revenues for the year increased to €4.987 billion, a year-on-year increase of 5.6%. Not bad.

Iliad is a company we rarely speak about in the UK, partly because Orange is a more dominant player on the wider European space and the Vivendi/TIM situation is too unusual to pass on, but these are some pretty solid results. After disrupting the market with its Free Mobile offering, the telco is showing it wants more than 15 minutes of fame with its investment plans as well. FTTH plans are continuing to develop as 6.2 million homes are now fibre connectable, up two million compared to 2016, while the team claims to have 4G coverage of 86% of the French population.

Over the next 12 months the team plan to open another 2000 new sites, driving 4G coverage up to 90% of the population and 3G to 95%, while also finalizing the migration of 4G sites to 1,800 MHz. In the broadband business, the aim is to increase the FTTH subscriber base by 300,000 to 500,000 and have 9 million connectible FTTH sockets by the end of the year.

Aside from consolidating its position in the French market, Iliad has also ramped up plans to become Italy’s fourth mobile operator before the summer. 2017 was a year of planning and organization, the team hired 80 employees, put in place a management team and €220 million paid to the Italian government for the re-farming of 1,800 MHz frequencies, but 2018 is the year to make some noise.

The next couple of months could make the Italian market a very interesting place, with Iliad planning to achieve an EBITDA break-even in Italy with less than 10% market share and also the separation of the fixed network business from TIM. With Vivendi/TIM looking to capitalise on the media market to turn a profit and Iliad possibly aiming to use the same strategy which brought success in France, it could be a perfect mixing bowl of chaos.

Elsewhere in the French market, Altice has announced it has entered into an exclusive agreement to sell its international wholesale voice carrier business to Tofane Global. The announcement is part of a wider Altice strategy to remove any non-critical assets from the portfolio.

Vodafone and CityFibre make Aberdeen second UK gigabit city

A couple of weeks back Vodafone announced it would be bringing full-fibre broadband to Milton Keynes as part of broad assault on the broadband scene and now the second gigabit city has been named – Aberdeen.

The initiative with partner CityFibre promises to bring gigabit speed full-fibre broadband to 12 cities in the UK, and has the chance to make some waves in the sector. While the remaining 10 cities are yet to be named, a fair assumption would be areas where download speeds are currently woeful. We had a crack at guessing where would be next, and while Aberdeen was part of our five-city shortlist, we thought Peterborough or Edinburgh. We still think that these cities will be on the Vodafone hitlist, but we were just wide of the mark with Aberdeen.

As part of the initiative a £40 million investment in full fibre infrastructure for the Granite City has been committed. While CityFibre has already laid a 90km fibre spine through the city, the pair will systematically micro-trench each street. When Milton Keynes was announced as a gigabit city, Vodafone confirmed fibre would be laid down every street irrelevant as to whether demand is there. The idea is to give the option to the customers, not seek a commitment from X amount of premises before work begins.

Fibre optic cables will be used for every stage of the connection, from the customer’s home or business to the Internet, allowing Vodafone (as the customer facing half of the partnership) to offer broadband speeds which it hopes will hit 1 Gbps. Whether these speeds will be hit remains to be seen, but considering only 3% of the UK have FTTP connections, Aberdeen will be in a very enviable position before too long. Work on delivering the city-wide fibre network will begin in July.

“Our Gigabit broadband services, delivered over CityFibre’s new full fibre networks, will help Aberdeen build on its credentials in innovation and as one of the best places to start a business,” said Vodafone UK CEO Nick Jeffrey. “It will also transform consumers’ daily lives through superior Internet access. We’re committed to helping businesses, entrepreneurs and residents embrace the new gigabit society in Aberdeen, the technological heart of Scotland”

“Our commitment to Aberdeen is further evidence of the action CityFibre is taking to deliver Britain’s full fibre future,” said Greg Mesch, CEO of CityFibre. “Our existing network in Aberdeen provides us with an eighteen-month head-start on a full fibre roll-out to nearly every home and business in the city. With similar FTTP backbone networks already built in over 40 UK towns and cities, our contribution to national full fibre coverage is well underway. We are getting on with the job of building Gigabit Britain – at full speed.”

While there hasn’t been a notable reaction from incumbents in Milton Keynes just yet, we would expect BT to start ramping up it G.Fast game in cities were speeds are poor. While there has been little competition in those cities to date, Vodafone could easily capture frustrated customers with a strong speed offering.

A lot will of course depend on pricing (which will be announced later in the year – Vodafone promises it will be competitive to tempt customers away from copper) and where is next on the gigabit roadshow, but these cities where terrible broadband has become the norm will welcome a disruption to the status quo.

Openreach makes big FTTP statement, but with strings attached

Openreach, the UK’s dominant fixed-line wholesaler, has vowed to ramp up its fibre-to-the-premises roll-out to hit three million premises by the end of 2020.

As everyone knows, you can’t make a grand public statement without giving it a name, so BT-owned Openreach came up with the ‘Fibre First’ programme, presumably to distinguish it from the previous strategy of combining FTTC with copper augmentation via Gfast. The underlying point seems to be to virtue-signal about its new-found commitment to fibre.

“Through the Fibre First programme, Openreach is getting on with the job of building an ultrafast Britain,” said Openreach CEO Clive Selley. “We are accelerating our plans to build FTTP to three million premises by 2020 which sets the course to reach ten million by the mid-2020s with the right conditions. Where possible going forward, we will ‘fibre first’.

“Working closely with central and local government and our communication provider customers, we will identify the cities, towns and rural areas where we can build a future-proofed, FTTP network that’s capable of delivering gigabit speeds to all homes and businesses at an affordable cost.

“We’ll continue to invest in our people and we’re already in the process of re-training and upskilling to make Fibre First a reality. We plan to hire around 3,000 engineers in 2018/19 to kick-start Fibre First and further improve the reliability and performance of our existing networks.”

In case it wasn’t obvious, Selley is saying he’ll commit to the first three million (presumably where he feels healthy ROI is most guaranteed) but needs to see some public and CSP cash before he’ll do any more. Birmingham, Bristol, Cardiff, Edinburgh, Leeds, Liverpool, London and Manchester are flagged for the first wave, which Openreach nebulously said could also connect ‘up to’ (they just can’t get out of that habit can they?) 40 UK towns.

To further demonstrate its tear-jerking altruism Openreach reckons the cost of all this fresh fibre will be £300-£400 per premise, making the total cost £1-4 billion. The clear message is that if you want the spend to get anywhere near to the top end of that range we all need to chip in. Having said that the capex estimations seem to be coming down.

In a somewhat contradictory position the Openreach announcement also stressed how into Gfast it still is. “Openreach remains committed to rolling out Gfast at speed,” it said. “Openreach will employ a Fibre First ethos and will not build Gfast and FTTP to the same locations. So, in summary, Openreach is committed to fibre unless it’s a bit too pricey and/or it fancies going with Gfast instead. Great.