Ofcom officially releases BT from its Openreach undertakings

Measures BT undertook in 2005 to placate Ofcom over its wholesale operations are officially no longer relevant, so it doesn’t need to bother.

This seems to be a bit of a formality, since the legal separation of Openreach from BT is supposed to mean BT has no direct influence over the fixed line wholesaler. But at the very least it marks a milestone in BT’s relationship with Ofcom and gives Philip Jansen one less thing to worry about when he takes over next year.

The previous milestone was the official transfer of 31,000 staff from BT Group to Openreach at the start of this month. “This is an important day for Openreach as we’re fulfilling the commitments to Ofcom under the Digital Communications Review,” said Openreach Chairman Mike McTighe at the time. “Openreach now has its own Board, greater strategic and operational independence, a separate brand and an independent workforce – and we’re ambitious for the future.”

The long and short of it seems to be that Openreach now has a separate and distinct relationship with Ofcom and will be assessed solely on its own merits, with no BT baggage. This is probably good news for everyone and is ultimately what all this ‘legal separation’ business is supposed to be about. It should also protect Openreach from accusations of favouring BT. You can read the full statement here.

A possible manifestation of this new, unfettered Openreach may have been the announcement last week that it is dropping the price of full fibre broadband infrastructure to new homes by 75%. Openreach got a nice lot of kudos from public figures for doing its bit to improve fibre coverage, so job done there.

BBWF 2018: Chorus sings the praises of centralised infrastructure model

Yesteryears rumbling story was the enforced separation of BT and Openreach, and while this might have been nothing more than a thinly veiled show, Ofcom might look at the success of Chorus for future inspiration.

Down in New Zealand, Chorus is an example of what can be achieved through structural separation and effective centralised investment in broadband infrastructure. The business is rolling out fibre faster than many in the world, giving rise to a landscape which benefits the consumer and is remaining profitable in the meantime. Speaking at Broadband World Forum in Berlin, Kate McKenzie, CEO of Chorus, demonstrated just what is actually possible.

Back in 2011, Telecom New Zealand was completely separated into two legal entities; Spark for mobile and Chorus for broadband. Unlike the Openreach and BT separation, these are two entirely separate (and listed) businesses, both of which are proving to be a success.

Fibre broadband penetration is at roughly 70%, with the team targeting 87%. Ubiquitous penetration would be perfect, but due to the at times harsh environment in New Zealand, it is just commercially impossible with today’s economics. New Zealand might be a small country, but the environment is incredibly varied and population density can be a nightmare. Technology is now the third largest contributor to the economy, accounting for 8% of GDP, and is steadily growing. The country now even has its own space programme, and fibre penetration has been heralded as part of this success.

“Coming up with a plan and sticking to it is key to success,” said McKenzie. Sensible regulations, consistent government policy, an understanding of consumer demand, as well as a vigilant board to keep a close eye on costs and returns, are needed to create a successful centralised infrastructure model.

The only suspect outcome is the 90+ service providers in the market. This might be great for the consumer, but it is not sustainable. Barriers are entry are almost none existent allowing anyone to get involved, but numerous of these businesses will fail due to the cut throat nature of competition. However, there certainly are some interesting models. One example is energy companies bundling energy and broadband services together.

Of course, there are dangers of centralising so much spending. Without a resilient and robust regulatory framework, the monopoly could be abused. Australian broadband providers are supposedly feeling the sting of NBN’s dominance with Telstra complaining wholesale rates are double what they should be. The political agenda also needs to be quite stable, as too much interference or changes from different government administrations could cause disaster.

Despite the negatives, New Zealand seems to have struck the right balance. Perhaps this is a country Ofcom should have a close look at. BT might have resisted (and will obviously continue to do so) pressure to remove Openreach from its business, but under the right conditions, New Zealand has shown the great benefits which can be realised for the economy and the consumer.

Sky strikes an ultrafast deal with Openreach

Sky UK has reportedly become the first customer of a new discount deal from Openreach to encourage use of Gfast technology.

According to the Telegraph, fixed line wholesaler Openreach has been offering discounts of up to 40% to entice ISPs to use its Gfast products. Gfast extracts more bandwidth from legacy copper infrastructure, of which Openreach has loads, and is therefore a lot cheaper to provide that fresh fibre.

In typical ISP over-marketing style, this Gfast service is being packaged as ‘ultrafast’, which is one order of magnitude faster than superfast. It’s not obvious where we go from there. Megafast? F*ckingfast? Sky is apparently also signing up for fibre, where it’s available, which will be marketed as OMFGfast.

The Telegraph piece indicates UK ISPs are conflicted about even offering faster broadband to their customers as slower service apparently provide more margin, which is depressing. Ofcom has been hassling Openreach to cut its process but if current prices still disincentives ISPs from trying to improve their offering then it looks like the UK broadband market is still somewhat dysfunctional.

Here’s a recent Openreach video about how great Gfast is.

 

Openreach launches discount prices for superfast broadband

Openreach as announced a number of discounts for wholesale customers, in an effort to encourage the telcos to focus more on superfast and ultrafast services.

The offer, which covers fibre-to-the-cabinet and fibre-to-the-premise wholesale services, could be as much as 40%, and is geared towards encouraging service providers to focus on their own customers, as opposed to engaging in the cut throat battle of stealing subscribers from competitors. The hope is service providers will pay more attention to the subscribers they currently have, upgrading more to superfast and ultrafast connections over the next three to five years.

“We’ve invested more than £11 billion into our network over the past decade and whilst that’s helped the UK become a global digital leader, there are still millions more homes and businesses that could benefit from the better broadband infrastructure we’ve built,” said Openreach CEO Clive Selley.

“The offer is a win/win for Communications Providers, their customers and Openreach. It will help Britain’s homes and businesses to experience the benefits of faster and more reliable broadband. And it will incentivise our wholesale customers to participate in long-term investment in digital infrastructure by upgrading more of their customers to superfast and ultrafast services.”

As it stands, 10 million homes around the UK have upgraded to superfast services, though the total could be as high as 28 million. Openreach has also quoted Ofcom research claiming an additional 4 million could upgrade for the same price or even less. Such statistics perhaps demonstrate the attitude of service providers in the UK, securing more customers is more important than keeping the ones you have happy.

UK government unveils its cunning plan for future telecoms

Some UK officials had a bit of a think about telecoms infrastructure and were so pleased with the outcome they wrote it down and published it.

Whitehall’s condensed telecoms wisdom has manifested itself in the form of the Future Telecoms Infrastructure Review – a 90-page brain dump full of top tips on how to make the UK better at telecoms, with a heavy emphasis on ‘full fibre’. Only this, it seems, will keep our national pipes healthy and regular.

We want everyone in the UK to benefit from world-class connectivity no matter where they live, work or travel,” said new Secretary of State for this sort of thing Jeremy Wright. “This radical new blueprint for the future of telecommunications in this country will increase competition and investment in full fibre broadband, create more commercial opportunities and make it easier and cheaper to roll out infrastructure for 5G.”

Sounds good Jezza, so let’s take a closer look. Here are the key recommendations from the report:

  • New legislation that will guarantee full fibre connections to new build developments;
  • Providing operators with a ‘right to entry’ to flats, business parks, office blocks and other tenanted properties to allow those who rent to receive fast, reliable connectivity, from the right supplier at the best price;
  • Reforms to the regulatory environment for full fibre broadband that will drive investment and competition and is tailored to different local market conditions;
  • Public investment in full fibre for rural areas to begin simultaneously with commercial investment in urban locations;
  • An industry led switchover (from copper to full fibre) coordinated with Ofcom;
  • A new nationwide framework which will reduce the costs, time and disruption caused by street-works by standardising the approach across the country;
  • Increased access to spectrum for innovative 5G services
  • Infrastructure (including pipes and sewers) owned by other utilities such as power, gas and water, should be easy to access, and available for both fixed and mobile use;
  • Ofcom to reform regulation, allowing unrestricted access to Openreach ducts and poles for both residential and business use, including essential mobile infrastructure;
  • Alongside the FTIR, Government has also published a Digital Infrastructure Toolkit which will allow mobile networks to make far greater use of Government buildings to boost coverage across the UK.

To be fair there do seem to be some genuinely useful measures in that list. Improved access to sites is something regularly called for by operators and if that, together with a significantly more benign regulatory environment, is actually delivered, then telcos will have far fewer excuses for not just cracking on with the job. Having said that the obligation for new builds to have full fibre connections could further inhibit that already feeble industry.

“We welcome the government’s review, and share its ambition for full-fibre and 5G networks to be rolled out right across the UK,” said Ofcom Chief Exec Sharon White. “The government and Ofcom are working together, and with industry, to help ensure people and businesses get the broadband and mobile they need for the 21st century.”

The ‘notes to Editors’ at the end of the press release seek to further illustrate what a great idea ‘full fibre’ (i.e. FTTP) is. In a blow to technologies such as Gfast they note that running fibre and copper in parallel is inefficient. They also reckon that ‘if we get the conditions right’ the market should deliver 80% FTTP coverage (Portugal is already at 89%), despite onlt being at 4% right now.

The company largely responsible for delivering 20x more fibre than we currently have will be Openreach. “We’re encouraged by the government’s plan to promote competition, tackle red tape and bust the barriers to investment,” said an Openreach spokesperson. “As the national provider, we’re ambitious and want to build full fibre broadband to 10 million premises and beyond – so it’s vital that this becomes an attractive investment without creating digital inequality or a lack of choice for consumers and businesses across the country.”

The report doesn’t quantify the total number of premises in the UK but it does say around a million currently have FTTP, and since that represents 4% of the total that gives us 25 million premises. In turn that means Openreach’s lofty ambition would still only get us half way to 80% so there remains a lot of work to be done.

A lot of that, it seems, will be done by CityFibre, which is aiming to connect 20% of the country to fibre by 2025. “Today marks the day the government decided once and for all to leave copper behind and commit the UK to a full fibre future, making clear that a new generation of infrastructure builders is the vehicle for delivering its bold ambition for all homes and businesses to be connected to full fibre by 2033, not just Openreach,” said Mark Collins, Director of Strategy at CityFibre.

“However, it is critical that the consumer is at the heart of this fantastic opportunity from the start, as this is the key to unlocking demand. That means avoiding price rises, ensuring switching between networks is simple and ending the years of misleading ‘fake fibre’ advertising. Getting both sides of the equation right is key to ensuring millions of homes and businesses will benefit – we now need to see the Government and Ofcom push these plans through.”

CityFibre isn’t the only independent fixed infrastructure player to cautiously welcome the report, but with an air of ‘I’ll believe it when I see it. “We welcome the Government’s statement today that a switchover from hybrid to full fibre networks could be underway in the majority of the country by 2030. But the devil is in the detail,” said Evan Wienburg, CEO of full fibre infrastructure provider TrueSpeed.

“While the Government is right to state that a full-throttle drive to nationwide full fibre connectivity requires competition and commercial investment to succeed, a fair and equitable playing field for all infrastructure providers is essential,” said  This has not always been the case. There are numerous examples of tax payers’ money being wasted by national incumbent providers building FTTC/FTTP networks in areas where privately funded infrastructure providers have already deployed.”

Coinciding with the publication of this report is the formation of a pan-European alliance of indie fibre providers, including CityFibre. Its aim seems to be to promote the wholesale-only model and make sure fibre means fibre in broadband advertising. The alliance doesn’t seem to have a name yet but something like the Fibre Union of Connectivity Kings might do the trick.

At the very least this report and its recommendations give outfits like CityFibre a concrete set of parameters to refer to when embarking on one of their regular moans about how unfair the UK infrastructure market is. It looks like the government is committed to doing everything it can to encourage fibre investment and it should definitely be held to account for that over the coming years.

Openreach gets Nokia and Huawei involved in its Fibre First efforts

UK fixed line wholesaler Openreach has announced both Nokia and Huawei have been selected to help it with the next phase of its fibre rollout.

Openreach has been banging on about its ‘Fibre First’ strategy for a while, which essentially consists of vowing to hook three million homes and businesses up to full fibre by the end of 2020, and a more vague aspiration to hit ten million sometime in the mid 2020s. Opinion is divided about how ambitious these targets are, but they’re certainly better than nothing.

With Ericsson not involved in the fibre side of things and ZTE fighting for its life, the obvious vendor partners for Openreach in its fibre rollout are Nokia and Huawei. Sensibly it has decided to get both of them involved, with the ZTE situation serving as a brutal reminder of the dangers of putting all your eggs in one basket.

“We’ll be going flat out to make FTTP available to three million homes by the end of 2020, and we want to reach 10 million by the mid-2020s, so using cutting-edge technology will be integral to achieving that,” said Peter Bell, CTO & NGA Operations Director at Openreach. “Britons consume more than double the amount of data they did just three years ago and whilst we’re already a leading digital economy, Openreach continues to invest in network upgrades to make sure we can repeat that success and keep well ahead of demand.”

“We’re excited about this new five-year collaboration with Openreach and are confident that our innovation, strength and operational expertise will benefit all broadband subscribers in the UK,” said Frederic Guillén, President of Nokia Fixed Networks.

“As a long-term strategic partner of Openreach, we look forward to continuing our work with the fibre and network delivery team,” said Jeffrey Zhou, President of Huawei Access Network. “We welcome the opportunity to help build a better, faster and intelligent network that helps Openreach customers stay connected. Huawei is committed to building a better connected UK.”

Great quotes guys – really fleshed the whole thing out for us. Along with the embargoed press release Openreach attached lengthy datasheets for the Nokia 7360 ISAM FX and the Huawei MA5800, which presumably are the key bits of kit being used. We preferred the Nokia one because it was shorter.

Openreach announces a bunch of new Gfast locations

In spite of heavy pressure to raise its fibre game, BT’s supposedly autonomous wholesale unit Openreach has proudly unveiled a major extension of its Gfast programme.

Referring to its as ‘cutting edge technology’, Openreach announced it’s adding 59 new locations to the 46 already served by Gfast, which extracts improved performance from legacy copper cables. Apparently this will help to ‘reinforce the UK’s position as the leading digital economy in the G20.’

“Britons are using their home broadband connections more than ever – consuming more than double the amount of data than they did just three years ago,” advised Kim Mears, MD for Strategic Infrastructure Development at Openreach. “A mass of new apps and services which demand higher quality broadband connections are becoming parts of our daily lives in our homes and at work – like virtual and augmented reality and more sophisticated online gaming, education and healthcare. That’s why we’re making this huge investment in upgrading the network, to make sure we stay a step ahead of that demand.”

The Openreach spin on Gfast is that it enables more of the country to get faster broadband speeds more quickly than if we just sat and waited for the fibre-to-the-premise rollout to run its course. Having said that Openreach was also quick to stress how totally into fibre it still is and to restate its vague ‘10 million premises by the mid-2020s’ pledge.

Here’s the full list of places that will live the Gfast dream by some unspecified date: Aberdeen Denburn, Acocks Green, Altrincham, Aylesbury, Bedford, Birmingham Central, Bishops Stortford, Boscombe, Bowes Park, Bury St. Edmunds, Bury, Byfleet, Cardiff, Carlisle, Chelmsford, Chester, Cosham, Didsbury, Erdington, Gipsy Hill, Guildford, Hampton, Harlow, Harrogate, Headingley, Heywood, Kingston, Lancaster, Leamington Spa, Leeds, Llantrisant, Maidstone, Market Harborough, Mile End, Morley, Narborough, North Finchley, Paignton, Plymouth, Rugby, Shipley, Slough, South Kensington, Southampton, Southend Town, St Albans, Stockton Heath, Swadlincote, Tamworth, Taunton, Telford Wellington, Tunbridge Wells, Walthamstow, Weston Super Mare, Windsor, Wolverhampton, Woodhouse (Berkshire), Woodley, York.

BT gets a reminder Ofcom is still keeping a close eye on Openreach

Ofcom has released its first progress report on the legal separation of BT and Openreach, commenting progress is being made, but there still might be too much meddling going on.

The report, which you can see here, states there has been a satisfactory amount of work done, though there are still signs BT is fundamentally entwined in the organization. The problem here is simply down to the fact BT will not want to lose too much control. Current projects have focused on staff training and removing BT branding from Openreach, but these should be considered little more than window dressing and busy work; Ofcom needs to make sure BT cannot influence Openreach operations to its own benefit or the detriment of competitors.

The question still remains about balance. One of the concerns raised in the report is whether the new structure has struck the right balance between BT’s interests and those of Openreach. BT still has a major say in the Openreach strategy, and while this is still the case, few could deem this initiative a success. One example focuses on the investment plans.

“This is supported by emails exchanged between senior executives which demonstrate that BT was involved throughout the financial planning process,” the report states. “We are also concerned that BT’s newly established Investment Board reviewed Openreach’s investment proposals to be included in its strategic plans before the final draft plans were presented to the Openreach Board for approval. This is an issue that we will explore fully in the next monitoring period.”

Surely this should be considered contradictory to the purpose of having an independent board at Openreach. If BT is influencing the decision making process before the board is getting involved, the entire process of independence should be considered redundant.

There has of course been progress, it would be unfair to call this a disaster. However, in over a year the situation is fundamentally the same.

UK Chancellor wants 15 million FTTP by 2025, Openreach is sticking with ten

The UK Chancellor of the Exchequer has said he wants to see full fibre to 15 million premises by 2025 but the CEO of Openreach thinks 10 million is more realistic.

Phillip Hammond was speaking at the Confederation of British Industry (CBI) annual piss-up and his general agenda seemed to be to show how much his government is helping the UK tech sector. There was lots of talk of public R&D spending and name dropping of emerging tech trends such as AI and autonomous vehicles.

“But we won’t be able to put the UK at the front of the pack unless we have infrastructure that is fit for the future,” he said, before equating fibre networks with the canals, railways and roads of the industrial revolution. “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.”

Hammond conceded this is an ambitious target and that it won’t be achieved merely as a result of him setting it, but at the same time implied it won’t happen without government intervention. Sadly that’s all we got.

Precisely what the UK state will do to encourage the likes of Openreach to raise their game remains to be seen and it will probably take the form of further grandstanding at equivalent piss-ups in the intervening years. Apparently Matt Hancock will flesh the plan out later this summer, if he can find time away from protecting us from internet horridness.

Clive Selley, CEO of Openreach – the main fixed line infrastructure player in the UK – seems to think this target is over-ambitious. “We share the Chancellors’ full fibre vision for Britain,” he said, as he has previously. “This year we’ll double our FTTP footprint and by 2020, we will have built it to 3 million homes across the UK. We want to reach 10m premises by the mid-2020s, and believe we can ultimately fully-fibre the majority of the UK under the right conditions.”

Openreach currently has full fibre to around 500,000 premises so it will reach a million by the end of this year and then take over a decade to do another two mil. At that rate it seems highly unlikely that it will do another seven in five years, let alone 12, but hey, it’s just a target.

The Openreach virtual dark fibre service finally sees the light of day

Six months after proposing a compromise between full dark fibre access and full managed service, Openreach has formally launched ‘virtual dark fibre’.

The proper name for this fibre wholesale service is Optical Spectrum Access Filter Connect and the thinking behind it was explained to us by Openreach General Manager of High Bandwidth and Passive Services, Darren Wallington, in October of last year. In essence it aims to combine the service assurance and response times of a managed service with the scalability and flexibility sought from dark fibre access.

“We’ve re-engineered our high-bandwidth optical services to give our wholesale customers far greater flexibility at a fantastic price,” said Wallington. “OSA Filter Connect allows providers to grow their needs affordably, at their own pace and using their choice of innovative equipment.

“By innovating a virtual dark fibre service, we can give customers that extra flexibility whilst still being able to monitor our network and respond to faults and issues proactively. With a regulated dark fibre access product, we would’ve literally been left in the dark with no monitoring capabilities and significantly longer service interruptions due to the reactive nature of fault reporting, but this means we can commit to a national five-hour response time.”

Pricing seems to be one of the things Openreach has worked on a fair bit on the last six months, much of which have been spent in what Openreach characterizes as ‘proper, constructive engagement’ with UK stakeholders. Additionally it has received a significantly increased level of direct lobbying from MNOs, keen to get ahead of the game on 5G fronthaul and backhaul.

“We’ve listened closely to our customers,” said Wallington. “They wanted something that would address the perceived failings of a ‘one size fits all’ regulated product and they’ve helped us to shape the product we’re launching”

“Both large and small customers told us they wanted a service that offered more competitive high bandwidth pricing with low incremental scaling costs. They also wanted more flexible and configurable services that give them more control, the ability to support fast evolving technology – like synchronization, and more efficient use of space and power.”

It’s not for us to say whether or not this is the right solution to the dark fibre access issue, but it does seem like a good-faith attempt by Openreach to balance a number of different factors and needs. We’ve copied the new pricing tables below to help you make up your own mind.

 

*Pricing – OSA filter connect prices below, note the 5 year term variant is less than our original consultation range

This provides CPs with a 10GB managed service with spare filter ports that they can use to scale to higher bandwidth by themselves with no additional costs from Openreach. We will continue to offer additional Managed Wavelengths for those CP’s who prefer a managed service at very competitive price points.

Product Minimum Period Connection £ Exc VAT Rental per annum £ Exc VAT
OSA Filter Connect FSP3000 – 12 month 12 month £15,550 £7,845
OSA Filter Connect FSP3000 – 36 month 36 month £12,233 £6,276
OSA Filter Connect FSP3000 – 60 month 60 month £12,233 £5,775

* Can be upgraded to 20Gb without a site visit

 

EAD 10Gb will see connection prices reduced by up to 32% and rentals by up to 53%

At the same time the 5 year term variant will now in effect make be a 3 year term product, as we’ve set the early termination charges for Year 4 and 5 to zero.

Product Charge type Current Price New price for 3 April 2018 Price reduction
EAD 10000 Connection £5,990 £5,590 -6%
EAD 10000 Rental £10,500 £4,980 -53%
EAD 10000 (60 month minimum period) Connection £5,990 £4,090 -32%
EAD 10000 (60 month minimum period) Rental £8,400 £4,380 -48%
EAD Local Access 10000 Connection £5,990 £5,590 -6%
EAD Local Access 10000 Rental £7,500 £4,146 -45%
EAD Local Access 10000 (60 month minimum period) Connection £5,990 £4,090 -32%
EAD Local Access 10000 (60 month minimum period) Rental £6,000 £3,648 -39%

 

Dual Fibre mainlink, the headline rate will be reduced from 37.2p to 24p

OSA Main Link charge feature Current price (pence per meter) Price on 3 April 2018 (pence per meter)
Main link per metre or part thereof  37.2 24.0
Main link + Standby link per metre or part thereof  82.8 57.6
Diverse main link per metre or part thereof 42.0 28.8