UK Labour party pledges to nationalise much of BT if elected

A key policy of the Labour party ahead of the UK general election next month is to make broadband ‘free’ by nationalising Openreach.

Renationalising infrastructure is a core Labour policy in the run up to next month’s election and now that includes broadband. The good news for BT, and fans of property rights in general, is that Labour plans to buy the following using public funds it will get from somewhere: Openreach, the parts of BT Technology that deal with backhaul, BT Enterprise and BT Consumer. The bad news is that BT will have no say in the matter and Labour will decide on the price.

“It’s time to make the very fastest full-fibre broadband free to everybody, in every home in every corner of our country,” said Jeremy Corbyn, leader of the Labour party. “Making it free and available to all will open up opportunities for everybody, at the cutting edge of social and economic change. By creating British Broadband as a public service, we will lead the world in using public investment to transform our country, reduce people’s monthly bills, boost our economy and improve people’s quality of life.”

“This is public ownership for the future,” said John Mc Donnell, Labour’s Shadow Chancellor. “A plan that will challenge rip-off ‘out-of-contract’ pricing – and that will literally eliminate bills for millions of people across the UK. Every part of this plan has been legally vetted, checked with experts, and costed.”

Here are some of the ‘notes to editors’ from the Labour announcement:

  • Labour will deliver free full-fibre broadband to all individuals and businesses by 2030. We will integrate the broadband-relevant parts of BT into a new public entity, British Broadband, with a mission to connect the country. Labour will aim to deliver free full-fibre broadband to at least 15-18 million premises within five years.
  • This will be paid for through Labour’s Green Transformation Fund, with the costs of maintaining the network paid by a tax on multinationals (including tech giants like Google and Facebook).
  • To deliver this we will adopt a public mission to roll-out the remaining 90-92% of full-fibre across the country, as well as acquiring the necessary access rights to the existing 8-10% of full-fibre assets.
  • All current workers in broadband infrastructure and broadband retail services will be guaranteed jobs in the new public entity and be guaranteed the same or better terms and conditions.
  • There is a one-off capital cost to roll-out the full-fibre network of £15.3 billion (in addition to the Government’s existing and not-yet-spent £5 billion commitment), which will be paid for from our Green Transformation Fund;
  • The cost of bringing parts of BT into public ownership be set by Parliament and paid for by swapping bonds for shares, as occurs with other public ownership processes;
  • Full-fibre has low maintenance costs once rolled out, which can be estimated at around £230 million a year, which will be more than covered by a system unitary taxation of multinationals, which involves treating multinational companies as single entities, and taxing UK-based multinationals on the share of their global profits that reflects their UK share of their global sales, employment and assets.

Unsurprisingly such a radical pledge has provoked some robust responses, especially since McDonnell had said as recently as July that he had no plans to nationalise BT. The company itself is keeping its cards pretty close to its chest, offering only the following statement.

“It should be a top political priority to super-charge the roll-out of full fibre broadband and 5G right across the UK so we can build the digital economy of the future.  Whatever the result of the election, we’d encourage the next Government to work with all parts of the industry to achieve that. It’s a national mission that’s bigger than any one company.”

Others have been more forthcoming, however. “These proposals would be a disaster for the telecoms sector and the customers that it serves,” said Julian David, CEO of UK tech sector trade body TechUK. “Renationalisation would immediately halt the investment being driven not just by BT but the growing number of new and innovative companies that compete with BT.

“Full Fibre and 5G are the underpinning technologies of our future digital economy and society. The majority of the estimated £30bn cost for Full Fibre is being borne by the private sector. Renationalisation would put this cost back onto the taxpayer, no doubt after years of legal wrangling, wasting precious time when we can least afford it.  These proposals would be a huge set back for the UK’s digital economy which is a huge driver for growth.”

“Today’s announcement highlights the importance of full fibre access for all,” said Lloyd Felton, Chief Exec of County Broadband. “However, it also shows an alarming lack of understanding about the complex nature of full fibre rollouts and the fact that, unlike by comparison the rail industry that operates rail franchises, the industry has already invested billions of pounds in building its own infrastructure over which the service is delivered, in direct competition to BT.

“This proposal would almost certainly lead to delays, or at worst, derailment of existing full fibre investment and new network rollouts. It is a broad-brush, and makes no mention of how customers would be served and supported and provides no recognition for what has been achieved by the many Alternative Network providers who are currently active in providing a competitive full fibre solution.

“The competitive nature of the current market in the UK has meant consumers already benefit from one of the lowest cost broadband services in Europe. Broadband is an essential utility and whilst we share the ambition to bring future-ready full fibre connectivity to every home and business, we believe a mix of public and private investment is the only realistic strategy to deliver the service efficiently, without the need to bring significant cost to the public purse.”

Ofcom isn’t commenting and Openreach is leaving it to BT. We understand that there is an unprecedented exchange of views taking place within the UK telecoms industry, however, and look forward to the outcome of that. We also asked a few industry experts what they thought of Labour’s plans.

“There is no denying that the UK is far from a leader in full-fibre broadband, but the market is really starting to move as Openreach’s rollout plans are complemented by a long list of alternative / competitive network providers – Virgin, Talk Talk, CityFibre, Hyperoptic, and many more,” said Phil Kendall, Analyst at Strategy Analytics.

“A survey of The Independent Networks Cooperative Association (INCA) members showed an aspiration to pass 16 million premises with fibre by 2025. If there is a role for government in this it would be to support pushing broadband coverage out to all communities, so the areas that the private market will struggle to cover profitably, not torching the whole sector.

“If nationalizing Openreach doesn’t kill off some or all of those competing providers or wholesalers then offering free fibre broadband to everyone definitely will. For the average voter, there are good optics on this – free broadband, like free Wi-Fi or free roaming, is a nice populist idea and getting the evil webscale giants to pay for it is perfect. But this is a hugely destructive attempt to fix a sector that isn’t anywhere near as broken as Labour seems to think.”

“On the face of it this is not completely insane,” said telecoms analyst William Webb. “BT was, of course, publicly owned about 30 years ago. There have been state-led fibre deployments, most obviously in Australia, and while this hasn’t gone particularly well, nor had UK fibre deployment under the current model until recently.

“There is always a tension between a competitive market, which we currently have, but which will often not deliver socially desirable outcomes; and a publicly provided service, which will deliver those outcomes but tends to have well known downsides including a lack of innovation, possibly high prices (even if these are charged to taxpayers, not consumers), slow responses to changes and so on.

“But, of course, there are massive issues. The biggest is how we would transfer out of an environment with multiple competing providers in a way that compensates all fairly, that doesn’t slow things down, and that rationalises duplicated resource. Another is the extent to which we really need fibre everywhere and whether a state-led masterplan is reactive to real needs – this was one of the biggest issues in Australia. And as fixed and mobile converge with services like fixed wireless access, intervention will spill across into the mobile arena, potentially destabilising that competitive market.

“Fundamentally, I guess, it comes down to whether you believe in state ownership or market forces. Both can be made to work. But with the market forces approach appearing to work probably as well as it could right now, changing approach feels almost certain to slow things in the short to medium term.”

“It’s great to have bold aspirations but we’ve seen how challenging they are to implement,” said TMT Analyst Paolo Pescatore. “For sure, connectivity needs to improve and so does coverage. There are so many companies laying cables and installing masts. The best way is to forge partnerships which will help lower costs for all including consumers.”

There are coherent arguments in favour of nationalising natural monopolies, but the way Openreach has been regulated alongside the presence of competitive alternative fibre providers means this isn’t one of those cases. There are just so many flaws and pieces of sloppy, wishful thinking in this proposal that if it were a different time of year we’d assume it was a joke.

Firstly there’s the costing alone. Labour not only plans to quadruple Conservative broadband spending pledges, it needs to find the cash to buy over half of BT. Despite the hit to its share price this announcement has delivered, BT’s market cap is still around £19 billion, so that’s another £10 billion or so Labour would have to dig up, depending on how fair it intends to be to BT shareholders. And as for getting US tech giants to pay for the maintenance, good luck with that.

Then you have the underlying concept of forced state appropriation of private property. If Labour is willing to force one of the UK’s biggest companies to sell half of itself to the state, at a price it has no say in, then are any other companies safe? The effect on business sentiment of moves like this is likely to be catastrophic.

But finally, as many people have indicated above, we have the extreme improbability that the state will do a better job of fibre rollout than the private sector currently is. NBN is a great example of the folly of such initiatives and once a Labour government is forced to confront hard financial realities, work on the network would likely grind to a halt.

All politicians try to bribe the electorate in the run up to general elections, but the trick is to at least make it plausible that they will be able to deliver if they do win power. This policy is not only damaging for UK telecoms infrastructure and business in general, it also has no chance of being put into practice as promised. Labour has massively over-reached with this move.

Vodafone extends broadband reach with new Openreach agreement

Vodafone has broadened its fibre footprint to Birmingham, Bristol and Liverpool after signing a new wholesale agreement with Openreach.

The Vodafone business might be primarily known as a mobile business to most, though it has been making strides into the broadband world after signing an agreement with CityFibre last year. What this wholesale agreement with Openreach looks like is an effort by Vodafone to expand its fibre footprint in areas where its primary partner, CityFibre, does not have a presence.

With this wholesale agreement in place, Vodafone will soon be able to offer fibre broadband services in 15 locations throughout the UK.

“Vodafone is committed to a full fibre future and to creating the infrastructure Britain needs to compete and win in the digital era,” said Vodafone UK CEO Nick Jeffery.

“This initiative with Openreach builds on our existing commitments with CityFibre and underlines our belief in the power of digital technology to connect people for a better future and unlock economic growth for the UK.”

As part of the agreement, Vodafone’s Gigafast Broadband service will be available to customers in Birmingham, Bristol and Liverpool on the Fibre-to-the-Premises (FTTP) network from 2021. The first phase of the Openreach rollout is currently underway and the team plans to be able to reach as many as 500,000 customers on this network by mid-2021.

For Vodafone, this is a wholesale agreement which makes sense. The partnership with CityFibre looks to be one where the terms and conditions are very favourable to both parties, however Vodafone will want to be a service provider which can offer broadband to everyone. The CityFibre deployment strategy means secondary partners will have to be sought.

As part of the CityFibre agreement, Vodafone has made a minimum volume-based commitment for 10 years which increases over the period to 20% of the initial one million premises. In return, Vodafone has a period of exclusivity for consumer fibre-to-the-home services from CityFibre for 12 months, though the time-period is nuanced depending on location and the phase of network construction.

The CityFibre deployment strategy is also a point to consider here. CityFibre is targeting small and medium sized cities, as well as larger towns. These are areas which are generally not being targeted by the likes of Openreach or Virgin Media for fibre deployment. The idea is to create a scaled challenger, and targeting areas where rivals aren’t is a perfectly reasonable strategy.

In short, Vodafone will use CityFibre infrastructure as default, and Openreach in locations where it is not available.

For Vodafone, this partnership demonstrates something which many will see as a plus; ambition. The team is seemingly attempting to expand the fibre service offering to more regions across the country, which should add greater confidence in its pursuit of making a meaningful impact on the segment.

Openreach explains why FTTP is such a great idea

A new report commissioned by fixed line infrastructure provider Openreach has concluded the UK would be £59 billion better off with full FTTP.

The report is called ‘Full fibre broadband: A platform for growth’ and was compiled by the Centre for Economics and Business Research, which likes to think it’s good at this sort of thing. The headline conclusion is that if we achieve ubiquitous fibre to the premises by 2025, UK productivity would increase by almost £59 billion, thanks to smarter ways of working and better public services.

It’s fairly common practice for analyst firms to use clever Excel models to extrapolate current trends and make forecasts and this is no exception. It seems the CEBR had a look at the effect FTTP has had in places where it’s already available and scaled that up to the whole country. It also tried to factor in other disruptive technological events such as mass ICT and even railways to get a sense of the transformative effect of everyone having faster broadband than they currently do.

As ever with commissioned research, Openreach wasn’t about to shell out for a report that concluded the whole reason for its existence is unimportant, but that doesn’t mean the conclusions should be ignored either. World class broadband does have the potential to transform society, especially when it comes to things like working from home and revitalising neglected parts of the country.

“Full fibre is a vehicle to turbocharge our economy post-Brexit, with the power to renew towns and communities across the UK,” said Openreach CEO Clive Selley. “We’re proud to be leading the way with over 1.8 million homes and businesses already having access to our full fibre network. We’re currently building full fibre to around 22,000 premises a week– which is one every 28 seconds. But we want to go even faster and further – to 15 million premises and beyond if we can get the right conditions to invest.

“Through our Fibre First programme, Openreach is now building to 103 locations across the UK and we’re on track to build to four million premises by March 2021. With the right policies and regulation, we can build a better, more reliable broadband network faster than any other country in the world and unlock the benefits for the whole UK. If that doesn’t happen, then many people will be locked out of a more connected future and the UK could lose its status as a global digital leader.”

As ever when it comes to telecoms infrastructure, the government and regulators are called on to help out with the roll-out. Openreach reckons the telecoms sector should be exempt from paying business rates for the foreseeable future, be granted better access to blocks of flats and other such buildings and get a regulatory environment more conducive to investment.

If you want to read the full report as well as Openreach’s thoughts on how the roll-out of full FTTP can be sped up then click here. To some extent Openreach is pushing at an open door here, since no one thinks faster broadband is a bad idea. This report is just part of the ongoing lobbying campaign to get the UK state to be a bit more helpful when it comes to fibre infrastructure and, presumably, to maintain the momentum created by Boris Johnson’s enthusiasm for fibre.

Openreach unveils rural fibre trials

Openreach has provided some colour to the rural fibre plans, testing out new technologies and techniques, with the objective of connecting 50,000 homes by Christmas.

13 rural locations around the country have been selected to trial the new technologies and techniques. Should the pilots prove successful, the hope is full fibre deployments can be accelerated, allowing the team to meet the demands of ambitious (and potentially misguided) politicians.

“At Openreach, we’ll never just be a city fibre provider,” said CEO Clive Selley. “We’ve always worked hard to improve connections to isolated, less commercially attractive communities through inventive engineering and effective funding partnership models.

“In recent years, we’ve been extending our full fibre network into rural areas – mostly in partnership with local authorities and Government – but the economics are clearly challenging, and we want to do more.

“The trials will also give us a much clearer picture of what the technical challenges in these kinds of rural areas are. We hope they’ll go a long way towards developing the tools, skills and innovations required to make sure that nobody’s left behind in the full fibre future.”

The 13 trial locations across the UK will see Openreach test out some new equipment and techniques which it seemingly hopes will improve the commercial business case for full fibre deployment in the rural regions. Let’s not forget, while the Government clearly thinks Openreach should forget about profits in pursuit of a nationwide digital society, it is a private business with responsibilities to shareholders.

One new piece of equipment which the team will be testing is a new trench digging tool known as a ‘Diamond Cutter’. With diamonds embedded in the blades, the tool can carve through concrete much more efficiently, while simultaneously laying the tubing for fibre cables. Openreach suggests the tool could lay 700 metres of cable a day, 20 times greater than a traditional two-man team.

Another trial will focus on ‘remote nodes’. The broadband boosting equipment enables current fibre installations to be extended by 150%, allowing the team to ‘piggy back’ on existing assets. The hope is with this trial that the team will be able to avoid the expensive and time-consuming job of deploying new fibre spines to the rural locations.

What is worth noting is that while any business will look to innovation to decrease financial outlays, there is political and regulatory pressure in the background also driving the Openreach ambitions.

Announced back in June, Prime Minister Boris Johnson made the very grand proclamation that his administration would fuel a full fibre diet, reaching every household by 2025. Considering the previous objective was to fibre-up the country by 2033, the accelerated timeframe would certainly get a few people in the industry panicking.

Speaking to Telecoms.com, a few industry insiders suggested Johnson was not necessarily living in the real world with such ambitions. Not only would the financial burden of these of these plans perhaps be inhibitive, but the regulatory environment isn’t the most helpful, while the workforce would need to be super-charged. BT has since suggested the industry would have to find additional investments of £30 billion to meet the earlier deadline.

If the likes of Openreach are going to aid the Government in reaching such ambitious targets, the success of these trials will be very important. That, and finding the extra couple of billion needed to finance the projects.

Openreach maps out fibre plans for the next 18 months

BT’s fixed line wholesale division has created a new website that allows everyone to see how its fibre roll-out is going.

The website devoted to banging on about Openreach’s Fibre First programme features a map showing every bit of the US that either already has FTTP, is in the process of acquiring it, or is in Openreach’s immediate plans. 29 more places have today been added to those immediate plans, taking the total over 100.

“Full-fibre broadband provides a reliable, future-proof, consistent and dependable service that will be a platform for economic growth and prosperity throughout the UK for decades to come,” said Openreach Chief Exec Clive Selley.

“We’re now building at a massive scale. Every 28 seconds we pass a home or business with our new future-proofed full fibre network. This has given us ever greater confidence in the level and accuracy of whatever we announce – which is why we’ve now laid out our build plans right up to the target delivery date of four million premises by March 2021.

“We also want to ensure we give our stakeholders – like council leaders, planners and MPs – the best view of where and when we intend to build so we can work together to build as rapidly as possible and help encourage people to take up the technology when it arrives.”

You can see the site, with its handy map, here. One possible reason Openreach has decided to be more transparent about its plans and progress is the political elevation of fibre under the Johnson premiership. Better broadband for everyone seems to be one of his key bits of propaganda and the company will want to be seen to be entering into the spirit of it all. Openreach expects to have connected four million homes and businesses to full-fat fibre by April 2021.

Openreach cuts costs by 75% to attract builders to fibre diet

Openreach will be slashing the cost of installing fibre wires in new residential developments of less than 30 plots, as it looks to tempt housing developers onto a fibre diet.

Although it might seem remarkable, house builders are not currently mandated by law to install fibre broadband infrastructure on new premises. Considering the aggressive rhetoric being spouted by the UK Government when it comes to laying future-proofed foundations for the digital economy, it does beggar belief the opportunity to cut corners and ignore fibre is still available to these developers.

The ‘Housing Crisis’ in the UK is one which does attract headlines. The severity of this ‘crisis’ does of course depend on who you are talking to, though in certain regions it is undeniable there is a shortage of properties. All you have to look at the price of a two-bedroom flat in London to understand the pickle some youngsters might be in.

This does present an opportunity for the housing developers to make a profit. During the last quarter, the Office for National Statistics estimated 42,870 new homes were completed, though not all took fibre as default. Around 88% of plots on new builds contracting with Openreach elect fibre, though this number increases to almost 100% for plots of over 30 premises.

However, there are still numerous developers which are not taking fibre as a default position. Openreach suggests 124,000 of the new homes constructed in the UK in 2018 still lack access to ‘superfast’ broadband speeds of 30 Mbps or more. The situation is gradually improving, though there still much work to do.

With this in mind, Openreach is looking to increase the attractiveness of installing fibre connectivity through cutting costs by up-to 75% for multi-dwelling housing developments up to 29 properties.

“Our existing offer already provides huge benefits to both buyers and builders alike, but we wanted to go further and make sure everybody moving into a new build property can enjoy the advantages of Fibre-to-the-Premises broadband,” said Kim Mears, MD of Strategic Infrastructure Development.

“Our new offer provides a low-cost option to housebuilders and we hope it will help encourage the adoption of this future-proof technology across smaller developments so that no-one’s left behind.”

Although internet speeds might seem like an after-thought to some, research from LSE and Imperial College Business School suggests home-owners in London are willing to pay up to 8% above the market value properties in areas offering very fast internet speeds. The benefits of fibre connectivity for housing developers is key, though there are still some who are demonstrating a preference for copper, presenting a problem to the likes of Openreach and Virgin Media; it would be far simpler to connect properties while they are in the construction stages.

The Future Telecoms Infrastructure Review (FTIR) concluded connectivity in new builds was not anywhere near the standard it should be, while the FTTH Council Europe estimates also paint a dreary picture. Fibre penetration is as low as 1.5% across the UK, woefully short of other nations such as Latvia (46.9% penetration), Sweden (43.6%) or Spain (43.6%). Even the lethargic Germany manages to beat the UK with 2.3%.

Moving forward, the Department of Digital, Culture, Media and Sport is set to publish its opinion from a recent consultation into the matter, with the intention of making it mandatory for developers to install gigabit-capable connections to all new build developments in the future. This is a step in the right direction, though it does surprise us it has taken until 2019 for such rules to be considered.

The consultation should result in a change to the rules, though whether this goes as far as some would want remains to be seen. It would also be a fair assumption that these new rules would not be implemented immediately.

Openreach might have to use the financial carrot for a bit longer while the slow-moving cogs of government click into place.

Vodafone challenges new Ofcom rules on leased line rates

Vodafone has lodged a complaint with the Competition Appeal Tribunal, challenging new rules which it believes will give Openreach too much opportunity to abuse customers.

Following the latest Business Connectivity Market Review rules published in June, Ofcom granted Openreach greater freedoms to charge customers more for leased lines. These leased lines underpin home broadband, cloud hosting and 5G, as well as services offered directly to the citizen, such as banking, healthcare, and local and central government online services.

“Ofcom has now changed its approach and is regulating based on what it hopes will happen in the future, rather than based on the evidence of how the market works now,” Vodafone said in a press release.

The relaxation of rules has been based on various investigations over the last few years, though Vodafone has found issue with a few points.

Firstly, the Business Connectivity Market Review suggests Openreach does not have significant market power in the London region. Vodafone disagrees with this, suggesting market share of between 60% and 70%, exceeding the levels defined as market domination by Europe.

Secondly, Vodafone disagrees about the removal of a cost-based price cap in favour of a flat rate price cap. The cost-based approach was much more fluid, moving with the real cost realised by Openreach. Vodafone suggests Openreach costs are only going down, therefore the wholesaler will benefit significantly from the change.

Finally, in some cities Ofcom expects competition to enter the fray, therefore pricing regulations have been loosened. From Vodafone’s perspective, the facts are simple; competition hasn’t yet entered the market, and the regulations should be kept in place until they actually do.

In some parts of the saga, Ofcom has perhaps acted slightly irresponsibly, though you always have to remember this is a PR assault from Vodafone. Weaponising the press, as Vodafone is trying to do here, is often accompanied by emotive language, exaggeration and quoted figures which push right to (or perhaps beyond) the edge of estimate ranges.

This is not to say they will not prove to be accurate, but it is always worth remembering the presence of massaging and manipulation.

Sky and Liberty Global allegedly in talks for full-fibre investment

Sky is reportedly in discussions with Liberty Global to add further fuel to the full-fibre machine which is engulfing the UK at an increasing rapid rate.

After a new company, Liberty Fibre Ltd, was registered with Companies House in the UK last week, parent company Liberty Global has allegedly entered talks with Sky UK to add additional investment to the scheme. According to the Financial Times, with Sky moving away from satellite connectivity for its content proposition, the team are seeking more attractive wholesales terms, with Virgin Media providing a potential alternative.

As it stands, Openreach is the incumbent wholesale partner to Sky. The wholesale giant has enjoyed market dominance in recent years, though numerous ‘alt-nets’ and alternative providers are creating a much more competitive market. Sky is supposedly in talks with Virgin Media to use its fibre network to deliver its broadband and OTT content service, and the creation of another wholesale fibre business would further lessen the dependence on Openreach in the rural locations.

The new company, Liberty Fibre Ltd, will aim to deploy full-fibre networks in locations outside of the main urban areas, the primary focus for the vast majority of network owners. Virgin Media will become the anchor tenant of the network, though should the rumoured discussions continue as planned, Sky would become an investor in the scheme and a second customer.

For Liberty Global, attracting Sky as a customer would be a significant win.

Although it does not own any of its own network assets (fixed or mobile), Sky is one of the most successful broadband providers in the UK. Although Sky has stopped reporting total subscription numbers, most estimates put the total number of broadband customers between 6.2 million and 6.5 million. This would give Sky roughly a 20% market share, even with Virgin Media and second behind BT. Currently, Sky has a fibre penetration of 38%.

The commitment of a heavyweight such as Sky would certainly lesson the financial burden of deploying a fibre network in areas where ROI projections are certainly less attractive than the dense urban environments. The attractiveness of Sky as a customer only increases when you consider the increasingly popular OTT video drive and aggressive fibre broadband marketing campaigns.

Although Sky is still primarily known for being the premium satellite pay-TV content provider in the UK, the OTT proposition, Now TV, is becoming increasingly popular. After being acquired by Comcast, Sky is likely to attract additional advertising revenues from the parent-company to further consolidate an attractive position in the UK.

After years of neglect, the full-fibre market in the UK is gathering momentum very quickly. It is still years behind other nations across the European continent, but the creation of a new fibre wholesale player will add more fuel to the blaze as glass sweeps across the isles. Liberty Fibre Ltd is an interesting idea, and if it can nail Sky as an investor and customer, its prospects will certainly head north.

Openreach adds another 35 cities to ‘fibre first’ programme

Openreach has announced a further 36 cities and towns which will be upgraded to Fibre-to-the-Premises (FTTP) broadband technology over the next 12 months.

As part of the ‘fibre first’ programme, 74 cities and large towns will undergo extensive upgrade programmes to ensure fibre is a realistic option for broadband services. It might have taken a while to get the UK on-board with the necessity for future-proofed broadband infrastructure, though momentum is gathering.

“We’re pressing ahead with our investment and Openreach engineers are now building in communities all over the country, keeping us on track to deliver against the bigger ambitions we set out in May,” said Clive Selley, MD of Openreach.

“The Government wants to see a nationwide full fibre network and we’re keen to lead the way in helping them achieve that. We know that if it’s going to happen, Openreach will need to be at the front doing the heavy lifting, so we’re working hard to build a commercially viable plan.”

With the continued aggressive push towards fibre broadband throughout the country, the prolonged battle between BT and Ofcom to retain control of Openreach makes much more sense. The telco fought bitterly to keep Openreach in the Group and now with enthusiasm for fibre higher than ever before it is was a justified battle, even if it did negatively impact the relationship with the regulator.

However, things are not all rosy for Openreach.

“One headwind to investment which affects all full fibre builders is business rates, and we’ve been encouraged by the Scottish Government’s move to extend rates relief north of the border,” Selley stated. “I’m convinced that prioritising investment in faster, more reliable and future proof broadband networks will prove to be a no-regrets decision for future generations.”

Complaints over regulation are of course not a new element of the telecommunications industry, though this is one which has been persistent. The industry has been promised changes, though few has been realised to date.

That said, the fibre revolution is catching. New Prime Minister Boris Johnson has pushed the issue onto the front pages with a ludicrous statement of 100% fibre penetration by 2025, though momentum was gathering prior to this. Last year, at Broadband World Forum in Berlin, one panel session discussed the improved appetite from investment funds and bodies to fuel the objective. The consumer demand has been proven, therefore the money men are starting to get interested.

What is worth noting is that Openreach is not the only firm who is on the charge with fibre expansion. Virgin Media’s Project Lightening is progressing successfully, while CityFibre is leading the charge for the ‘alt-nets’ to broaden the footprint in areas which might be deemed less commercially attractive.

With ambitious Government targets pushing the fibre rollout, it is encouraging to see promises entering into reality.

Ofcom looks to Salisbury for full-fibre experiment

Ofcom has introduced a new public consultation for rule changes which will remove regulatory commitments for Openreach to provide Superfast broadband services over copper wires.

As it stands, rules dictate Openreach has to provide customers access to Superfast broadband services. This is a step-change towards the ultimate goal of full-fibre broadband, with Openreach being forced to incrementally increase broadband services. Although this seems like a sensible approach to walk the path to full-fibre, the worry is offering two different services might disincentivise investment in full-fibre.

“Openreach has announced plans for a trial in Salisbury in which it aims to migrate customers to full fibre and then withdraw copper services there at the end of 2022,” Ofcom said in a statement. “Openreach has requested changes to existing regulation to facilitate the early stages of the Salisbury trial. This consultation sets out our proposals in relation to those changes.”

The proposal open to consultation here is the removal of obligations for Openreach to provide Superfast broadband services, speeds of more than 24 Mbps, over copper infrastructure when full-fibre alternatives are available. This is only when a customer requests an upgrade (when moving to a new house for example) not when a contract comes to an end. Customers will be able to stay on current contracts should they choose.

There are two questions which need to be answered here. Firstly, will removing Superfast options for the consumer help drive more investment into full-fibre infrastructure. And secondly, how will the consumers react to being forced into most-likely more expensive broadband tariffs? Openreach and telcos will have to take a careful approach to pricing if this trial is to prove successful.

The plan for Openreach is to withdraw copper services from various markets as exchanges are upgraded to full-fibre. As each exchange area is upgraded, copper services will be withdrawn, this is the strategy across the UK and is important to support the investment case for full-fibre. Ofcom has seemingly listened to this case and is looking to adapt rules to support this case, and hopefully, accelerate the migration across to full-fibre.

Should the consultation be positive, the new approach would be introduced in Salisbury during September 2020, with the long-term plan to retire all copper-based services in 2022 in the area.

Outside of this trial in Salisbury, Openreach has also recently announced a number of wholesale price reductions to encourage wholesale telco customer to encourage consumers to switch to fibre-based offers.

The new prices will come into effect on September 1, designed to make Openreach’s full fibre platform more accessible, with the same terms and conditions available to all telcos, without any obligation to commit to specific volumes.

Product Price reduction New price
Ultrafast (330 Mbps) 36% £24.28
Ultrafast (110 Mbps) 20% £17.28
Superfast (40 Mbps) 10% £14.28

Openreach also plan to launch 500 Mbps and 1 Gbps variants of its FTTP service during the next 12 months.

“We’re making great progress on our full fibre build programme and our discussions with customers about upgrading the country have been encouraging so far,” said Katie Milligan, Managing Director for Customer, Commercial and Propositions at Openreach.

“Naturally pricing is fundamental to that shift and we want to give our wholesale customers the confidence to invest at scale in their own full fibre products and services using our network. To do that, we’re offering them a greater incentive to switch their customers to a full fibre world, with more competitive pricing and a wider choice of products.”

The UK is pretty far behind the norm when it comes to fibre connectivity, though progress does seem to be accelerating in recent months. Should Ofcom be able to evolve the rulebook at the same time as Openreach taking a new mindset to pricing, the future does look a lot more positive.