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Bigger, better, faster. UK ignores the recession to improve broadband services

Posted By TelecomTV One , 06 December 2012 | 0 Comments | (0)
Tags: Broadband UK Europe FTTH FTTC FoD Fibre cable Research Finance Government

As a new survey reveals that 58 per cent of the UK has access to superfast broadband, the Chancellor releases fund for more fibre cities whilst BT addresses the FTTP shortfall with an aggressive roll-out plan for a reduced cost service. Guy Daniels reports.

Yesterday, the UK Chancellor of the Exchequer delivered his Autumn Statement to Parliament, confirming fears that the economic recession is here to stay. With weaker than expected growth and inflation higher than planned, recovery is still a long way off. But Chancellor George Osborne did announce some significant spending plans in this age of austerity. A £5bn “capital investment” pot – obtained through savings and the hoped-for 4G spectrum windfall (possibly around the £3.5bn mark) – will be used for infrastructure work, including support for more broadband cities. During his statement to the Parliament, Osborne said:

 

“On top of broadband expansion for our countryside and our larger cities, we’re funding ultrafast broadband in twelve smaller cities.”

 

The lucky cities to benefit from the extra £50m (via the Urban Broadband Fund) are Brighton and Hove, Cambridge, Coventry, Derby, Oxford, Portsmouth, Salford, York, Newport, Aberdeen, Perth and Derry-Londonderry. Dana Tobak, Managing Director of Hyperoptic comments:

 

“Not-spots are still prevalent across many urban areas it has named. We hope that these funds will be used to plug these gaps and concentrate on the last mile to future-proof our networks. We urge the Government to allocate these funds via a fair and open process that is accessible to those companies that have proven they can efficiently implement fibre technology regardless of their size.”

 

The statement came on the day that UK telco BT announced it was cutting the wholesale prices of its Fibre-to-the-Premises (FTTP) service by 37 per cent. Wholesale monthly rental costs drop from £60 to £38, and also apply to its forthcoming Fibre-to-the-Premises on Demand (FoD) service that will launch across BT’s fibre footprint in Spring 2013 (in other words, around two thirds of the population should be able to take advantage of the service by the end of 2013).

 

BT’s new service promises to deliver downstream speeds of 330Mbit/s and upstream speeds of 30Mbit/s, and will be delivered by infrastructure company Openreach. FoD is expected to be of most interest to SMEs who want to take advantage of the faster speeds on offer. Consumers and businesses can already access speeds of up to 80Mbit/s via Fibre-to-the-Cabinet services (yes, it’s true, after a decade of “only-just-broadband”, even I’ve got 78Mbit/s…) or higher speeds via business Ethernet services.

 

As well as the monthly wholesale fees, Openreach will charge ISPs and communications providers a distance-based construction charge for FoD, which it says is due to the extra work involved in providing a direct fibre connection. The average distance of a premise from a cabinet is apparently 500m, and this will incur a £1,000 charge plus a fixed £500 installation fee.

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So if ISPs and CPs pass these charges on to customers, then you had better have a damn good reason for wanting these ultra-fast speeds…

 

Mike Galvin, Managing Director NGA at Openreach, said:

 

“Our fibre plans are going very well. Our deployment is one of the fastest in the world and our services are proving very popular with the public. It is now time for us to focus further on FTTP and I am pleased to say that we are making it more affordable than ever. I am sure that small businesses will welcome this major price cut and I am also sure that our fibre on demand plans will be of great interest.”

 

Andrew Ferguson, editor of thinkbroadband.com, said that while the cost of £1,500 for an average property seems high, this is in line with Fibre to the Premise install costs in other countries:

 

“A full fibre connection potentially makes a property more attractive, and for the next decade, having it already installed and working may command a premium at property sale time. As with other home improvements, it can be considered an investment.”

 

Ferguson estimates that the major communications providers – if they decide to sell a 330Mbit/s service – would charge end users around £70 to £90 per month. It’s a lot, but as he points out, still well below the $210 plus taxes that Verizon charges in the US for its comparable FiOS service.

 

Meanwhile, a new study by broadband specialists Point Topic shows the UK is now over 58 per cent towards achieving the European Union’s aim of ensuring that all its citizens can get access to superfast broadband (i.e. at least 30Mbit/s) at home by 2020.

 

The firm says the UK’s superfast coverage is well above the European average and the UK is second only to Germany in the size of its superfast footprint, with 15.5m homes passed – almost 15 per cent of the total in the EU. However, this has been achieved to date off the back of an extensive cable TV network and VDSL, rather than FTTP. The cable Docsis 3 standard is the most important superfast technology with 46 per cent coverage, according to the report, whilst VDSL comes second with 26 per cent. Both are above the European averages. However, FTTP is far behind with only 0.2 coverage.

 

The report was produced for the European Commission’s DG Connect department, which is responsible for its Digital Agenda strategy. Point Topic’s chief analyst Tim Johnson says that the problem is that the superfast operators compete to serve the richer and more densely populated areas in each country, leaving others underserved. EU Commissioner Neelie Kroes commented:

 

“This study gives us the best view so far of where action is needed on broadband coverage. It will help to guide decisions on where EU and private money can be invested to provide the best long-term return for taxpayers and investors such as pension funds.”

 

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