UPDATE BT Cut the Price of Ultrafast Fibre Optic FTTP Broadband ISP Services

BTOpenreach, which manages access to BT’s national UK telecoms network, has slashed the monthly price of its “ultra-fast” 330Mbps (Megabits per second) capable Fibre-to-the-Premises (FTTP) broadband service by a whopping 37%! Installation prices for the operators new On Demand (FTTPoD) solution have also been revealed.

The move, which will see the monthly rental of BT’s top FTTP product being reduced from £60 +vat a month to £38, will sadly not take effect until June 2013. The move is deliberately timed to coincide with the commercial launch of BT’s new FTTP On Demand service. At present the existing FTTP service only passes a tiny number of UK homes and businesses, although this is set to improve from next spring 2013 with the On Demand solution.

In short, FTTPoD will allow BT to install an “ultra-fast” FTTP service anywhere that their slower up to 80Mbps FTTC lines can already go (i.e. 66% of the UK by spring 2014). The downside here is that this effectively requires BT to install a new fibre optic line to your home or business, which is hugely expensive (note: the monthly rental remains the same as normal FTTP) and thus the product has more of a “premium” business user focus.

Openreach Statement on Installation Costs

As Openreach has previously indicated, CPs will be charged a distance based construction charge for FTTP on Demand due to the extra work involved in providing a direct fibre connection.

These charges are currently being finalised and will be released closer to the launch date. They will be based on a series of price bands relating to the distance between the premise and the NGA Aggregation Node.

Premises are on average around 500m away from an NGA Aggregation Node and will incur a charge of around a £1,000. Those that are closer will face a lesser charge and those further away a higher one. This is in addition to an installation fee of £500 for the service.

At present the FTTPoD service is being piloted at the following telephone exchange areas: High Wycombe, Bristol South, St Agnes Cornwall, Edinburgh Waverley, Basingstoke (from January 2013), Watford (from January 2013), Cardiff Central (from January 2013) and Manchester Central (from January 2013). A second pilot phase is due to begin in May 2013 (further pilot details here). The prices for Pilot phase 2 will be published in the first week of January 2013.

Mike Galvin, Openreach’s Managing Director of NGA, 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.”

It’s important to note these prices represent what ISPs have to pay BT and thus the end-user (consumer / retail) price for related products will typically be higher because providers must also factor in the need for a profit margin and additional service / capacity costs etc.

BT hopes that ISPs will share some of the FTTPoD installation cost and thus help to bring down the total price for subscribers, although in reality most providers are not infrastructure builders and would not find this economically viable. Instead some may raise the monthly rental to off-set against the heavy installation fee but that’s assuming any ISPs even choose to offer the service.

UPDATE 09:11am

We thought it might be useful to pull in one of Openreach’s old FTTPoD diagrams from earlier this year, just to help illustrate the difference between an NGA Aggregation Node and BT’s street cabinets (PCP/DSLAM below).

UPDATE 10:11am

Added a comment from Openreach’s MD above.