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Why being different will matter in the FTTC world – Guest Editorial

Posted Tuesday, April 2nd, 2013 (1:02 am) by Jeff Pitt (Score 800)
jeff pitt picture zyxel

Widespread availability of up to 80Mbps capable FTTC (VDSL) based superfast broadband products will bring “major opportunities” to carriers and ISPs, says Jeff Pitt, Key Account Manager on the Service Provider Group for the UK and Ireland at ZyXEL Communications (Guest Editorial for ISPreview.co.uk).

Those of us who live in areas that are being fibre-enabled by Openreach, can hardly have failed to notice the stickers on roadside cabinets telling us that ‘fibre is here’. Well, yes it is – up to a point. It’s steadily being rolled out in many areas of the country, and in those areas, BT can certainly offer you one of its Infinity services, but only a few select others can offer any kind of fibre-based service for now at least.

Until more exchanges and cabinets are enabled, and Openreach makes the pricing structure more attractive, it will be difficult for ISPs to justify offering higher-speed VDSL services anyway. But when the point of critical mass is reached, and the infrastructure is made accessible for just about every ISP, the market will get very competitive, very quickly indeed.

There will be a mad rush for market share, just as there always is when a new grade of service becomes available. We saw it with 8Mbps broadband and we saw it with ADSL2+. With VDSL, it’s going to be even more competitive because really, if ISPs do not sign up customers now, it may be some time before they get another chance. But ISPs have a problem. Even when they can offer a straight-forward FTTC connection, they will face massive competition from the many other providers that make the commitment and enter the market early.

Premium service

For a while, it is probable that all these providers will try to sell their services at a premium, to maximise the potential margin. But that won’t last. Sooner rather than later, one or more of these ISP will start to try and undercut the competition and the inevitable will happen; prices for undifferentiated VDSL offerings will be driven downwards.

It won’t be easy, even for ISPs that are not interested in price-warring and will be satisfied with a small (and hopefully profitable) share of the VDSL market, to set themselves apart. We’ve seen that very clearly in the broadband market over the past decade. But ISPs that take a focused approach and deliver the right combination of service levels, and hardware that is capable of supporting customers it is seeking to attract, do have a real chance of standing out from the crowd.

In certain markets – hospitality for example, while the higher bandwidth that VDSL brings is going to be most welcome, there will also be a need to ensure that the CPE is able to make the most of that extra capability, and can provide the functionality, flexibility, reliability and secure connectivity that customers are going to need. In hotels, health clubs and cafes it’s now becoming absolutely vital to provide good wireless connectivity. This means having a gateway or router that can cope and, in most cases, a wireless controller, numerous access points and a security appliance as well.

Hospitality is just one example of an industry where this is now the reality – but there are many others, all of them with differing needs; education and the wider public sector, train and bus services and retail, for example. Even in the broad business market, there will be groups with specific requirements – legal firms and accountancy practices, construction, companies that have large numbers of temporary staff or high turnover.

Right combination

We’ve seen more ISPs doing this already with ADSL2+ services. Some have been extremely clever, offering services that, for example, allow customers to crank up their bandwidth at peak times but benefit from a lower monthly subscription than they have to pay for the higher bandwidth, which most of the time they won’t use. We have also seen ISPs offering a choice of routers and gateways that will, for example, enable them to offer extended wireless coverage, a built-in controller that can cope with managing large numbers of associations (important when you have a lot of people coming and going on the wireless network), or a built-in firewall.

When given the choice, customers often take up these options as they are much better-suited to their particular needs. Making your value proposition stand out amongst the crowd of ISPs offering low-cost options – but it’s possible and with VDSL, there will be more potential to offer services and hardware options that are tailored to the needs of specific customer groups. ISPs that target a specific market with VDSL services and ensure they can provide a combination of service level guarantees, and hardware that has the right capabilities, can win.

Jeff Pitt

(Ends)

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17 Responses
  1. Phil

    Problem is BT Openreach say my FTTC is available from April 2014 but it only available to the cabinet right next to the roadside (street cabinet) and I live within all houses and shop area (footpath) and stand no chance of street cabinet (because my area isn’t outside of the roadside)

    FTTC only installing by the street (roadside) is pretty unfair and every exchanges only get 10% of FTTC in the area while the rest of 90% will be missed out.

  2. Sledgehammer

    In my case this will not happen for some years. While my local exchange was fibre enabled July 2012 the cabinet which serves my area is only a 100 pair cab(not profitable to upgrade). I will have to remain on my present contract with IDnet on ADSL 2+ (monthly contract) for quite a long time.

    It will be interesting to see in the future if any ISP’s come up with a monthly contract for FFTC.

    • DTMark

      I can’t see any ISP offering month to month contracts. Unless BT starts offering them to ISPs.

      Which presumably would require OFCOM intervention. Which I can’t see happening.

      The ISP is already shafted by BT because they provide a speed estimate to the customer which BT is not obligated to meet, their self-imposed guarantee is only half of what the estimate was. Oh, the joy of having a monopoly. I wonder how many customers I’d have if I only did half the work and insisted on payment.

      So then the customer can then cancel and the ISP still has to pay BT for 12 months anyway.

      In this type of circumstance it’s hard to see ISPs prepared to subsidise BT even more, for instance Talk Talk don’t even want to sell FTTC services at all, at any contract length.

    • fastman

      Sledgehammp why doin you look to help gap fund the cab with your community — as islip did and a number of others

  3. Neil McRae

    There are loads of ISP’s offering FTTC via Openreach now.

  4. ChrisB

    Then you have the problem that a BT engineer (or contractor) will not install aN ISP supplied router (Technicolor TG582) because it is not “BT equipment” (ie not a Home / Business Hub).

    • FibreFred

      I’m sure that will change over time

    • DTMark

      Hmmm. Unusually perhaps, I find myself siding with BT here.

      BT provides the service installation to the demarcation point.

      IDNet, AAISP, Zen etc can all nip round the customer’s house and set their modem up for them if they like. Or, they could pay somone else to do it for them.

      Have I gone mad…

  5. Sledgehammer

    I think you will find that a FTTH supply means that a FIBRE capable modem will need to be fitted by a BT engineer. Then you can intall the router supplied by your ISP.

  6. zemadeiran

    I for one will only be buying Zyxel equipment from now on.

    Mark,

    The guest editorial is a very good start to the new financial year and I am sure that the community here would welcome many more of these industry nuggets.

    £…

  7. DTMark

    Out of interest, when was this article written – it seems rather out of date.

    For example:

    “There will be a mad rush for market share, just as there always is when a new grade of service becomes available.”

    The only two players I can see in that “rush” are BT and Sky. Talk Talk don’t even want to sell it and pretty well try to discourage people from ordering it by offering it in a “low key” way.

    “For a while, it is probable that all these providers will try to sell their services at a premium, to maximise the potential margin. But that won’t last.”

    BT can’t sell these services at much of a premium if they want market share in VM areas, since VM was and is already light years ahead of them having made investment in their network over the years, so they have a commercial pricing advantage in that respect.

    “Sooner rather than later, one or more of these ISP will start to try and undercut the competition and the inevitable will happen; prices for undifferentiated VDSL offerings will be driven downwards.”

    This happened from day one, with BT’s pricing for the service. The BT Group gets the product at cost price (effectively less taxpayer subsidy) and everyone else pays the wholesale price, so others are going to struggle to make more profit out of this than the entity at the top of the vertical monopoly.

    This article also fails to address perhaps the number one changing differentiator which I always thought would see the death of many small ISPs – bundled TV packages. Not even possible with ADSL, just not enough speed or reliability – even the pants BT Vision thing had problems on a fair number of lines and that only needed 2Meg.

    As that changes, the forward “market” for the smaller ISPs is, I would assert, likely to be selling ADSL solutions to businesses at much higher prices than now – in effect they all join the “AAISP niche”. (Not meant as an insult, if anything, a compliment)

    Or, they accept that there isn’t really much in the way of “USPs” with FTTC, by design of the solution, and simply cancel the golf club subscriptions, send back the leased cars, get rid of lots of staff and join the “pile it high sell it cheap” strategy and go for volume.

    Which they’re not going to get without a decent bundled TV, phone and broadband package. Which is why Sky is winning so many customers.

  8. FibreFred

    “This happened from day one, with BT’s pricing for the service. The BT Group gets the product at cost price (effectively less taxpayer subsidy) and everyone else pays the wholesale price, so others are going to struggle to make more profit out of this than the entity at the top of the vertical monopoly.”

    But that just isn’t true. BT (the ISP) pays exactly what Sky, TT, AAISP etc pay

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