In a surprise move BTOpenreach has advised us that its FTTP on Demand (FoD) product, which makes their “ultra-fast” 330Mbps (30Mbps uploads) fibre optic broadband ISP technology available to premises on FTTC capable lines, is now going to become even more expensive due to higher than expected deployment costs.
The premium service, which effectively asks the property owner to pay for the fibre optic cable to be built out to their own individual home or business, was already an extremely expensive prospect and one that many ISPs didn’t know quite how to approach (here). So the news that it’s going to get SIGNIFICANTLY more expensive from 1st May 2014 probably won’t help to improve its appeal.
General FoD Price Changes
* The monthly rental charge for the first three years will be increased to £99 per month (from the current £38 per month).
* The current one-off fixed connection charge will be increased to £750 (from the current £500).
* And the current one-off distance based charge (which varies according to the distance between the fibre aggregation node and the customer premise) will be increased to £3.50 per metre (from the current £2 per metre).
* As a result, we estimate that more than half of premises will face a total connection charge of between £1,100 and £2,500 (these premises would have incurred a total connection charge of between £700 and £1,500 under the original pricing).
Openreach claims that its original prices for FoD were based on various modelled assumptions and on a small volume of completed orders, which they’ve had to keep constantly under review. Unfortunately this revealed that the “cost of deployment is higher than we originally expected“, which means they faced a choice between either withdrawing the service completely (i.e. losing too much money while fulfilling FoD orders) or raising their prices.
The operator claims to have “invested heavily in the product and in training our engineers” to support it and thus a decision was taken to raise the prices, with most of the hurt falling upon the services once semi-attractive monthly rental (this is done to help spread the overall cost). However Openreach are quick to point out that, once the lengthy 3 year contract is over, customers are free to adopt the ordinary FTTP product at a normal rental from £38 a month again or even slower FTTC.
At present the service is still in its Early Market Deployment (EMD) phase, which is similar to a full commercial launch but it lacks the same guaranteed service levels. FoD is currently available from 142 telephone exchanges around the United Kingdom, rising to 303 (serving some 4.7 million premises depending on the exchanges enabled) by the end of March 2014 (here); more upgrades are due to be announced over the coming months.
As a result ISP support is currently almost none existent and Openreach admits that it has seen “very low demand for FoD from CPs and there is an extremely low volume of orders“. The latest hike certainly won’t improve matters and makes it significantly less attractive as a long-term investment for even wealthier home owners, unless you’re rich of course.
Admittedly FoD has never been a mass market solution but before there was at least a hint of accessibility for some homes as an investment opportunity. Meanwhile many businesses may prefer an SLA equipped Leased Line, unless of course they’re looking to secure a £3,000 super-connected cities grant.