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BT Openreach Hike the Price of Already Expensive 330Mbps Fibre on Demand

Posted Tuesday, January 28th, 2014 (12:02 pm) by Mark Jackson (Score 3,291)
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In a surprise move BTOpenreach has advised us that its FTTP on Demand (FoD) product, which makes their “ultra-fast330Mbps (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.

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40 Responses
  1. Anyone else think that this was predictable and only a matter of time?

  2. boggits

    Nothing to do with the current bduk super connected cities maximum grant for installs?

    • midnight

      You got it in one. Increasing one-off charges a little is understandable … however, increasing the monthly fee (for 3 years!) by 2.6x is very revealing. There is absolutely no way they underestimated the cost by THIS MUCH. Total farce.

  3. John

    So, BT are another pure greed. Wait until they put up FTTC next! Sound like back to square one and rejoin Virgin Media 152/12 for same price.

    Rip off BT. Shame on you BT.

  4. Richard

    £2500+20% vat=£3000
    Grants for city businesses capped at £3000

    BT doing the same as smaller ISPs have been doing in Wales for a couple of years then?

  5. Phil

    Mark J – if the customer sign up FTTPoD before 1st May, will the price £38 per month staying the same until end of their contract eg: 36 months because of new Ofcom ruling here: http://www.ispreview.co.uk/index.php/2014/01/ofcom-uk-measures-stop-mid-contract-price-hikes-start-tomorrow.html

    If the price increase from 1st May the custmer had the full rights to cancel without fee.

    • PhilT

      If they sign up now the impending price rise is in the public domain and could/would be written in surely ?

    • Ofcom’s mid-contract rules seem to only apply to consumer products (I could be wrong?) and so FoD would not be applicable anyway as it runs off a 36 month contract, which makes it a business product.

  6. Current Copper Cost recovery – e-side capital £7.14 (20yrs), d-side capital £38.41(20yrs) and dropwire capital £17.14 (10yrs) is c£62 of the c£85 in the MPF costs – table 6.8 in the current Ofcom FLA reviews.

    Are we expected to pay twice? When do we start linking a right to recover cost with an obligation replace over a 15 year period.

    • Gadget

      What basis is the assumption that the copper is automatically recoverable- what if the customer wants a copper line for burglar alarm, epos, fax or even voice?

    • FibreFred

      ^ Or Copper based LLU (i.e. most of the Sky / TalkTalk customer base)

    • Transition will be a 15-20 year process. If those services are the only barrier, then this is small indeed. I should imagine the use of web enabled cameras will surpassing the use of the legacy alarm system.

      The use of a sunshine date as a tool to begin a process is needed.

    • FibreFred

      But you can’t transition areas where they are still in use, LLU being in use… well everywhere

    • @fibrefred, BDUK paying for fibre into d-side and e-side. Dropwire which supposedly are replaced every 10 years – that’s basis of the cost recovery, could have copper/fibre for some time while you work it out. Quotes available from your suppliers – a little bit on the £17pa would happily cover it.

    • GNewton

      It amazes me how these BT trolls still believe copper can’t be replaced because of alarm systems or LLU. The LLU have been fully aware of the risks that their equipment will be eventually obsolete. None of these are valid reasons for not to replace lines with fibre. With 85 Million miles of copper, most of which is much has been been paid for multiple times over the years, fibre could have been there for quite a while.

    • Gadget

      Try telling that to the next owner who does not want to pay FTTP prices and wants a copper line back, or should we just get Ofcom to declare them obsolescent and then obsolete and wait for the consultation?

    • New_Londoner

      @GNewton
      And it amazes me that these fibre fetishists cannot see beyond the end of their noses, do not appear to grasp the concept of choice. If someone is happy with their “free” broadband from Sky, or their £2.99 a month from the latest ISP special offer, why should they for forced to change?

      Just because some believe in the pursuit of speed at the expense of ISP choice, and FTTP at the expense of the PSBR, why should that be forced on the majority? Let the people that insist on the very highest speeds pay for the privilege, just as they would for the latest 4K TV or top spec PC. The rest of the population may be content with something else for now, possibly taking advantage of upgrades such as vectoring and G.Fast as these become available.

      You can afford the prices? As with the latest TV etc, the earlier adopters usually pay a premium, if you can’t afford the price tag you’ll have to wait with the rest of us. Don’t try and force us all to become early adopters instead, and to pick up the price of your profligacy.

      And remember, we don’t know the real prices yet, as these are the prices from Openreach, not ISPs, but let’s assume the ISPs mainly follow the same approach. Perhaps MarkJ will put up ISP pricing as this becomes available.

    • ELO SME customers in most city centres are being mis-sold private circuits if they need to fix their broadband connection. This is the best the ‘market’ can do on its own. The current access for ELO customers is no longer fit for purpose. This is more perhaps an accident of history given the area is well populated with VDSL cabinets serving surrounding residential areas. FOD would have worked nicely here but it is not been offered yet and now looks less likely.
      Best in Europe for FTTP access is cE20 wholesale a month. Regulatory intervention was needed to deliver that, and it included the regulator responding to the aspirations of the elected representatives.

    • New_Londoner Will Fell End users in Cumbria, which is a brillant effort now expected to pay the new rates?

    • New_Londoner

      @NGA for all
      No idea, presumably one for their ISPs to answer.

    • GNewton

      “Just because some believe in the pursuit of speed at the expense of ISP choice, and FTTP at the expense of the PSBR, why should that be forced on the majority? ”

      I absolutely agree with this statement. It is funny how strange some posters’ thinking here really is because the same applies to the BDUK:

      It is clear from the actual takeup figures that a large majority for whom VDSL is available actually doesn’t want it, for whatever reasons. So how come you hardcore BT proponents find it OK that £1.2Billion of taxpayer’s money is then wasted on this largely unwanted VDSL luxary, just to enrich the BT share holders? The whole BDUK process is flawed!

    • Bill Murphy confirmed Fellend is FTTP not FOD so this increse will not apply but it will to anybody trying to those trying to exploit the rural rollout.

    • Bill Murphy confirmed Fellend is FTTP not FOD so this increase will not apply but it will to anybody trying to FTTP from a subsidised rural cabinet.
      Awaiting to hear what wholesale rate FellEnd will pay.

  7. The worry is people who have put up a high install and excess construction fees now on 3 year terms with a price hike. They can probably get out of the 3 year term as a result, but after paying all that install they won’t want to.

  8. finaldest

    I can somewhat accept the increased installation costs but the monthly line rental and 3 year contract is the killer as that is over 3.5 grand over 3 years. Would rather pay £150 per month for 12 months than a 3 year contract.

    So the average cost is around 7 grand per connection. Agreed that take up will be extremely low.

  9. Matthew Williams

    I was actually at least considering this a 3 year contract was a minor thing and the installation fee worth it for the future. Increased in install fees didn’t put me that much but £99 a month for it though is just a joke there is no way at all that is nothing but a scam.

  10. GNewton

    I remember some of the BT advocates on the ISPreview forums touting the FoD is the way forward. I have pointed out months ago that FoD is a dead product. It shows the incompetence of BT. BT has no vision nor innovation, it’s like those dinosaurs living in the past.

    • FibreFred

      “I have pointed out months ago that FoD is a dead product.”

      That was under your other alias “JNeuhoff” thanks for confirming what I already knew. ;)

      Its not a dead product just outside the price range of many home consumers, but its aimed at businesses anyway

    • GNewton

      Don’t know what JN was on about, he sometimes posts provocative statements. However, like many other posters, I have repeatedly pointed out in the past that FoD is not a useful product for the majority, neither for private users, nor for businesses. Only a hopeless BT advocate would have welcomed the FoD in the past, with their their self-righteous know-it-all-better attitude, as if they were an BT employee. Fact is, BT is desperately trying to protect its leased line business, FoD will never have a future with BT! Get over it!

    • @GNewton it hurts but your correct. At £38pm you could foresee it pushing fibre further aka Fell End, Northbury,etc. Now I could not argue with you.

    • MikeW

      Actually, GNewton, both you and JNeuhoff have simply decried it as a dead product, without the qualification about “the majority”. Those you are now arguing with are the ones who have said all along that it isn’t for the masses – so it is nice that you finally agree with us that the product *does* have a role for the non-masses.

      Anyone on here who advocates financial sense (whether that gets them labelled as a hopeless BT advocate or not) knows the positioning of the product, that FoD is not for the masses. That doesn’t make the product dead; BT and many other CPs have expensive products that are unsuitable for the masses, and those products aren’t dead either.

      However, I do agree on this aspect: The old pricing would have made FoD just about appeal to some consumers (the group that Ofcom refer to as ‘Pioneers’ in their consumer experience report), and may have seen some takeup. With the new pricing, there’s considerably less chance of that, which will leave those people disappointed.

      Unfortunately, that group of pioneers is precisely the one that populates forums like this. Hence the amount of noise generated here.

      But there isn’t any noise outside this group because the product means nothing there. Heck, there’s over 70% of the country that don’t even know what speed their broadband runs at.

      If I were still single, I’d have probably been in the group that would have tried it, even if I have absolutely no need for those speeds. With a family, and better places to spend my money, it couldn’t be justified at either the old price or the new one.

      Without the pioneers, the product goes back to what Openreach intended it to be – a business product.

    • MikeW

      As for leased lines…

      The FTTC, FTTP, and FoD (as seen so far) that we see are usually WBC-based products, with shared capacity within the core network. They can be subject to congestion at any number of points.

      Leased lines don’t have this feature. They have bandwidth dedicated to the one business – which is why the business buys the leased line in the first place.

      FTTx, as we know it, is not a contender for the leased line business.

      However, there are FTTC-based products that are the entry points for leased line, having the uncontended bandwidth in the core network. Called “Ethernet fibre GEA” rather than “WBC fibre GEA”, the prices seem to start at around £130 per month for 2Mbps and £200pm for 10-20Mbps. That compares to “proper” fibre leased line prices of £350pm for 10Mbps.

      Those product’s max-speeds depend on the upstream speed, and the hike in price compared with residential services is to get the uncontended bandwidth plus the quicker support times.

      So FoD doesn’t kill the leased line business. It actually gives it another avenue for a wholesaler to reach a business.

      Superfast Access from a business perspective: http://www.openreach-communications.co.uk/fibreforbusiness/docs/understanding-benefits-SFFA-SMEs-webinar.pdf

  11. MikeW

    Ouch. Serious miscalculation by someone.

    The obvious consequence is that it will get factored into future plans for a full rollout, and cause it to be slowed down. It probably increases the likelihood of FTTdp getting a look-in.

  12. GNewton

    “Ouch. Serious miscalculation by someone.”

    I call it incompetence when you don’t even know the state of your own products.

  13. This is a real smack in the face for BDUK as FOD was the means to overcome the shortcomings of the cabinet.

    • FibreFred

      I’ve not seen FOD mentioned in any context of BDUK, how do you mean?

    • MikeW

      BDUK has always had affordability requirements in place, with limits for both basic broadband and NGA, and limits for both installation and monthly subscription.

      Even at the old wholesale price, FoD was well outside the BDUK affordability limits. Now it is even further.

      I don’t think it was ever something that BDUK saw as part of their remit, but certainly some people saw BDUK as a way of bringing FoD to them, on the back of the FTTC that BDUK does bring. Those people will be disappointed.

    • Fibre Fred – NAO report Table 11 shows FoD enablement costs of £16k (if you fill it out the table) for each cabinet and path. FoD started as an answer to a need to assist communities to build and then benefit from their effort.
      This changes reduces drastically that opportunity. It was there to assist in overcoming the shortcomings of the cabinet.

  14. Chris Conder

    FOD was a part of the tender which formed the contract that councils have signed. If they have reneged on that then the councils are entitled to break the contracts and award the funding to altnets like gigaclear who can do the job properly?

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