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UPDATE Breaking Down the UK Costs of 330Mbps FTTP on Demand Broadband

Posted Monday, April 28th, 2014 (2:31 am) by Mark Jackson (Score 4,992)
fibre-optic-cable-duct

BTOpenreach’s new FTTP on Demand (FoD) product offers the attractive potential for anybody within reach of an FTTC capable line to order a full fibre optic broadband connection, which can deliver stable speeds of 330Mbps (30Mbps uploads) using Fibre-to-the-Premises technology. But have cost and confusion killed the attraction.

At present most of BT’s superfast broadband (25-30Mbps+) roll-out has been conducted using their up to 80Mbps capable Fibre-to-the-Cabinet (FTTC) service, which takes a fibre optic cable to your local street cabinet and then distributes its service out using VDSL technology over existing copper lines.

Unfortunately FTTC has its limits. In particular the last run of copper wire means that those who live furthest away from their local street cabinet can still suffer from slower speeds because the signal degrades with distance. The minimum speed supported by FTTC is 2Mbps.

Meanwhile BT had originally envisaged a much bolder plan to make their 330Mbps capable Fibre-to-the-Premises (FTTP) technology, which takes the fibre optic cable all the way to your property, available to 2.5 million premises (part of their £2.5bn commercial roll-out). But this was abandoned (here) due to being slow to deploy, expensive and tricky to install (end-user installations were particularly tedious).

Fibre on Demand (FoD)

However BT still wanted to offer a fibre optic solution, which would give them an answer to the endless “why don’t you do real fibre optic connectivity?” questions and be good for marketing. The solution they developed was called Fibre on Demand (FoD) or FTTP on Demand (FTTPoD) if you prefer, which at its most simplistic effectively shifted the cost of installing the FTTP infrastructure on to end-users.

In theory this new service meant that anybody within reach of an FTTC line could also now order FTTP via FoD, which was marketed more as a “premium” service and aimed squarely at the small business and or the home office sector; this also meant that home owners could still technically order the service if they really wanted.

Naturally FoD doesn’t come cheap. The service initially attracted a one-off fixed connection charge of £500 +vat and a monthly rental of £38 (the same as their native FTTP product). But the real pain came from their one-off distance based charge (effectively the cost of building the network) of £2 per metre, which roughly translated meant that more than half of UK premises would face a total connection charge of between £700 and £1,500 (BT figures).

On top of this some premises might also have incurred an Excess Construction Charge (ECC), which could have potentially added thousands more to the final bill. Never the less some still saw this as a viable home solution, albeit more in the form of a longer term investment to help boost house value. But one year on and FoD, despite some good roll-out progress (here), now appears to be struggling.

Market Confusion

At present FoD is still in its EMD roll-out phase, which lacks the same guaranteed service levels as a full commercial product. The service is currently also available from 142 telephone exchanges around the United Kingdom, which should have increased to 303 by the end of March 2014 and more are supposed to be coming (though we’ve yet to see the promised Q2 – 2014 roll-out update).

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52 Responses
  1. zemadeiran

    First comment post!

  2. Chris Conder

    FOD was a sop to the councils when they asked about long line lengths. It meant BT could offer a solution to all the homes in a county. It would never have happened at the lower price, and it had to be that price range to comply with the tenders. It looks like it was a scam? I think this needs more investigation. The price hike means they never could comply. Therefore councils could break the contracts and put the funding into altnets who can deliver real fibre?

    • DTMark

      I think this about sums it up. When local authorities began to question performance versus line length and quality, the “answer” was “fibre on demand”.

      Thus the local authorities could complete the tick-box exercise and have some reassurance that the entire BDUK scheme was not “dead money”, a temporary and short to medium term boost, that there was a “way forward”. It would not be “all to do again”.

      However here we have BT saying that their line plant and ducting never was adequate, that they cannot work efficiently, and confirming that VDSL is indeed a dead-end. It was always going to be the last part of the circuit to homes which was going to be the most expensive and absolutely nothing has changed.

      Except that BT have now positioned themselves in such a way as to extort money from the taxpayer in BDUK round 2 where the taxpayer finishes building BT’s network for them so they can rent it back to us.

  3. Sledgehammer

    It’s too expensive, FOD will evevtually die.
    With the likes of Gigaclear, Hyperoptic, B4RN and others continually running FTTH they are just knocking nails into BT’s coffin. BT may wake up but find they have left it too late.

    • FibreFred

      Come on really? The providers above are no real threat to BT in terms of coverage.

    • Altnets, if we combine their dreams could take no more than 3% in 5 years.

      The portfolio re-positioning of business only at £100 pm wholesale is in breech of BDUK affordability definition of retail <£50 pm.

      This is about defining Best in Europe to include an approopriate level of FTTP transition given FTTC overlay has been found to be very cheap. There is no reason why councils/industry should not aim to provision all their business parks in NGA araes(for instance) with FTTP rather than over subsidising VSDL cabinet outside a business park given the duct will be in reasonable condition.

      There is no reason why BT should not plan for this given their long run incremental costs be lower to serve those businesses with fibre. They have already told Ofcom and EU they have allowed for the withdrawel of private circuits.

    • Martyn Dews

      @FibreFred. Whilst one altnet may not be a threat, many could be.

      Also, if what you say is correct and these altnets are not a threat to BTs business model then why is there increasing evidence of aggressive marketing in areas where alnets are being seen to be making progress? Surely if they were no threat then BT would just let them get on with it an concentrate on the areas that they really can deliver in and also make a profit without massive subsidies.

      It’s clear to me that BT do see the alnets as a threat. Why else would Bill Murohy spend a large proportion of his time criticising every alnet good news story on Twitter. He must be a very busy man and so must see this activity as important.

    • @Martyn There is something pathologically illogical about a national carrier wishing to stamp on community initiatives which by definition cannot grow beyond a particular scale or where they work in areas which have been seen and considered as a burden to the carriers balance sheet. You can see it arising from some mis-directed call on idividuals account managers to compete with one another to win 100% of a all public funds at the expense of any and all. This internal dumb machoism and bullying is sometimes ignored rather than dealt with. It can even be admired for a time but ultimately it fails to deliver what is needed. The NAO, 2 PAC hearings and reports and 1 efra report, all see it clearly, so maybe it will change with it with 2 new CEO applying themselves to the task.

    • It will happen sooner if councils wake up to the con. It is very difficult for them thanks to the multimillion pound marketing lobby of the incumbent. Even Ed Vaizey spouts their propaganda at every opportunity. Its up to the altnets to show it can be done at a far cheaper price and a thousand times better quality using modern fibre instead of patching up an old phone network with overpriced cabinets that can’t do the job. BT won’t up their game until there is competition. The cities would still be on dial up but for Virgin. The same has to happen in rural areas now, and those good networks will quickly expand into the towns and cities once people realise they give a better service for a similar price. BT will soon start recycling the obsolete copper when that happens! The councils are paying far too much for what they are getting, the majority of which is simply spin. The job should be done once and done right, or not done at all rather than waste public money in copper patch ups.

    • Raindrops

      “…..Why else would Bill Murohy spend a large proportion of his time criticising every alnet good news story on Twitter. He must be a very busy man and so must see this activity as important.”

      It seems many BT employees top to bottom have too much free time you only have to look at this very site. Maybe if they spent as much time caring about their customers as they do on the internet trying to rubbish other organisations they would not have to worry about other projects.

  4. FibreFred

    I think the price hikes are certainly an issue but as for this:-

    “In fact so far the only ISP that has offered any firm public price and package details for a FoD product has been Gradwell, which charges “from” £200 +vat per month for the service with a 500GB (GigaBytes) usage allowance. But soon even that offer might have to be scrapped because of a huge price hike.”

    Look at the 500Gb allowance, is this the real issue for ISP’s? Having to provide enough core bandwidth to cater for people with connections of this speed?

  5. PhilT

    The lack of symmetry arises from the use of GPON I suspect.

    Not that symmetry per se is important, unless you just happen to have symmetric needs. I’m more of an “adequate upload capacity” person.

    • Hmm.

      GPON capacity per OLT port: 2.488Gb/s downstream, 1.244Gb/s upstream, ratio 2:1.
      BT FTTPoD downstream, 330Mb/s, upstream 30Mb/s, ratio 11:1.

      Working on a full 32 port PON splitter, which seems unlikely, at 30Mb there is zero overbooking at all on the upstream. Working on splitting that splitter to 64 ports which I think is as far as BT have documented on there is an upstream overbook of 1.54:1.

      Seems a bit of a stretch suggesting this is due to any kind of technical restriction. Verizon in the USA are offering 150/65, 300/65 and 500/100 on the same technology both to consumers and businesses, and will have a considerably higher takeup on each split than BT could contemplate as it’s a pre-build with relatively minimal install costs, not a reactive one.

      http://www.verizon.com/home/fios-fastest-internet/#fastest-internet-plans

    • James Harrison

      The lack of symmetry is indeed down to the particular GPON implementation – that is, they use WDM on the downstream and a single shared wavelength with TDM for upstream. I may be wrong on this, can’t recall the source of those details off the top of my head. Their current products are asymmetric and this also lets them cram in more customers per GPON fibre termination, which is convenient.

    • They use a single wavelength both upstream and downstream, downstream is a broadcast network where individual ONTs see that traffic is destined for their devices and forward it, dropping the rest, upstream is a TDMA network where ONTs with upstream traffic to transmit request timeslots to transmit their data. It’s similar to DOCSIS cable networks.

  6. Another demonstration of the reason why ‘Premises passed’ ultimately results in far too many premises passed by

  7. The NAO report identified approximately £380m of the total sums contracted through BDUK for enabling products like FOD. BDUK have defined affordable as <£50 retail a month, hence the £38 wholesale might have been workable. The switch to £100pm amounts to a significant portfolio change.

    The £176 subsidy per premise past documented in North Yorkshire CC reports (as opposed c£70 in NI)would include the extra accessible fibre pits for FOD, but there would little need if BT has taken the decision not deploy.

    £380m should be converted perhaps to connection vouchers so councils can get their business parks onto FTTP. This may need more on action on passive infrastructure fron Ofcom, but councils, BDUK, Ministers are entitled a little bitter given the limitation its places on the national ambition to be best in Europe.

    • I wouldn’t mix FoD up with anything BDUK related as it’s never really played a part in that and the current FoD roll-out is funded by BT’s own direct investment, although of course it does indirectly benefit from FTTC’s deployment.

      Also I read in earlier Government/BDUK reports that sub £30 per month was considered the “affordable” level for a home service. Or as the EU’s 2012 review of the BDUK process put it: “BDUK is working at present on the basis that access to NGA broadband infrastructure is ‘not’ affordable if the installation cost is £200+ and/or the monthly rental price is £30 – £50+.”

    • @Mark The <£50 retail is referred to in BDUK innovarion fund documentation. FOD is provided as BT's response to supporting community extensions as is referenced in the Lancs project documentation. At £38pm it was just about do-able, and so projects like Fell End Broadband (Cumbria) could be replicated post rollout, but this is not realistic snce the change in position.
      If you read the NAO report on the cost breakdown, you will read the fibre readiness costs for FTTP being very sunstantial. This includes FOD. It is a substantial re-positioning of FTTP.
      If you get access to the BDUK requirements on supporting communities getting connected then the link with the announcements of FOD in 2012 are fully aligned.

    • You mean the new £10m Innovation Fund? It’s somewhat separate from the whole because they need to be more flexible as the projects appear to be considered tests of different solutions in remote areas.

    • Mark – Even allowing for the flexibility needed which BDUK need to be applauded for, FOD restructuring by BT is even more of an insult to BDUK, local authorities and Ministers, given its original role. I think 20% of the LA contract values was for future proofing and enabling FTTP is referenced by the NAO. In making this change, this 20% could be re-spent. Across the 40+ contracts it is some £380m of the total contract value. This future proofing was the principle means by which BT/BDUK informed PAC that the average subsidy per cabinet/fibre path would £28,900 each which represented 36% of the total cost. Future proofing costs were separately itemised and add substantially to the subsidy, hence the £47k reported in North Yorkshire for each of 300+ installed cabs to date but with no references to the nature of the future proofing – i.e.affordable FOD.

  8. FTTPoD is using the same network that’s backhauling the cabinets so it’s not that big of a deal to add it in. The kit in the exchange can do both gigabit Ethernet switch duty or can do GPON, so not a major issue.

    Now as I’m getting a caffeine rush, the price increase p****d me off as did the timing of the product’s release here. I am paying ~80GBP/month for 2 x line rental and 2 x FTTC lines. At the previous pricing levels an FTTPoD install was feasible and retail products at the right price may have been negotiable, however the price increase has completely wiped that out, the whole middle class investment + working from home angle entirely disappeared.

    That the price increase alongside release of the product here was just in time here for the Superconnected Cities voucher scheme seems unlikely to be a coincidence, neither does that BT started work in Leeds Basinghall exchange, a Superconnected City, to get cabinets live in time for the voucher scheme.

    The lack of symmetry is nothing to do with GPON’s restrictions. GPON’s ratio is 2:1 downstream:upstream, this product is 11:1. Even allowing for differing usage patterns between business and residential it’s extremely unlikely there would be any capacity crunch upstream, it was purely a business decision, as was the pricing change.

    The only thought that comes to mind is that FTTPoD ended up going the same way as some of the (very few) FTTP deployments did, costing more than expected and taking longer than expected so the prices were hiked.

    I contemplated this some more at http://telcotorment.blogspot.co.uk/2014/04/cornwall-and-rest-subsidy-economics.html

    • Good article. BT has confirmed to analsysts that the commercial rollout was circa £1.3bn (capital – cash and labour) for c19m passed, 50-55k cabinets and 800-900 handover points, – about £23-£27k fully allocated cost per cabinet/fibre path. Compare that with the £47k subsidy for each cabinet North Yorks CC recently confirmed.

      Rutland subsidies was c £2.8m for no more than 40 cabinets with or without a handover point. Again no efficiency savings.

      There are no reports on expenditure in Cornwall apart from state aid references for £7m and £14m in BT annual accounts which suggests BT is getting to bill whatever it can get away with and using these practice to impose on BDUK. Backing away from FTTP started in Cornwall hence the large budget with no FTTP visible in Rutland or North Yorkshire.

      Quite simply, the BT’s available capital is being switched to sport rights. Compare £1.3bn capital (capital+labour) for 50-55k cabinets and compare £1.2bn Gov cash for c25k rural cabinets and you will understand why PAC will be continuing their investigations for some time.

  9. gerarda

    For clarification Mark when you say “The minimum speed supported by FTTC is 2Mbps.” you presumably mean the service will not be offered where it is incapable of delivering 2Mbps and not that it magically produces a speed equivalent to the USC?

    • Yes that’s correct, minimum Threshold is 2Mbps and any lower than that would be considered a fault / not viable for installation (the 15Mbps threshold also still exists for faster FTTC lines). However it’s probably not a coincidence that they lowered it from 5Mbps to 2Mbps, which just happens to be the Government’s USC.

    • gerarda

      No wonder there is not much take up- pay a premium price but only guaranteed 2Mbps

    • Well technically it’s a 2Mbps or 15Mbps threshold depending on your lines predicted performance. But I wouldn’t even call it a guarantee as that suggests an SLA, which home users don’t get.

    • Raindrops

      Are you sure there is still a 15Mb guarantee on their home fibre services Mark???

      I thought that was killed off back in 2010…
      http://www.ispreview.co.uk/story/2010/11/25/bt-extend-the-range-of-superfast-fttc-broadband-by-cutting-its-speed-to-5mbps.html

      That 5Mb around early to mid 2011 became the now known 2Mb minimum.

    • Don’t confuse fault thresholds with guarantees. They had a 5Mb threshold and a 15Mb upper threshold before but the 5Mbps one seems to have morphed into 2Mbps sometime back. At least so suggests the FTTC Handbook.

    • No clue

      Which lines have this 2Mb threshold and which have the 15Mb?

      Also is there any fault threshold on the Up stream?

      I was also under the impression the 15Mb figure went away long ago in order for them to provide to more people or long distance or something along those mixed up blurry lines (excuses).

  10. DTMark

    All of this seems to indicate one of two things to me:

    1. That having further entrenched their monopoly position via the BDUK schemes which deny the consumer any real choice (“either BT provides it, or nobody does”) that the pricing of this is opportunistic and trading on that monopoly (that voucher scheme springs to mind here)

    2. That those who argued “it will all be to do again” were right all along. The BDUK rollout reaches a logical dead-end at the cabinet. BT were never in any position to efficiently roll our beyond there and have little or no commercial advantage in this respect over another operator.

    Fibre rollout often estimated at 29bn, if we had looked to undertake a superfast broadband programme. Because we instead opted for the “give money to BT programme” instead, the numbers I calculated before this price hike suggested the total cost is going to be much more like 46bn with no ceiling to that figure.

    • UNfortnately I would agree with the sentiment, but if a monopolist decides to mis-direct parliament including PAC on its costs and investment, while the regulator chooses to exercise its independence then it is difficult to know how to improve what’s occurred.

      On the £29bn – it has been shown FTTC which BSG/AM stated cost would £5bn will be £1.3bn from BT and circs £1.3 from Gov. The remaining BT match for rural will be some non-cash capitalisation of effort. If there is duct available FTTP will be cheap, so the notion of putting subsidised VDSL cabinets outside business parks will be shaming for all involved.

      It is unfortunate that in the 2014-2017 Ofcom cost recovery proposals for copper loops, there is no D-side upgrade insentive. I was suprised to see the Drop wire had a accounting lifespan of only 10 years and £17pa can be recovered for the Drop wire as part of c£87pa overall.

      There is certainly room to achieve more with the resources available but the will to do so has disipated.

  11. JNeuhoff

    About a year ago some posters, in their ever so eager spirit of promoting everything BT, pronounced FoD as the way forward. Several other posters have pointed out back then their reservations on this product. Look at where FoD is now. It’s a farce, a dead product, wrong price, wrong market, nobody takes it where available, it is just one of these long telecom fake trials to save face.

    • I had hopes for FOD so apologies. There will be a depressed engineering force, but the BT accountants and BT senior manager (bonuses on free cash flow) and shiny suits (bonuses on billed LA revebue and an adundance of project managers) will be having a very merry time indeed. Shareholders will suffer long term as will the rural economy.

  12. Chris Conder

    Some great comments on this post! Well done everyone. Surely the politicians must see through this farce soon? Surely now BDUK can break the contracts as BT have reneged on the deal? If they promised affordable FOD they should be made to deliver it or cancel the contract. Then the money can go to altnets to do the job properly. Lots of areas can be done for a fraction of the price BT charge. Get some real competition going and BT accountants and managers will have to earn their pay at long last. (the poor engineers already do).

    • FibreFred

      But they didn’t promise affordable FoD did they?

    • TheFacts

      Can altnets install FTTP to every property in an area at a cost lower than FTTC?

    • @FibreFred FOD was used, scored and contracted in BDUK responses on the basis of an affordable service at £38pm wholesale – which you can question! Why would you have c£380m of future proofing (see NAO table 11, P33) – 20% of the value in the BDUK contacts for a service which is now not affordable for most? It certainly points to a new limit on BT’s ambition and significant re-positioning of FTTP and thus this money ought to re-pointed to entities if they can be found with more ambition.
      No evidence (no information at all) that Rutland or North Yorkshire adjusted plans or subsidies to reflect this change.

    • FibreFred

      NGA for all,

      Thanks for that , so it wasn’t part of the rollout but in the contract as a future upgrade is that right?

    • @The Facts – Where duct exists in small rural business parks, then FTTP by altnets or BT for that matter will be better/cheaper than a couple of FTTC Cabinets at £35,000-£45,000 each. There is no evidence that this these are being planned.

    • @Fibre Fred It arose directly in response to a Build and Benefit requirement written in Cumbria and translated as a BDUK requirement for commnities wishing to expand past the operating limits of a cabinet.
      Some communities wanted the service without needing to own or manage infrastructure, a smaller number wanted to own and mange the infrastructure themselves. A few were hoping to close their home grown wireless efforts and retire proper on the back of the FOD offer.
      The contractual conditions around affordability and there interaction with state aid conditions and the ability or willingness to enforce them will be the responsibility of those managing the contracts.
      BT can offer to price community build and benefit schemes separately on an adhoc basis as per Fell End so naivgate around this, but FOD started in rural to extend FTTP where the cabinet ran out of steam or where power was too expensive. The changes is important because its limits our ambition by positioning FTTP in this form to a business grade product only. BT struggles to do work by exception so any alternative will be difficult to buy.

    • @Chris Probably not break the contracts but a new SOS and a two new CEOs one on either side could press a refresh button. BT have publicly stated on Feb 27/28th that they priced a National Framework agreement to win 1 of the 42 bids. 1 bid is c600 cabs, 42 bids is c25,000 cabs, regionalise project management, reflect the re-positioning of FOD, agree an FTTP target and a community build and benefit scheme.
      This is a big ask of a BT management getting fat on £176 per premise passed but any reasonable interpretation of state aid in terms of incremental costs suggests this will be found to be illegal and needs adjusting sooner rather than later.
      Let’s hope the SOS and two new CEOS have the wisdom and call it now rather than miss the opportunity to make a very positive change.

    • JNeuhoff

      @NGA for all: In our town there is no VDSL, and the BDUK won’t touch most of it either (which is good IMHO). However, I noticed from the notes of the local council meetings that current property development projects (new estates) are only allowed to complete if they can provide future-proof genuine fibre-optic services in there. Will be interesting to see how they’ll pull it off!

    • @JNeuhoff It would take very little nagging from DCMS/Gov to nudge Ofcom in the current market reviews for fixed line access to send such signals to BT that Voice over fibre is equivalent to PSTN (law can be re-written in time), a little uplift on cost recovery on fibre access, given the state is paying for e-side fibre in rural access and backhaul to handover points and then all new buids and re-furbs work towards fibre or be fibre access.

      It could be a one liner in the election, cost very little but be very effective.

  13. No clue

    So a failed FTTH/P rollout and now this overpriced garbage, how very typically BT.

  14. gerarda

    The nonsense of FOD can be shown in the fact that BT would charge £13,000 for each house in our village to bring it from the cab-3.5km away according to the Openreach engineer- whereas as cabinet would cost say £40K. So for the cost of providing FOD for 3 people if there were any takers at that price, BT could supply superfast with a take up of probably an extra 60-70 premises at either superfast or ADSL.

    • @Gerada the nonsense is at several levels.
      £40k subsidy rather than £15k subsidy for the cab/fibre path -note state aid is for incremental cost – not for grazing upon. For rural it would be some community effort anyway so you would put 5 or 10 orders together in a contiguous space and the £13k would + final drops would be shared. If it went back to its orginal form with a minimum order of 5 to 10 with a bit of self dig from road to homestead it could be done.

  15. RD

    I always laugh when the BT spent £1 billion on football rights. Basically the Goverment paid for BT to set themselves up as a Rival for Sky and sports and thus using the monopoly to herd more people onto BT’s own Fibre products.

    BT are esentially and have been for many years a Goverment funded PLC with the profits being creamed and taken by BT investors. Yes where do you think all these upper middle class peons and MP’s stash thier money? In BT of course and rightfully so.

    Scammers

  16. Bill

    How reliable and stable is FTTPoD 330/30? I am about to have it installed but would like a heads up on what it’s really like.

    Do they throttle you randomly for example?

    • Richard

      Bill. I cannot answer your question – throttling is what I do on my motorbike. I’d be interested in your install experience however as we are going through the survey process presently. And, incidentally, what is your expectation (or what have you been told are the options) once the 3 year contract ends?

  17. Mufassa

    Complaints about FoD cost make me smile. Having lived in Bradley Stoke (an area without any phone exchange nearby) for 5 years, 2 years ago I flipped – being in the technology industry I could no longer take an intermitent 0.5M download (which died when the phone rang).

    What did I do? Have corporate fibre installed to my house (100M/100M) – direct from the Exchange. It cost £2,500 installation + £7,600 ECC’s, and cost £950 per month (now down to £500 odd). Still – today – FTTC is only just starting to be rolled out: and the fibre was the best investment I made. Costs more than the mortgage though – but needs must.

    I’d rather have just paid for FoD….!

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