UPD BT Openreach Moot Naked FTTC Superfast Broadband Without Phone

BTOpenreach has proposed a new product option (‘Single-Order GEA-FTTC’) that could allow customers to take a Fibre-to-the-Cabinet based superfast broadband service, albeit without also needing to have a traditional phone solution for voice calls (aka – Naked FTTC).

The proposal first came to light on 2nd July 2014 as part of a semi-private briefing given to ISPs for a new service that would “complement [their] Superfast Fibre Access portfolio” (here). Unfortunately the details were kept private and Openreach’s explanation made it sound like some sort of administrative change, rather than an actual product.

But it seems as if Thinkbroadband has done some digging and in so doing has managed to dredge up a few more details, which suggests that Single-Order FTTC might just be that elusive Naked FTTC product that some consumers have been calling for ever since BT’s NGA technologies first arrived in 2009/10.

Openreach Statement

It will give communications providers (CPs) purchasing its Fibre-to-the-Cabinet (FTTC) product the option of placing a single, convenient order to provide customers with a fibre broadband service.

By building the underlying copper line into the product, CPs benefit from reduced complexity when ordering fibre broadband which is not coupled with a traditional voice service. CPs will have the option of introducing innovative IP based voice services for their customers.

The copper circuit from the exchange to the FTTC cabinet will be primarily used for line testing.

Naturally you can’t have FTTC without using some form of fixed copper line rental, although in an ideal world BT’s new option would give consumers the ability to take superfast broadband without the voice side of that service and with an appropriate discount being applied. Today most of us use mobiles for our voice calls and the phone line, outside of broadband, thus sees precious little usage.

On the other hand Openreach will still want to make some money out of it and so we don’t expect a dramatic adjustment. Currently it remains to be seen how they’d balance the pricing and this solution is still just a proposal, which would also need to be trialled before it could become more widely available.

At present it’s not known whether customers would still be assigned a phone number with related services. The lack of a number might potentially make it more difficult to switch ISPs or to reliably check for future availability.

UPDATE 18th September 2014:

Looking into this further and Ofcom’s recent Fixed Access Market Review (FAMR) makes mention of their regulatory position towards such a product from BT Openreach, which was raised following a question that was put forward by Tesco.

Ofcoms FAMR 12.146

We note that, in response to the 2012 FAMR Call for Inputs, Tesco raised the issue of standalone GEA, i.e. where, rather than being offered as an overlay product provided with WLR or MPF, FTTC-GEA could be bought on a standalone basis (sometimes referred to as ‘naked fibre’). While we cannot fetter our discretion, we set out here considerations we currently think are likely to be relevant to compliance with that requirement.

We first consider that we are unlikely to want the price of any standalone FTTC GEA product to undermine BT’s incentive to roll-out and promote take-up of fibre. Second, we consider that since GEA over FTTC is currently an overlay service (i.e. it can only be bought in combination with WLR or MPF) our initial view is that the charges for this service should not recover any significant common costs.

However, should GEA be made available on a standalone basis, our further initial view is that the common costs being recovered via the WLR or MPF charge should be transferred to this new standalone service. Our aim would likely be for there to be the same amount of common costs recovered per line, i.e. from each of MPF, WLR, GEA over FTTP and standalone GEA over FTTC.

In other words, much as we’ve already warned in the original article, if such a product were to emerge then the price advantage over taking a more normal FTTC + Phone service would not be significant.

At the end of the day you still have to pay something for the physical copper line that enters your home and the pre-existing basic wholesale charge for that of around £10 per month is probably a good measure (not forgetting to add the FTTC rental on top). Note: some providers, such as AAISP, already allow you to take line rental at close to the basic cost.

On the other hand retail ISPs have developed a tendency to cover the rising costs of broadband provision by hiking line rental above the rate of inflation every single year. It would be harder to do this with a Naked FTTC product, although no doubt that wouldn’t completely halt the increases.

But is this a product that ISPs would want to offer? Clearly more providers than Tesco have expressed an interest, otherwise we wouldn’t be seeing the proposal. Never the less some of those might lose interest once the pricing is known.