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CityFibre Accuse BT of Soft Peddling on the Rollout of True Fibre Broadband

Saturday, Jun 23rd, 2012 (2:04 am) - Score 2,229

CityFibre Holdings, which builds UK fibre optic broadband infrastructure (FTTP) for business, public sector and domestic needs, has criticised BT for choosing to “soft-pedal” on the roll-out of true Fibre-to-the-Premises (FTTP) based broadband services because of an “overwhelming bias” towards slower FTTC technology.

Both BT and CityFibre make use of FTTP style technology, which runs a high capacity fibre optic cable directly to your home or business. This cuts out the interference and instability of using existing copper cable and can thus deliver speeds of up to and possibly beyond 1Gbps (Gigabits per second). Unfortunately it’s also prohibitively expensive for BT alone to roll-out on a truly national scale.

As a result the operator’s £2.5bn superfast broadband deployments are dominated by Fibre-to-the-Cabinet (FTTC), which delivers a fast fibre optic cable to BT’s street cabinets. The remaining connection (between cabinets and homes) is done using VDSL2 (like ADSL but faster over short distances) via existing copper cable. It’s much cheaper but also significantly slower over longer lines.

James Enck, CityFibre’s Head of Corporate Development, said:

If the accounts of BT’s recent message to the House of Lords Select Committee are to be believed [related article here]. It is entirely unsurprising to observers of NGA developments in the UK that BT would choose to soft-pedal on true FTTP, given its overwhelming bias towards FTTC in its Infinity deployment.

The company also clearly has constraints in terms of its ability to radically change course. As the company’s latest results show, it ended its most recent financial year with £844m in cash and £1.5bn in available banking facilities, which implies a significant amount of financial headroom if the company wanted to pour more money into capex in support of a rollout comprising more true FTTP. However, against this, the company must weigh the various interests of shareholders (dividend payments, share price maintenance), lenders (credit ratings) and its commitments to its pension recovery plan, which total £2.4bn in top-up payments over the next nine years.

Given that anything remotely resembling a “nuclear” option on NGA investment would cause friction with stakeholders on all sides, our own back-of-the envelope working assumption on BT’s effective annual headroom for additional fibre investment has been around the £1bn mark. However, even this sort of incremental commitment to fibre investment would no doubt prompt some uncomfortable conversations with influential shareholders.”

CityFibre’s “back-of-the envelope working” isn’t terribly difficult to arrive at because BT has already pledged to invest an additional £1bn (total £3.5bn) into an expanded roll-out of superfast broadband services. But that would be contingent upon the operator winning a lions share of public subsidy and they’d still need a lot more to do a true fibre deployment, with some earlier estimates pointing to £15bn-£20bn.

At present BT’s £2.5bn will help their superfast broadband services pass around 66% of the UK population come 2014 (it currently covers almost 40%), which could be extended to 90% by 2017 with the governments entire Broadband Delivery UK (BDUK) office budget of £530m; plus an extra £300m from the BBC between 2015 and 2017 if necessary. There’s also that £150m Urban Broadband Fund to consider (here).

CityFibre suggests that BT could find more money if it needed and points to the operators recent £738m three-year football rights deal for its BTVision (IPTV) service, which they claim is only good as a “short-term commitment” and would perhaps be better invested into the “long-term commitment [of] transforming the nature of connectivity in the UK market“.

In fairness BT tends to take a lot of flak over this and not all of it is fair. The operator has invested a significant amount of money and FTTC should be fine for most people, although some won’t received the best speeds and the day will certainly come when a more capable solution is required. Similarly BT must also deal with expensive rural areas, which other operators simply ignore.

In the meantime next year’s Spring 2013 launch of FTTP-On-Demand, which effectively makes FTTP available almost anywhere that their slower FTTC service can already go (with a few caveats), might help to fill a few gaps (here).

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Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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