UK Superfast Broadband Take-Up Expected to Skyrocket by 2020

A leaked TalkTalk commissioned report from German analyst Wik Consult has predicted that take-up of superfast broadband (FTTC / P) services on BT’s (Openreach) platform will reach a “maximum” of 65% of addressable customers by 2019 and Virgin Media will hit 100% in 2017. But are BT’s prices anti-competitive?

WIK was asked by TalkTalk to estimate – through a bottom-up cost calculation – the cost to BTOpenreach of providing Generic Ethernet Access (GEA) over its dominant Fibre-to-the-Cabinet (FTTC) service in order to compare it with the price charged by Openreach.

Technology writer Ian Grant, whom leaked the confidential report (Download PDF) on his website (Br0kenTeleph0n3), suggests that the results could end up being used as fuel to support Ofcom’s investigation of BT’s alleged anti-competitive margin squeeze of superfast broadband (25Mbps+) pricing (here).

Grant claims that WIK’s report represents “credible evidence” that “BT is charging more than double what it should for wholesale superfast broadband products“, although the report itself avoids making such a direct accusation. Ofcom will decide later this year. In the meantime we are awaiting a comment from Openreach.

Otherwise the study also provides some useful insight into predicted adoption of superfast broadband services. Apparently the 65% take-up figure for BTOpenreach’s FTTC/P platform is considered a “conservative assumption” on the basis that take-up by BT Retail customers within served areas is more than 30% and BT reports that more than half of new retail customers are subscribing to its fibre optic based products (i.e. actual adoption could end up being as low as 50% or as high as around 80%).

It’s of course understandable that Virgin Media would have 100% adoption of superfast broadband in 2017 as they’re currently spending £110 million to upgrade practically all of their customers onto the latest DOCSIS/EuroDOCSIS 3.0 platform, which now comes with entry-level “superfast” download speeds of 30Mbps.

But achieving the same feat on BT’s infrastructure is more of a challenge as it requires customers to take a new service, which is usually accompanied by an additional cost and contract.

Overall WIK’s forecast predicts that the United Kingdom will be home to around 13.3 Million superfast broadband subscribers by the end of 2017 (assuming the service is available to 90% of the country – government target), which compares with a figure of 17.4 Million offered by a separate report from Enders Analysis and just 13 Million from the Broadband Stakeholders Group (BSG).