Timico CTO Calls for BT Split and National UK FTTP Broadband Network

The Co-Founder and CTO of UK ISP Timico, Trefor Davies, has called for “government intervention” to split off the “rural bits” of BTOpenreach’s network (BT can keep the urban bits that compete with Virgin Media) and to help rollout a truly national ultrafast fibre optic (FTTP) service to every home and business.

The comments came as a late reaction to last week’s scathing report from the National Audit Office (here), which broadly described the government’s Broadband Delivery UK (BDUK) scheme to help 90% of people gain access to a superfast broadband (25Mbps+) service by the end of 2015 (previous target) as being 22 months late, underfunded and lacking competition.

In fairness the NAO’s report wasn’t entirely fair as the new March 2017 target is 95% and not 90% as it was before for 2015. In fact the Department of Culture, Media and Sport (DCMS), which looks after all things BDUK, clarified that they now expect 88% of the UK to get superfast broadband by the end of 2015. Being only two percentage points out from such a tricky target isn’t terrible.

Never the less much of the NAO criticism was justified and the government are now working to restructure BDUK. But Trefor thinks they should go much further by scrapping the HS2 railway project and using the money to fund the deployment of an ultrafast national Fibre-to-the-Premises (FTTP) network instead (i.e. as opposed to BT’s predominantly slower hybrid-fibre FTTC approach).

Trefor Davies said:

“None of the political bluster really matters. At the end of the day the only sensible objective is for the UK to have a complete fibre to the premises network and to have this sooner rather than later. We can’t use traditional business case benefit methodologies to find out if this makes sense. I’m sure that this is how they worked out the ROI for HS2. Nobody really understands what benefits will accrue from a universal fibre network. This therefore requires a leap of faith on the part of the government and unfortunately this is a risk they are unlikely to take.

I realise that handing part of a private company back to what would effectively be public ownership sounds counter intuitive. People have criticised BT’s costs. Whatever people say about BT’s cost and overhead base it is difficult to imagine a scenario where a publicly owned company without a profit motive would do better. BT does actually maintain that its cost per metre benchmarks very well against similar networks in other countries and I wouldn’t want to argue the point.“

One potential downside to this suggestion is that it could take years longer to examine, review and to then deploy the solution (i.e. split Openreach and roll-out FTTP). In the meantime rival 4G based Mobile Broadband services would continue to improve and the wider superfast broadband rollout could end-up stuck in limbo.

Lest we not forget future 5G services, which Ofcom predicts could eventually threaten the whole fixed line model. On the other hand some would argue that sticking with today’s slower hybrid-fibre FTTC approach is almost as likely to leave fixed lines vulnerable to a threat from 5G, especially in areas where FTTC is at its slowest (furthest from the street cabinet). But predicting the future is a difficult business.

Suffice to say that taking Openreach out of BT’s hands is not a simple solution and at the present time there’s no sign of this happening, at least not until after the current strategy has run its course or Ofcom changes its mind about the alleged merits of full structural separation. Certainly Ofcom, within the context of the current market review, has shown no sign of changing its stance.

Trefor Davies added:

“It could be a bullet we should bite. Service provision could be provided by BT, Virgin, Timico or any other ISP who cared to do the business. It would just be a matter of buying wholesale bandwidth off the new company and sending out a router. It would provide for a properly competitive market.”

Trefor also described the often forgotten goal to ensure that everybody has access to a minimum broadband download speed of at least 2Mbps by 2015 as “utterly pathetic“; surely nobody will disagree with him on that. Ofcom’s own Group Strategy Director, Steve Unger, thinks that a minimum of 8-10Mbps would have been better (here). On top of that the 2Mbps Universal Service Commitment (USC) has no legal weight unlike a Universal Service Obligation (USO).

At the end of the day the future will probably be fibre optic but how far in the future and by what mechanism that occurs remains highly debatable and open to change. In the meantime FTTC can plug the gap but eventually we’ll need more, the question is just how much extra juice can you squeeze out of the “last mile” copper run before that point arrives? Vectoring, G.Fast and other changes will extend its life but those whom live furthest from an FTTC street cabinet can already struggle.