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Obstacles Remain as TalkTalk Dream 60% 1Gb FTTP Broadband Cover

Friday, September 26th, 2014 (8:30 am) - Score 1,311
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The boss of TalkTalk’s business division, Charles Bligh, has confirmed that the ISP ultimately wants 50-60% of homes in the United Kingdom to connect via their new ultrafast 1000Mbps Fibre-to-the-Premises (FTTP) network. But in order for this to work Bligh admits that take-up will need to be 30-40% or higher and the cost per home must be below £500. Difficult.

Over the past year we’ve seen a growing number of alternative network operators, from utility firms to ISPs, entering the market for pure fibre optic connectivity. Indeed it’s starting to look like we’re in the midst of a welcome fibre optic broadband revolution, one where BT may no longer be the dominant force.

But so far most of those projects, except for a few involving new-build homes where deployment costs are less of a concern (much easier to do it before you build the houses), have been strictly demand-led. In other words, the service doesn’t get deployed unless enough locals express an interest first (e.g. Gigaclear, Hyperoptic etc.).

By comparison any ambition for a truly national deployment would need to relax the demand equation in favour of putting itself at the mercy of natural market economics and competition, which is usually where FTTP/H/B’s high deployment costs can become a problem.

Explained another way, the competition from slower but cheaper pre-existing broadband services (ADSL2, FTTC etc.) makes the case for FTTP/H/B a lot harder to make, unless we go back to the patch-work of strict demand based deployments or adopt B4RN’s ‘build it yourself’ social model (B4RN’s model works well in rural areas, but not so much cities where taxes, rules and other restrictions can be a bigger problem).

Some of these issues are likely to become problems for TalkTalk, which is currently working with Sky Broadband, Fujitsu UK and CityFibre to roll-out an experimental FTTP fibre optic broadband network across the city of York (starting with 20,000 premises). So far TalkTalk and Sky have contributed £10m to phase one of the project (here and here), which will make use of CityFibre’s existing network, and more will be needed later to reach the 80,000 premises around the whole city. It’s anticipated that two further cities will then be added, but this won’t be decided until next year.

Charles Bligh, MD of TalkTalk Business, said:

We have spent a couple of years talking about the BT rollout, but it’s an interim step in terms of really pure gigabit fibre. We’ve decided to put our reputation on the line, but also some money into this. We’re putting our money where our mouth is … We’re very deadly serious about making this go right.”

Bligh’s comments were made as part of a speech to Huawei’s Ultra Broadband Forum 2014 event in London this week, where he also revealed that the cost per home would need to be below £500 and that take-up would have to be in the 30-40% range or higher to make the service viable.

But achieving such figures is no easy task, much as BT’s well-advertised and affordable ‘up to’ 80Mbps Fibre-to-the-Cabinet (FTTC) technology has found. This is especially true in urban areas where many people already have access to 10Mbps+ speeds through ADSL2+, which while not especially fast is still clearly enough to keep a lot of consumers satisfied (so long as they only have to pay a handful of pounds for it). In effect, outside of cable areas, FTTC has been battling its cheaper but much slower ADSL2 predecessor.

In the future this will change and indeed we can already see a strong movement towards FTTC connections from the markets largest ISPs, while Virgin Media has also moved around 4 million+ on to their superfast cable platform that can dole out speeds of up to 152Mbps. However this will only make it even more difficult for FTTP solutions to find their footing, especially when forced to fight over the same turf.

TalkTalk’s approach with CityFibre hopes to counter this by offering ISPs access to the new network via wholesale, effectively positioning themselves as a direct competitor to both BT and the semi-separate BTOpenreach. TalkTalk also believes that their approach will be able to deploy FTTP at a cost that is not dissimilar to how much BT pays in order to roll-out FTTC, although this has yet to be proven. But even in the best case scenario we expect it to be a difficult battle, especially with a take-up goal of 30-40%.

On the other hand TalkTalk and Sky, combined, already account for approaching 10 million broadband subscribers and if correctly leveraged this could be converted into strong FTTP uptake. The ISPs also want their FTTP service to be cheap and competitive with existing FTTC prices, which if it works would be another bonus.

Put another way, if somebody offered you 1000Mbps for £20 you’d probably pick that instead of paying the same for FTTC’s distance inhibited speed lottery where you might get anything from 2Mbps to 75Mbps, depending upon your line quality and distance from the local BT street cabinet etc. Of course this is a simplification; the real-world is usually more complex with more things to consider than just speed and price. Not least with whether people will see a NEED for 1000Mbps.

It should be said that TalkTalk’s CEO, Dido Harding, has already spoken of her ‘aspiration’ to push their fledgling FTTP/H network out to 10 million homes across the United Kingdom. In that context Bligh’s remarks should be taken with a similar pinch of salt, but then that’s the purpose of the deployment in York, to test such ideas and attempt to confirm a workable model.

The first “technical trial” customers are due to connect in the next few weeks and the first full customers should then go live sometime during 2015, but none of the longer term plan is going to happen quickly. It will take years and bags of money to achieve TalkTalk’s coverage goal and we doubt BT will sit the battle out. But for now BT are probably just content to observe and wait to see whether TalkTalk, Sky and Cityfibre’s big experiment turns into a real threat or fizzles out into economic unviability.

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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 Twitter, , Facebook and Linkedin.
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20 Responses
  1. Avatar Bob2002

    The more ISPs talk about FTTP the more everyone else, including other businesses, political parties, and the government, will talk about it as well – sooner or later talk will turn into some kind of action.

  2. Avatar DTMark

    I strongly suspect a nationwide fibre rollout – and for the sake of pedantry and clarity that does not mean every barn in a field ten miles from anywhere, but probably 90%+ of premises – was possible and do-able via the various methods others, and I, have outlined on here before. (Cue the usual BT cries of “but who will pay!” ergo “the government won’t pay” or the thinking model that telecoms must be a State Thing)

    Sadly, I think it does need government involvement – “facilitation” – and BDUK has effectively destroyed all chances of that by going for the quick win/bung cash to BT/tick some boxes approach.

    One irony is that I don’t see any mechanism for bringing improvements in a cost effective way other than competition. Works in most industries, whereas in the UK we have almost none and for some reason expect a monopoly to operate like some sort of co-operative.

    And the irony of that is that it reduces the take-up and tends towards a duopoly at best.

    I’m sure ISPs who don’t have a TV service may have borne in mind that this is what customers seem to want, not raw broadband as such, but the apps that make it useful, as customers defect en-masse. But then such ISPs were never in any position to contribute to infra.

    Apparently just one player, which is in essence a pension scheme with a phone company attached to it, is supposed to deliver all of the infra while operating in a price constrained model.

    Change that bit, and all things begin to become possible.

    Keep it the same, and in a few years, the only ISPs will be BT, Talk Talk, Sky and Virgin Media.

  3. Avatar FibreFred

    When talktalk announced their plan for York I expected two things to come out if the trial, lower than required take up ( I expect it would be hard even outside or York never mind in a well served already) and the install costs would be prohibitive.

    Sounds like they are already admitting defeat

    • I wouldn’t say they’re admitting defeat, more that the given cost and take-up figures are their actual expectations. I think you might have miss-read our highlighting of the potential problems and attributed that to TalkTalk, but this is not correct, TalkTalk remains entirely upbeat.

      Industry watchers will of course know just how difficult it is to achieve that sort of take-up without a much more strictly demand-led or social approach to deployment.

    • Avatar DTMark

      What still puzzles me, is why FTTP providers pick areas which already have VM cable. OK, it’s not fibre-optic but it is the most performant mass network that we have, people are locked in long contracts, it has probably the best TV service of any provider (inc. Tivo) and it’s also the provider that has the highest satisfaction ratings.

      You’d think that new providers would pick areas which are abysmally served, or those where there is no competition to speak of, or where competition could not respond easily.

      There must be reasons for this (City Fibre, Bournemouth..) but to those outside the industry it is hard to comprehend.

    • Avatar FibreFred

      It’s because cityfibre already have a presence in York DTMark , it’s not just cable in York there’s a lot of Bt FTTP and fttc , it’s gonna be a hard slog , I do think they are setting themselves up to fail and will then lobby for change as they tried it in York and its not viable.

    • Avatar Gadget

      I’d suggest if you were spending your own money on this there are a number of questions you and your board/investors would want answers to:
      1) how much does it cost to deploy both where there is a fibre ecosystem such as York, and where there is none?
      2) Can our systems cope with order, delivery and maintenance with/without modification (and if required how much and how long to modify)?
      3)How much are people prepared to pay for the product and what is the price/product elasticity?

      all of which allow you to answer the question how many do I need to sell to make it viable.

      Now given that there is, as so rightly observed, competition from one or two other players in most of the high population density areas of the country in order to get a sustainable market volume you are probably going to have to make some dent there otherwise the total market volumes probably will not fly.

      Remember Digital Region….. would it have been different if the leading market share ISPs had got on board, certainly it is more likely to have reached more than 3000 customers on the platform. The flipside is that if you cannot see the likely volumes why have the hassle of the systems and operational processes for a minority market?

      Those questions seem to be answerable or getting a long way towards answering as part of the current trial.

    • Avatar DTMark

      Indeed. We already know what people pay. We don’t know what they *might* pay though.

      Although I don’t study it closely and haven’t had fixed line for years, fixed line broadband seems to cost about thirty to forty pounds a month.

      That includes “line rental”. Perhaps we’ve reached the days now when a new provider can do away with landline voice circuits and provision altogether as people have mobiles with inclusive calls now anyway.

      The other dynamic being what people will pay for e.g. Sky TV. Call that another twenty quid a month maybe.

      A really good bundled offering of TV services which could compete with Sky/VM and true fibre – fifty quid a month? Sounds expensive, but it’s only about the same as now.

  4. Avatar Pete Woods

    I do get tired of the continued implications that (symmetric) gigabit broadband isn’t useful.

    * Ever tried using a cloud backup solution for more than Excel + Word documents? I’d literally have to wait days to backup my photo vault with my 5MBit upstream.
    * Ever tried downloading a (~25GB) game for a modern console? Then after it’s “finished”, waiting for a chain of 5x1GB patches? It takes me pretty much a whole day to go through this process.

    • Avatar FibreFred

      Minority requirements

      Backing up all your pics ? You do it once in the background and then just sync changes

      Just look at virgin for a good example most of their customer base have always gone for lower tiers , no need for such high speeds

  5. Avatar Pete Woods

    Yeah, sure. Only a minority of people own a PS3/PS4/XBox 360/XBox One.

    • Avatar Pete Woods

      As it’s nice to argue with facts than vague assertions, I thought I’d leave some evidence of the massive installed base of home consoles in the UK. It was 24 million units in 2009:
      http://www.gamesindustry.biz/articles/uk-console-installed-based-tops-24m

      Given that both of the new platforms strongly encourage digital purchasing for everything, and downloads are typically in the order of over 20GB, I can certainly see a case for really fast downloads.

      Sure, not everyone in the UK would be willing to pay premium prices for a 1Gbps service, and I don’t expect them to. But there are really a great deal of households that would benefit from very fast bandwidth, as even this one simple example demonstrates.

    • Avatar FibreFred

      Minority requirement in as much as you feel you need such downloads that instantly.

      Why is 1gb fast enough to download ps4 games , why not 10gb?

      100mb would be nice for such services but 1gb total overkill for the masses

    • Avatar FibreFred

      So lets say a 40GB game, on 100Mbps it would take 55mins or thereabouts , sounds total reasonable to me, compared to buying a game from Amazon and waiting days or going to the shop its a massive improvement.

      But you believe there’s a large viable market that would want that game in 5mins using a 1Gb connection?

      Seriously… 🙂

    • Avatar No Clue

      One hour or thereabouts for 40GB of any data i agree with you fred is very reasonable, not a “long” time to wait at all. Nobody should be complaining about that, if they even had dial up and remember trying to just download a few hundred Mbs i doubt they would be.

      The trouble is with the rollout which has happened not many are capable of getting that 100Mb speed from a normal retail broadband/”fibre” product. I imagine once profile 30 happens or even vectoring for FTTC there will still be a fair chunk of people stuck at around 30Mbps due to line length and other issues.

      That suddenly is not as acceptable and that 40GB is then going to take you close to 3 hours, which could be argued still does not sound too bad until you realise that is around a fifth of the typical day a person spends awake. :O

    • Avatar FibreFred

      I’m not referring to anyones rollouts just stating what I think is a reasonable time for the items in questions (PS4 games etc)

    • Avatar No Clue

      Yeah i got what you were aiming at, hence my first paragraph agreeing with you. I just thought it wise to remember there is a fair few which even if they wanted 100Mb are not likely to see it from a retail product at a sensible price for a while.

  6. Avatar Matthew Williams

    Think 1Gbps for all is something very unlikely to happen but think 100Mbps for all is a manageable target.

    • Avatar No Clue

      Not with FTTC as it stands, profile 30 and even vectoring will not give 100Mb on around a 1/3 ish of lines by my very brief reckoning. (that 1/3 figure is a very brief and quick estimation it could be wrong/not exact/better or worse but there will be many with JUST FTTC that will never get near 100Mb).

  7. Avatar zemadeiran

    @FibreFred

    This is all an ongoing battle between yay and neighs, imho what we need is the equivelant to quantum computing where the end goal is the solution at the lowest energy expenditure.

    Why not just grab some funds from the Uk’s five richest families who have the equivelant wealth of the UK’s 10.000.000 poorest and build out ftth?

    Create public ftth broadband bonds with 5% fixed interest over 10 years.

    Maybe even cancel HS2.

    How about the massive voting fraud in Scotland? Time for electronic voting using the block chain.

    We really need to push forward and upend these entrenched archaic business models, just look at Uber’s impact? Huber has not inovated, it has simply used several existing technologies and created a p2p service with them.

    We have to look at the bigger picture and not just at our comfort and requirements. We need to put things in place for the next couple of generations in order for them to have something solid to stand on.

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