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BT Tops 7.47m Broadband ISP Customers as FTTC Covers 21m UK Premises

Thursday, October 30th, 2014 (8:37 am) - Score 1,351
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National UK telecoms giant BT has today posted their latest results for Q3-2014 (calendar), which reported slowing retail broadband growth to total 7,473,000 customers (up by +88k versus the +104k added in Q2 and +170k in Q1). The operator also revealed that their superfast capable “fibre broadband” (FTTC/P) network could now reach 21 million homes and businesses (premises passed).

Ordinarily we tend to see ISPs gain an uptick in broadband subscriber growth during Q3, which is often thanks to students as they return to their education and take out new contracts, although BT seems not to have benefitted. The aggressive price competition from Sky Broadband, Virgin Media and TalkTalk can’t be helping.

Similarly BT’s Consumer division also saw their base of predominantly ‘up to’ 40-80Mbps capable superfast Fibre-to-the-Cabinet (BTInfinity) subscribers grow by +203,000 in the quarter to total 2,535,000, which is down from the +226k added in Q2 and well below their peak of +249k additions in Q1. Sadly BT never splits out uptake data for their 330Mbps FTTP products, although this only represents a tiny minority due to limited coverage.

At this point it’s worth looking at ISPs across the market, specifically those that also make use of BTOpenreach’s national UK telecoms network to help deliver their own FTTC and some FTTPfibre broadband” services (e.g. Sky Broadband, TalkTalk, BT, Zen Internet etc.). Overall Openreach added +344,000 new FTTC/P customers in Q3 to total 3,363,000 and that’s actually a small increase from +341k in Q2, which suggests that the fibre slowdown at BT’s consumer division is not being mirrored elsewhere (around 40% of Openreach’s net fibre broadband connections were generated by external ISPs in Q3).

Overall Openreach saw their total UK broadband lines top 18,800,000 (+182k in Q3 vs 163k in Q2 and +217k in Q1), which among other things included 8,180,000 fully unbundled (MPF LLU) lines and 1,288,000 shared unbundled (SMPF LLU) lines; these are predominantly used by Sky Broadband and TalkTalk. BT Wholesale also sold a total of 1,859,000 external broadband lines (-8k in Q3 vs -5k in Q2) to other ISPs (this now excludes the broadband lines that BT’s own consumer division uses – as above).

On the TV front the BT TV / IPTV (YouView + BTVision) service added +38,000 new subscribers to total 1,045,000 in Q3 and that’s well above the +5k added in the previous quarter, although this was because BT removed -35k inactive customers during Q2 (i.e. a result of their earlier decision to exchange legacy set-top-boxes).

Gavin Patterson, BT Group’s CEO, said:

This was a solid quarter, with results slightly ahead of market expectations as we reduced costs and grew EBITDA. Profit before tax was up 13 per cent.

Our Consumer business continues to perform well thanks to the impact of BT Sport where Premier League audiences are up around 45 per cent on average. Fibre is also driving growth with one in three of our retail broadband customers enjoying super-fast speeds.

Our fibre footprint has increased to more than 21 million premises and will continue to grow. We continue to see strong demand across the market for the faster speeds that fibre offers.

Further improving customer service remains a priority and Openreach is recruiting an additional 500 engineers to help us better serve our customers. We have also launched a range of new cloud-based products and services aimed at the business market.

We are delivering on our strategy and our outlook remains unchanged. Our confidence enables us to raise our interim dividend by 15 per cent to 3.9p.”

On the financial front BT Group’s reported quarterly revenue reached £4,441m and their reported profits before tax topped £563m (up slightly from £546m in Q2). Meanwhile total net debt for the group increased slightly from £7,028m in Q2 to £7,063m now. Separately BTOpenreach reported that their Q3 revenue was down 2% to £1,245m with regulatory price changes having a negative impact of around £45m, the equivalent of 4%.

Otherwise there wasn’t anything particularly new or interesting to report this quarter, with prior G.fast and FTTdp trials getting a brief mention (we’ve already reported extensively on those). Sadly there was no meaningful update on BT’s consumer 4G service either, which is due to arrive during H2-2015.

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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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32 Responses
  1. Avatar Patrick Cosgrove

    BT is very unlikely to ever publish figures which tell us how well publicly-funded, rural broadband is progressing. It would have to be extracted from them like rotten teeth.

    Numbers of houses ‘passed’ means nothing unless expressed as a percentage of the total target group of premises. All it does is enable ministers to pick figures that sound impressive: “One million premises can connect etc etc..”

    Actual take-up is not reported, but it is probably low and may be the reason why BDUK has launched a marketing drive to persuade people with quite reasonable speeds to buy a product that they don’t need. Recent news is that BDUK is trying to persuade BT to provide this information per cabinet (or maybe exchange, I’m not sure) according to a standard format. It’s astonishing that this wasn’t built into the programme from the very outset, and it will be interesting to see if they’re successful in extracting the data. If low, it will prove that the centre-outwards approach was wrong all along and millions of pounds of taxpayers money has been misdirected into shoring up an inefficient monopoly that relies on outdated technology.

    Ranges of speeds accessible for premises supplied by upgraded cabinets is another test of programme effectiveness, but it is never reported and not likely to be. How embarrassing if large numbers still only received, say. 15 Mb or less. It would be a mis-selling scandal on the scale of PPI.

    Meanwhile connection speeds for people in rural areas are not even remaining the same. They are getting worse (one neighbour has fallen from 1.4Mb to 0.3 Mb within two years; I have dropped from 2.33Mb to 1.4Mb in the same period). I predict a mass migration to satellite out of sheer desperation and disillusionment. This will become an election issue next spring, and rightly so.

    I’ll leave aside the value for money aspect as that’s for people with bigger brains and inside knowledge.

    Patrick Cosgrove
    Shropshire and Marches Campaign for Better Broadband in Rural Areas.

    • Avatar New_Londoner

      @Patrick
      Quote “Meanwhile connection speeds for people in rural areas are not even remaining the same”

      That’s probably the only sentence in your post that I agree with – as the recent Ôfcom figure show, average speeds in rural areas have increased quite significantly, and that’s whilst the BDUK programmes are still at relatively early stages.

      You have your own, well publicised reasons from splitting with the local authority team in Shropshire, but let’s not allow personal disagreements to obscure the facts. If at the end of the first phase of the BDUK programme the better part of 90% of the population have access to “superfast” speeds, with another few % getting faster, but not superfast broadband, then that seems like a good start. Especially if the next phase moves the total closer to 95%.

      Obviously the remaining 5% will not be happy, but surely it’s better to reach 95% than decide it’s too hard and do nothing.

    • Avatar Steve Jones

      I rather think that the various BDUK projects will know exactly how many customers take up the services. After all, those numbers are used to determine whether the “clawback” mechanism is to be invoked. I also can’t see why there would be any more reason to keep those commercially secret than the overall FTTC connections numbers which are published.

    • This footnote appears: ‘Capital expenditure
      Capital expenditure1 of £533m or was down 10% reflecting the phasing of expenditure within the year and was net of £94m grant funding (Q2 2013/14: £15m) relating to our activity on the Broadband Delivery UK (BDUK) programme.’

      This is about as clear as mud.

      Note, Openreach capital expenditure of £246m (of which about c60% is capitalised labour) so this footnote shows £94m cash in aid with the £15m in brackets. The PR is claiming 50,000 premises passed a week and the contracts are c£170-£200 per premise past or c£120m a quarter.

      It is interesting to see how the biggest state investment in networking in a generation is reduced in a footnote and the cash is absorbed without any record as to how it is recorded.

    • In the Openrach footnotes the aid for the quarter is £94m passing 540,000 premises, this will not be synchronised precisely so the £200 per premise holds.
      Openreach also report a 8% reduction in their own capital expenditure, and a 9% increase operating cash flow.
      You better get Shropshire checking those invoices, and attempt to verify BT’s contribution. If they are paying milestones which looks to be the case, they must check the invoices and challenge line by line. You will get your service extended that way.

  2. Avatar Patrick Cosgrove

    Dear New Londoner, I don’t know why you think the reason to split from Shropshire’s broadband partnership was personal. We simply weren’t getting anywhere in trying to persuade them to prioritise people with poor/no/slowing broadband speeds during Phase 2 of roll-out. Your point about access is wrong. It will hardly be a success if milions have been spent giving people access to faster broadband, but very few take it up.

    Kind regards

    • Avatar GNewton

      There is no need to argue with New_Londoner because he is a ‘I’m All Right Jack’ personality who believes the BT propaganda.

      The whole BDUK has been a farce from its inception, and getting local councils even to publish some basic figures such as postcode-level availability of broadband technologies and speeds, let alone how much money was exactly spent, and where, is next to impossible. We tried in vain to get more details in numerous enquiries under the Freedom of Information Act, and I know of cases where up-to £2400 per VDSL line were wasted under the BDUK scheme, and this in densely populated areas. VDSL is a waste of taxpayer’s money, and is not future-proof.

  3. Avatar Patrick Cosgrove

    Dear Steve,

    I’ve recently asked a few local authorities what their take-up figures are for the last three quarters, so soon we’ll know if they’re willing to release them. I know that BT isn’t willing to release them per exchange area as they consider that commercially sensitive.

    Kind regards

    • Let me know if you have any luck. I already tried to do that myself and nobody came back with a reply.

    • Avatar TheFacts

      Why per exchange area, that is just a arbitrary collection of properties?

    • Avatar GNewton

      “Why per exchange area, that is just a arbitrary collection of properties?”

      Why not? Why this stupid question? Any better idea how to get the takeup data?

    • Avatar Gadget

      Why should they be released on an exchange basis if the contract, and therefore the clawback is over the whole area, I’d suggest that is why not.

      If you are a council, and I seem to remember that demand stimulation is part of the framework from the redacted Isle of Wight contract, why would you not get takeup as high as possible not only to benefit from clawback, but from the benefits when negotiating future contracts and share of the Government pot.

    • Avatar Steve Jones

      I don’t see how those figures won’t come to light given the political pressure on BDUK. We also know that an advertising/market stimulation plan is in the offing so, presumably, the BDUK project are well aware of the importance of take-up.

      However, be clear. The reason that the roll-out has proceeded the way it has (that is prioritising maximum “superfast” coverage) rather than dealing with the more difficult (and inevitably more expensive) areas first, is due to the targets set by politicians.

    • @Mark,

      We have a couple of Shropshire BDUK funded cabs in Bridgnorth, that we have kept a close eye on. After 6 month and getting to know the local engineers, one cab is sat at around 45% of use and the other is at around 65% use, so uptake has been pretty good given the placement of both.

      That all said, both cabs we have argued from the start really should have been under the BT commercial rollout, but that’s another story.

    • @Gadget I think clawback only applies to the premium associated with the take up. It does not address the reconciliation of milestone payment with the actual incremental costs that qualify for state aid.
      Unless LA are checking and challenging invoices and verifying incremental costs, any clawback will be restricted to a proportion of the milestone payments.
      The cost inflation occurred by the imposition of a milestone model whose costs were divorced from BT’s reference costs for the commercial rollout. There are 20% future proofing costs, premiums for USC, contingencies, project management costs and fees, and c£3k for each survey. BT contribution must be verified. All need grounding. These are on top of the clawback opportunity.

  4. Avatar Patrick Cosgrove

    Dear The Facts,

    Openrreach engineering rollout for the BDK rural programme is largely based on exchange areas which are are in turn based on smaller cabinet areas (plus a few Exchange Only lines). Openreach measures the take-up for these areas, aggregates it and passes it to a local authority as a single figure each quarter. The same can be done for percentages of premises getting different ranges of speed varying from less than 2 up to 80 Mb. My understanding is that local authorities don’t receive the speed range figures as a matter of course, but can request it for individual exchanges or cabinets. Why on earth such a large public investment was permitted to begin without a robust management information system that included these vital components is a question that should be asked, and probably is with a fairly new CEO at BDUK, hence revised arrangements being made. But I’ll bet Steve Jones a quid that it won’t come into the public domain without a fight.

    • Avatar TheFacts

      So if an exchange area had a 18.6% take up on 1 July 2014 how would you evaluate it without a full breakdown of the demographics of the area, premises and distance per cabinet, enabled or not, etc. etc.? Plus knowledge of the ISP marketing, how long cabinet was live etc. etc.

      I would guess a cabinet needs to live for 18 months before any useful figures could be analysed.

    • Avatar No Clue

      “So if an exchange area had a 18.6% take up on 1 July 2014 how would you evaluate it without a full breakdown of the demographics of the area, premises and distance per cabinet, enabled or not, etc. etc.?”

      If an exchange area had a very specific 18.6% take up then i imagine a full breakdown has been done already just once again BT use their “confidentiality” clauses to only release the information they want to.

  5. Avatar Patrick Cosgrove

    Dear The Facts, I think information at cabinet level could well be affected by demographics, although assumpitions of precisely how are risky, but whatever patterns emerged would even themselves out across the larger exchange areas. One of the reasons for wanting the range of speeds per cabinet/exchnge would be to see if there was any correlation with take-up percentages. I don’t see what difference it would make knowing which ISPs were available. If someone wants faster broadband he.she will go with BT if that’s the only choice (which in many rural areas it is). I agree that the time a cabinet has been live will make a difference, but how much difference is largely untested. I suspect your 18 months is a top-of-the head figure. I’d suggest less, but I may be wrong. What will prove it is a levelling off with time. If it clearly levels off at, say, 15%, after, say, 9 months, it’s an utter waste of money, and there’ll be no clawback to extend FTTC further. I wonder how quickly Cornwall’s take-up increased and to what level. I must ask. Thanks for the suggestion.

    • Avatar DTMark

      I was going to suggest that the measurement mechanisms must have been derived by BDUK and put in place from the very beginning, but BDUK has proven itself beyond comedy throughout the process, for example by signing off LA contracts with confidentiality clauses and then telling LAs that they must break them.

      Take this area of which I was the ‘broadband champion’. We’re 600m from the cabinet connected by 1200m of wire, so VDSL is going to be useless here. We don’t even have a phone line, we have 4G and mobiles which will probably remain even if we do get access to VDSL. It’s just too slow.

      From a purely statistical analysis looking at fixed line, it looks like this property has no interest at all in telecoms yet I’d venture we probably spend more on it than anyone else in the village and have by far the fastest speeds.

      Has the joined-up thinking been done?

  6. Avatar Patrick Cosgrove

    Dear Martin at Aqiss, I’d suggest that it’s the same story. What on earth is ‘rural broadband money doing upgrading busy Bridgnorth?

    • Depends how you define Rural I guess. The cabinets in question were outside Bridgnorth Town, in Tasley and Astley Abbotts, thus dropped into the Parish’s. This is only explainable reason we could get out of everyone to why these were not covered by BT, even though you can walk into the parish area, without even knowing you left Bridgnorth.

      The excuses that we got from BT for Tasley, was the 300 new homes were not built at the time they drew up plans (the estate as been there 5 years).

      Patrick, hope your sitting down, a 3rd BDUK cabinet was enabled in the heart of Bridgnorth, on Whitburn Street. Why this cabinet was BDUK funded, well, I’ve never been able to get answers. I’ve rattled too many cages.

      I have to declare a vested interest, in that I personally gained from one of the said BDUK upgrades, as listed above, but that also made me directly question the funded process in Shropshire as a tax payer. I would rather have seen BT logically upgrade the 3 BDUK cabinets here, and the money for those cabinet’s gone to other rural areas.

    • These ones before BDUK were being done for £10-£11k by Openreach (see Iwade) but BT Group is collecting c£46k. This is the rural rip off. There is also a well documented example in Middleton, Leeds where Openreach CEO requested £40k but local campainer showed it could be done for no gap funding.
      If Shropshire checked those invoices and challenged them, it ought to come back, but they have to prove to BT that the milestones were over generous.
      If you a word count for rural on SA.336671 state aid document, you will find rural mentioned very regularly, but this was countered by the use of intervention area.
      Page 12 of the BT accounts for Openreach has a perfect line.. capex down 8%, BDUK/LA funding of £94m with operating cash flow up 9%. It summarsies the situation in one line.
      It highlights their should be no SEP funding until the current actuals are challeneged. This is consistent with the wishes of PAC but this is being ignored.

    • Patrick, if you fully document Bridgnorth, it can be added to a draft evidence book. The email trail on the attempt to squeeze £40k out of Middleton – cabinet 82 goes all the way to top of BT, so Bridgnorth can provide a contrast where cabinets serving housing estates should not need anything like the gap funding currently being paid. http://www.ispreview.co.uk/index.php/2012/11/fibre-for-middleton-broadband-campaign-criticises-bt-viability-assessments.html Middleton subsequently paid nothing. There are housing estates all over these projects where no subsidy is due. This would release the funds for rural.

  7. Avatar gerarda

    With depreciation of £1.27m for the half year exceeding capital investment of £1.049m BT is not exactly pushing the boat out in terms of investment. If it wasn’t for its Openreach monopoly it would be a slumbering technoloy giant ready to be down by a more forward thinking new kid on the block.

  8. Avatar Patrick Cosgrove

    Dear Martin, cock-up or conspiracy? We may never know., but certainly it’s a mystery.

  9. Avatar fastman2

    Dt mark if your 600 metres from cab — suggest you be looking at around 35 m/bps i got some that are around 1.3 km on a good cable ang getting 20 m/bps so dont beleive all the nonsense around the distance stuff — put by people with a veszt interst not to deploy FTTC

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