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Boasting the Savings of Moving from Copper to Fibre Optic Broadband

Wednesday, May 20th, 2015 (1:53 pm) - Score 3,461
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Telecoms operators that upgrade from their old fixed line copper based broadband (e.g. ADSL) services to a pure fibre optic (e.g. FTTH/P etc.) style network infrastructure could make significantly bigger maintenance, energy and reliability savings than initially predicted.

At present one of the biggest barriers to adopting a pure fibre optic network remains the massive first-time cost of physical deployment, although it’s long been known that some of this could be mitigated by longer term savings due to lower maintenance costs. But so far the evidence for this has been rather limited or hints at only modest savings.

Back in 2013 a study of more than 350 ISPs in North America by market analyst RVA LLC found that upgrading from a slow copper to ultrafast pure fibre optic network saved an average of 20.4% via operational expenditure (here). Good, if not amazing.

But now telecoms giant Verizon, which focuses on services around the USA where they use the word “fiber” instead of “fibre” (crazy stuff), has come out to boast about some of the huge savings they’ve made in moving away from their old copper network. Annoyingly they don’t provide any key financial data, but the savings can be roughly summarised as follows (broadly speaking fibre was found to be over 60% cheaper than copper).

Verizon’s Savings – Going from Copper to Fibre Optic

* Real Estate (Savings of 60-80%)
* Dispatches (Savings of 60%)
* CAPEX (Savings of 10-15%)
* Energy (Savings of 40-60%)
* Maintenance (Savings of 40-60%)
* New Revenue (60% of total value)

Not to mention that metal thieves are distinctly less likely to steal cheap fibre optic than lucrative copper telecoms cable. According to Sowmyanarayan Sampath, SVP of Transformation at Verizon, fibre has also proven to be 70% to 90% more reliable than copper, albeit somewhat depending on the network design.

Sowmyanarayan Sampath said (LightReading):

The economics of fiber are fascinating. At the end of the day, the customer wins. When you do these business cases, almost 60% [of savings] come from new revenue as folks without fiber before get fiber. We see a fair amount of folks who use this opportunity to get better services. We’ve proven time and again this pays for itself. It is sustained pay back.”

By contrast some operators, such as BT in the United Kingdom, have continued to preference an increasingly complex upgrade to their existing copper line infrastructure (hybrid-fibre solutions like FTTC appear to be the order of the day). The network design might similarly become even more complicated once G.fast arrives.

But on the flip side a hybrid-fibre approach like FTTC is significantly cheaper to deploy (the predominantly FTTC method is gobbling around £5bn to reach 95% of the UK instead of £20-30bn via FTTH/P) and also significantly quicker to roll-out, not to mention being much easier to install in homes.

Mind you the figures for FTTH/P could do with some serious revision to reflect modern deployment methods and a hybrid-fibre starting point. For example, TalkTalk and Sky Broadband’s roll-out in York hints at a cost of £500 per property (this is provisional and may not yet accurately reflect the full cost), which isn’t far from FTTC territory, but equally that may not hold up outside of the cities where the pay back from smaller communities can be challenging. In the latter case B4RN’s roll-out is a rare exception, although even their deployment runs at around £1000 per property.

On top of that we’d caution against trying to make a direct Apples to Apples style comparison between BT and Verizon. Both have different network histories and operate in markets with different regulatory rules and taxation requirements. But clearly this is one topic that might need a fresh look.

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52 Responses
  1. Avatar Kits

    I think it should be made compulsory that BT replace copper with fibre, if any large scale copper is stolen as has happened that should have been replaced with fibre. All these small parts would soon then be linked replacing the whole network.

    • Avatar TheManStan

      But most of the time it’s the power cable that is stolen… this is the thick valuable stuff… not the telephone cables.

    • Avatar Astroturfer

      Presumably you’re fine with people being left without phonelines for weeks on end while BT deploy the FTTP infrastructure to replace the copper?

    • Avatar Astroturfer

      I have a suspicion that Sky, TalkTalk and other LLU operators wouldn’t be too happy with their customers being forcibly migrated to FTTP either.

      If you’re on about replacing small sections of high pair count copper with fibre it doesn’t work like that and that’s not the expensive part anyway.

    • Avatar MikeW

      Thieves generally don’t steal the full length of a line, just easy segments.

      It is pointless putting fibre in place of a single copper segment; there is no way for it to work with the remaining copper going toward the house and toward the exchange.

      Likewise if you just ask them to pull the fibre in while they’re pulling copper for a segment, and leave it to be connected at some future unspecified date, you are condemning the poor jointer to make millions of unnecessary splices.

    • Avatar FibreFred

      @kits

      What an ill thought comment

  2. Avatar MikeW

    A reminder that the cost for TT and Sky, in York, only appears to include getting the fibre down the street so far – not connecting any homes.

    The 2008 BSG study reckoned it cost as much again to connect each house.

  3. Avatar KStone

    Homes passed varies Hugely from operator to operator. Gigaclear for example, final drop can be done by the customer. Just a cable that is pre-connectorised, (I wish is was £500 though).

    • Avatar X66yh

      Yes, They are not stupid
      Gigaclear off-load the cost of getting from the boundary into the house onto the customer who pays market cost to an installer partner of theirs to do so.
      Gigaclear do NOT do the final drop ever.

      They know the last 15,25 yards whatever and through the house to the location etc neatly is the expensive bit filled with aggro and things that can go wrong leading to unhappy customers. So best if they manage and pay for it themselves.

    • Avatar TheManStan

      Gigaclear, £100 connection + £95 installation minimum if done by installer and ~15M dig with 3M hard digging, more if it’s more complicated. So a setback property down a drive for access would be a killer install fee…

  4. Avatar Ken

    Most of you do not get the Bigger Picture! its about COST EFFECTIVENESS! Copper is EXPENSIVE vs Fibre! The more copper you have the more likely some tool will steal it! for the Post office and bt to lay out the UK with copper over 100 years has cost well into the Billions probably the 100’s due to the repair and upgrade costs etc. If fibre is Correctly PoP’ed then it can be Massively cheaper over the coming years! ADSL and copper uses to much electricity!50volts per-line 0-800metres. where as fibre is somewhere around 10watt per 2000miles Due to LED’s or Lasers not needing vast amounts of electric but Pulse. and even better than that is that the Excess power created transmitting can be used to power the equipment and or retransmit that power and data 🙂

    • Avatar TheFacts

      @Ken – clear English please.

    • Avatar TheFacts

      @Ken – ‘Excess power created transmitting can be used to power the equipment and or retransmit that power and data’

      Please explain.

    • Avatar MikeW

      We all get the big picture – and it is indeed about cost-effectiveness.

      Fibre might well be cheaper to operate and maintain once it is in place, but you cannot ignore the cost of getting fibre into the ground in the first place. The GPO/BT had over 100 years to get the copper network in place – replacing it with fibre in a tenth of the time is not a cheap option.

      Unfortunately, BT cannot afford to replace fibre in any kind of “quick” timescale. They might manage a 30 year project; the people at the end of the queue might complain about still getting 2Mbps in 2044, though.

      Likewise the people aren’t willing to pay what is needed to get a fibre rollout done quickly. The nerdy early-adopter will pay of the order of £1,000 installation, if they could order it, but the other 90% of the country can’t justify it, or can’t afford it. Most people still won’t make the jump to paying more than £3pm for TT ADSL.

      I have been a nerdy adopter of ADSL and FTTC so far, running ADSL, ADSLmax, 40/10 then 80/20 as soon as I could. But I don’t need anything faster, and couldn’t justify a jump to anything that costs more. If I used VM, I would not be choosing their top speed tier.

      The easiest path for BT to follow, the least risky to them, is one that improves the network incrementally – with increments in speed, for small increments in cost, delivered just as people want to make use of the new speed.

      BT will factor in the reductions in operation & maintenance cost for fibre when looking at these increments – and you’ll see them jump to FTTH as soon as it pays them to do so. After all, if you listen to their meetings with financial analysts, it is *all* about cost transformation. Cost effectiveness is how BT *has* to present itself to the city.

    • Avatar Astroturfer

      I think you’re missing the smaller picture – Openreach have to run open access, Verizon don’t. Openreach have to deliver LLU, Verizon don’t. Openreach can’t retire copper and never provide it again once they have delivered FTTP, Verizon can.

      The biggest hurdles alongside the obvious logistical ones are regulatory.

    • Avatar Ken

      The first question about Fiber Power (PV Cells) Creates heat yada yada… All im saying is that Openreach Has NGA nodes there when they Place Fibre Cabs (Dark Fibre- Unlit) Why cant we just Splice into it? i know thats what FTToD is all they do is take Access from a Fibre Cab NGA node. at the moment i might wait a little longer before placing my final order on BT.net Leased 1Gb/1Gb Bearer because i know and everyone else knows that BT “Wholesale” will take the CAP of the FTTPoD. I shall just by more FTTC lines to Annoy BT i may even take more than 4. i have 3 installed and 4th to be installed next month and then another by BT PTSN. I need Stupid Amounts of Internet at ONCE! http://www.speedtest.net/my-result/4373372045 while 4G is tethered to 3 FTTC lines 😛

    • Avatar GNewton

      @Ken: “everyone else knows that BT “Wholesale” will take the CAP of the FTTPoD.”

      Care to share your source for this? FTTPoD was supended by BT a few months ago, and as far as I know there’s no new development on that front, and I don’t expect it to to be resurrected any time soon, if at all.

    • Avatar MikeW

      FTTPoD:

      BT have been looking at ways to make it cheaper to deploy fibre, attempting to reduce costs associated with duct blockages, splicing, and separating individual fibres. This seems to entail an entirely different type of fibre, a different way of blowing (“push/pull”) and quite possibly different housing in the streets or on the outside of buildings.

      It looks like they’re expecting to start a trial of FTTPoD-2 later this year (summer?), location unknown.

      With new deployment methods, I guess rollout speed will be limited by the rate at which they can train their staff.

    • As I understand it those FTTPoD improvements will be trialled alongside some of the G.fast stuff, albeit semi-separately. Certainly that’s the indication we get from various documents. But we’re not expecting it to result in a huge price cut for FTTPoD on the product side.

    • Avatar MikeW

      I wouldn’t hold my breath waiting for cost reductions either.

      I expect the first aim is to make sure they can offer an FTTPoD product which doesn’t cause the installation queues to get longer – especially as Ofcom seems to be be demanding that they have to reduce, and stick, to 40 days.

      Then I imagine the cost will be used, at least partially, as a tool to control the level of demand.

      @Ken
      You’re close enough that they splice into the FTTC cab for FTTPoD – it’s actually the Aggregation Node on the fibre spine, but these likely won’t be far away from the existing cabinets.

      BT have already announced they will be going for 1Gb fibre alongside the rollout of G.fast, so I wouldn’t expect them to remove the existing limit from FTTPoD in too much of a hurry – I’d guess at a couple of years, minimum. And even then, I doubt it will be bi-directional. The PON used, whether plain GPON or XGPON, is still asymmetric.

  5. Avatar KStone

    So… would you suggest that VM with their COAX installs pay £500+ for a new customer?
    After all they have even more to do with a pull from the L4 cabinet.

    • Avatar TheManStan

      VM appears to have calculated a £750 per home passed cost (£3BN over 4M homes for their new expansion), what their connection cost on top is another matter.

      TeleWest and NTL did go bust… so they got their sums wrong somewhere in their business plans…

    • Avatar Astroturfer

      Telewest and ntl weren’t making nearly enough cash and *massively* overpaid when they were acquiring other companies.

      ntl spent £8.2 billion on CWC, Telewest ran through a bunch of mergers and acquisitions to catch up including Eurobell, bits of Cable London, and others after they lost the bidding war for CWC.

      Both have since had to spend a ton of cash upgrading networks to reasonable standards as some of the networks they bought were absolute garbage and needed rebuilding of almost everything bar the coax. Telewest avoided doing this as they spent a good part of the 2000s waiting for ntl to come get them so ntl:Telewest / Virgin Media ended up spending a load of cash rebuilding ex-Eurobell and other areas 🙂

  6. Avatar TheFacts

    ‘Real estate – savings are in the order of 60 – 80 per cent, since instead of 13 floors for a big exchange, a fibre-to-the-premises area needs just two’

    As does FTTC…?

    • Avatar Astroturfer

      Only if you have every cabinet to running VoIP, provision enough cabinets for all lines and completely replace all copper to the exchange with FTTC/N and fibre backhauls.

      BT can’t do this for right now as they have to leave the copper in place for LLU.

    • Avatar MikeW

      BT expects everyone to be using IP-based voice by 2025; whether that means it looks like today’s VoIP is another story.

      I expect it means they have plans to phase out the System-X / AXE-10 exchanges (which will be 30-40 years old then) to replace them with softswitches, at minimum. They might still leave the media conversion at the exchange building though – akin to the original 21CN concept.

    • Avatar X66yh

      Long term They will be looking to close the smaller/dedium sized exchanges and just run everything from regional fibre head-end mega-exchanges feedingout to umpteen hundred (if not thousand+) fibre/PCP cabinets.

  7. Avatar Captain Cretin

    I am sure there are software solutions to the LLU position, what the legal situation is to doing it is beyond me though.

    BT is a strange company in a strange position, as a company they are valued at LESS than the value of the copper they own.

    Make a note of that, the copper they own is VALUABLE, a lot of the costs involved in upgrading to fibre can be offset by selling the copper cable it is replacing. It would still take a considerable investment to achieve, but then we reach the real issue – as a PLC, the shareholders want dividends NOW, and are completely uninterested in potential higher dividends 5-10 years in the future.

    • Avatar X66yh

      Yes but the copper is in the ground, in many cases not in ducts and probably rather expensive to extract.

      The Shareholders are in many cases pension funds and life insurance companies and I doubt many pensioners etc are interested in having their payouts reduced now for some possible intangible maybe higher payout in 10 years time.

    • Avatar TheFacts

      @CC – please provide some numbers for the value of the copper, including recovering it.

    • Avatar GNewton

      @TheFacts: “please provide some numbers for the value of the copper, including recovering it”

      Come on, we all know you are lazy, but really, it would only take you a few seconds to answer this question for yourself by doing a simple Google search on e.g. ISPReview, TheRegister, The Guardian newspaper, or other places. This subject has been discussed intensively on ISPReview in the past.

      If you don’t like your broadband situation, do something about it, club together with other businesses and/or local residents and get a telecom provider to install fibre in your area.

    • Avatar Gadget

      If there is so much information about it ripe for searching why is it not legitimate to ask for such a statement to be qualified at source – unless it is being put forward as an opinion or interpretation?

    • Avatar GNewton

      @Gadget: TheFacts has shown repeatedly that he’s unwilling even to do some simple research, instead he chooses to post the same lame questions on the various ISPReview forum threads. It was even shown to him in the past how to do enquiries under the Freedom of Information Act, yet he never posted the results of his research! He always expects others to do the work for him.

    • Avatar TheFacts

      The last discussion on the value of the copper showed incorrect calculations. Instead of telling people to Google just post some links showing the particular source of the calculations you claim exist.

    • Avatar TheManStan

      Power cable valuable, telephone cable not so valuable. g/m of copper is what counts.

      The costs of stripping the telephone cable for what is in effect a very thin wire has a much lower revenue yield than the power cabling that has a nice fat piece of copper running down it. Hence, the penchant for thieves to nick both rail, VM and BT power cabling. With the occasional fibre theft which netted the thieves nothing.

      Also people habitually use the virgin copper prices, vs recovered copper prices, and with copper prices falling telephone cable will be barely £1000 per ton vs £3500 for virgin copper.

    • Avatar MikeW

      Yawn. The kids are squabbling in the back.

      Here’s where The Register broke the news that BT are worth less than the value of the copper:
      http://www.theregister.co.uk/2011/09/22/bt_copper_cable_theft/

      And here is where The Grauniad broke the story into mainstream media … which includes the footnote, 4 days later, detailing how the Register got their sums wrong:
      http://www.theguardian.com/business/2011/sep/23/bt-copper-assets

      Wham … values drops from £50bn to £2.5bn in 4 days, and doesn’t even include the cost of digging up the copper, or extracting the metal from the sheathing. A whole non-story, caused by lay journalists not knowing enough about the subjects they cover.

      Its common courtesy to provide links to back up stories/accusations/scoops; this simple process lets others fact-check you, and lets them go on to discover alternative evidence. A process that @TheFacts is attempting to get people to be involved in, and that @GNewton just wants to complain about. Simply demanding they use Google is not helpful. Reference to FoI is particularly unhelpful for private companies – a waste of otherwise useful electrons.

      Why do you think good scientific papers spend a lot of their effort listing the papers that they in turn reference? The whole thing of “standing on the shoulders of giants” only works when you can figure out who the giants are, and who are ants. @GNewton isn’t living up to his namesake in this respect.

    • Avatar GNewton

      @MikeW: I agree, links should be included. TheFacts repeatedly refuses to do so but just keeps posting his same lame questions. Not very constructive, especially not with an attitude to always let others do the work.

    • Avatar FibreFred

      Lol gnewton maybe you misread mikew’s post

      He is agreeing that links should be posted when making claims just as thefacts has been asking for

    • Avatar MikeW

      I wish everyone would include links, including @TheFacts.

      However, @TheFacts isn’t often trying to present his own argument on this site – he tends to be calling out someone else’s argument, and asking for something to backup that argument. I think that’s fair enough.

      I tend to find @TheFacts sometimes too terse, but I find the quick decent into demands to Google and send FoI’s equally as lame as @GNewton seems to experience.

    • Avatar GNewton

      For all we know @TheFacts might not be a real person, but rather an entity played out by ISPReview to stir up the forum discussions a bit 🙂 At least, that would explain his persistent laziness, and always letting others do the work. Still, makes him look strange, to say the least.

    • Avatar FibreFred

      I don’t think its lazy to ask for linked evidence when someone makes a claim or sweeping statement.

      If you are making such a claim its good internet etiquette to back-up that claim with some evidence.

      I mean.. when Mark publishes an article on here he posts links to relevant articles/evidence to back-up the story.

      He doesn’t just say… “Google it” 🙂

  8. Avatar Captain Cretin

    Copper prices are currently depressed by the worldwide economic situation, but prices have been rising faster than gold, and “virgin” copper isnt enough to meet demand over the mid to long term.
    In other words, all that used BT copper is gaining value all the time.

    No, I am not bothering to post sources, there are plenty out there if you want to do some work.

    What BT should have started to do is fit fibre by default to NEW installs, and use fibre replacements when repairing/replacing cables.

    But they havent – and they wont unless pushed HEAVILY by the government.

    FTTC is like a cheap laptop, it does the job for now, but in a couple of years it will be worthless.

    • Avatar TheFacts

      Explain what you mean by ‘use fibre replacements when repairing/replacing cables’. How do you convert from copper to fibre with a section of faulty cable?

    • Avatar FibreFred

      Yes I will second that , I am also interested in what happens to someone on copper whose line goes faulty and its replaced by fibre how does that work

      Care to explain?

    • Avatar themanstan

      @Captain Cretin

      New developments where new installs go in, are the responsibility of the developer… hence the news stories about planners making fibre installs mandatory for developers and the developers bleating about costs… even better BT then pays their costs once they completed those works to the correct standard. Blaming the right people for that would be good.

    • Avatar MikeW

      But not all of the FTTC deployment will prove to be worthless. For a start, it brings additional income in to pay for itself. One study reckons that, even with FTTC deployed, a G.Fast deployment now followed by FTTP in 2023, will cost the same as FTTP now. That income, from affordable but usable products, helps to a huge degree.

      And FTTC leaves a legacy – where fibre now comes, on average, to 450m from each home, rather than sitting back 3,500m away at the exchange building. That part is a future-proofed building block. It irrevocably changes decisions in the future.

      It will still cost a lot more to get fibre closer than 450m, but that’s OK… the FTTC rollout spends sufficiently little that means there’s plenty left in the pot.

  9. Avatar GNewton

    @TheFacts: “Explain what you mean by ‘use fibre replacements when repairing/replacing cables’.”

    http://www.google.co.uk/patents/US5557703

    • Avatar TheFacts

      Blown fibre is widely used on BDUK projects.

      Replacing short lengths of damaged copper cables is a non-starter.

    • Avatar MikeW

      I guess you haven’t read the stuff that shows BT seems to be moving away from just “blown” fibre – it isn’t proving to be cost-effective enough when duct blockages are encountered.

      They’re currently trialling new techniques, including push/pull deployment, and SST fibre from Corning, with structural members for stiffness, to reduce the need to clear blockages by digging.

      But blowing, pushing or pulling fibre is absolutely pointless if it only replaces a short copper segment – as happens with repairs and replacements. All services over the remaining copper segments require contiguous metallic properties from the MPF; fibre can’t do that.

      Mind you, this is mentioned earlier in these comments too, so I guess short-term memory is an issue.

    • Avatar GNewton

      @TheFacts: “Blown fibre is widely used on BDUK projects.”

      Links please? Sources?

      Anyway, that’s not how it was done in some nearby local BDUK projects we have seen in some towns.

      BTW.: As regards replacing a copper segment: The question whether to replace the whole line with fibre, or to replace the broken copper sequence, boils down to costs. There can be cases where fixing a broken copper segment is simply too expensive.

    • Avatar TheFacts

      Seeing fibre subduct being installed in many places.

      http://www.emtelle.com/?id=828

      What type of copper cable circuit would be too expensive to replace such that fibre was cheaper?

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