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BT Reveal FTTC “Fibre Broadband” Cabinet Cost as BDUK Clarify Delays

Friday, March 18th, 2016 (11:40 am) - Score 8,103

The cross party Culture, Media and Sport Committee inquiry into UK broadband infrastructure has revealed some useful new information on the “cost per [street cabinet]” of BT’s (Openreach) FTTCfibre broadband” service and confirmation of which BDUK areas have fallen behind their coverage targets.

At present the Government’s state aid supported Broadband Delivery UK programme has just achieved its original Phase One target, which claims to have put 90% of people within the United Kingdom in reach of being able to order a superfast broadband (24Mbps+) connection (here). Work on Phase Two (95% coverage) is now slowly getting under-way and should complete by around 2017/18.

Progress has been reasonably good for such a large project, although you might expect that to happen given that all of the Phase One contracts are being dominated by the national telecoms giant (BT) using a mix of ‘up to’ 80Mbps Fibre-to-the-Cabinet (FTTC / VDSL) and ultrafast 330Mbps Fibre-to-the-Premises (FTTP) technology. However Phase Two is a bit more diverse, with Gigaclear, Call Flow and some wireless ISPs also playing a role, although BT still dominates most of the contract extensions.

However it’s worth nothing that some of the 40 or so Local Authorities involved in the Phase 1/2 stages of the national BDUK programme are running behind schedule and the organisations CEO has now clarified matters to the inquiry team.

Chris Townsend, CEO of BDUK, said:

“I am delighted to report that we are maintaining good progress on Phase 1 of the Superfast Broadband Programme and as a result we are at or around the 90% UK superfast target in line with the timetable that we have set.

With respect to progress with individual projects, I am pleased to report that since I gave evidence to the Committee on 9 December 2015, the position on projects behind schedule has improved as a result of our continued intervention, to the point where we now have three projects of concern to BDUK regarding delays to overall deployment.

Two of these are Cumbria and Lancashire, which have suffered delays due to extreme bad weather and flooding, causing a delay to 20,000 premises within those projects, and the third is Wiltshire which is currently projected to be approximately 3,000 short at its end point at the end of March 2016. We are working with BT and the local bodies to agree a recovery plan.

However, overall the Superfast Broadband Programme is 200,000 premises ahead of schedule. Based on current data and information we are on schedule with regard to delivering our next target of 95% superfast broadband coverage by the end of 2017.

In addition to the above we continue to seek support from BT to provide premises coverage data which will assist the delivery of the ten alternative network provider projects under Phase 2. This will prevent overbuild and ensure that gaps in coverage can be filled cost efficiently. We hope that BT will supply that data in the very near future.”

We wrote a bit about the Superfast Lancashire (SFL) project earlier this week, which originally aimed to deliver 97% coverage of “high-speed fibre broadband” by the end of 2015 and then 99% by around 2017/18 (here). However the project’s last website news / progress update was made well over one year ago.

Elsewhere BT has also produced a couple of written submissions for the inquiry (example), but the one of most interest to some of our readers will be their response to questions about the cost of rolling-out new FTTC street cabinets under BDUK Phase One and Two.

BT’s Written Statement

1. Could you explain what type of expenditure is being treated as operational expenditure, as opposed to capital expenditure, especially as it relates to the BDUK phase 1 and phase 2 programmes?

BT can only claim funding against capitalisable expenditure that is incurred in relation to the implementation of the network specific to the local body’s intervention area. To support this activity, BT incurs incremental expenditure that cannot be capitalised, which includes some management of the programme during the deployment period and some management and reporting costs associated with the implementation of the network. These include the following:

•resource and capacity planning of BDUK plan and build activity (both internal and external)
•stores management of BDUK related vendors
•resources (onshore and offshore) associated with compiling some reports
•travel for engineers and project teams and some fleet costs.

Outside of the deployment of the network, BT incurs incremental costs from operating and maintaining the network once it is in service to meeting the ongoing open-access obligations including power and wayleaves, regular maintenance, capacity management and repair activity.

2.Could you also please demonstrate what the average cost per cabinet will be for phase 1 of the rural broadband programme. Please set out how this average figure is calculated.

The cost per cabinet completed to date (FTTC only) is currently £26,500. This cost includes:

•additional exchange equipment
•fibre and associated duct work between exchange and the cabinet
•civils work in preparing the cabinet’s plinth and new duct (where necessary)
•power connections, which can be extremely variable and expensive
•physical fibre cabinet (DSLAM)
•connections to the copper cabinet.

3.If there are estimates for the average cost per cabinet for stage 2 at this stage (ie, the SEP), then please provide that figure as well.

Phase 2 is in its earlier days of planning. In the procurement of these contracts, the average cost per cabinet was £27,500. This is +18% higher as there are more cabinets that require rearranging the current network to achieve the speed requirements. This excludes project and contract management planning and reporting costs. FTTP is not included in the above figures.

By our working £27,500 is only about 3.8% higher than £26,500 (not +18%), but we’re probably missing some key piece of context that BT left out of their written statement and £27.5k actually seems a bit low given the increasingly rural focus. It’s also worth mentioning that these costs are likely to be averages (cabinets can cost just a few thousand, but others seem to need around £80k or more depending upon the area size / cabinet type etc.).

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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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56 Responses
  1. NGA for all says:

    It is not the £100k or the £50k but £26k and now BT needs to pay its capital contribution.

    Phase 1 is circa 22,000 cabs so this leaves a £1bn fund + BT’s capital of £350m to restore the ambition by completing lots of FTT dp in the final 10%.

    Let’s hope no one tries to suggest BT’s capital contribution has been paid.

    1. Steve Jones says:

      Sigh. Once and for all, BT’s quoted contribution is (a) not all capital and (b) there’s an audited mechanism for payments along with a clawback mechanism plus the regular adjustment processes.

      Also, money is being recycled for reinvestment through the accelerated clawback process and reduced costs (over the bid) for implementation and changes to use more cost effective solutions. It’s clear that coverage will be higher than the original BDUK contracts set out (at least in the great majority of areas), although there’s going to be a law of diminishing returns as the expense per line goes up in the tail. From what I recall reading the projection is for another 2% coverage or thereabouts from this.

    2. GNewton says:

      @Steve Jones: What was the average operational expenditure per installed cabinet so far?

    3. NGA for all says:

      @Steve The BT capital contribution is £357m for phase 1 and phase 2 as per the first NAO report. It is missing from the process. Look and contrast this with BT’s evidence on February 9th where they claim it has been made.

    4. MikeW says:

      Whereas BT report (to the DCMS select committee)

      a) That they’ve made £276m of capital expenditure as of September 2015, across all public schemes.

      b) That their commitment is £910m total, from which £440m can be accounted as capital expenditure and £470m as operational expenditure. This includes BDUK, Northern Ireland, and Cornwall.

      c) That their commitment is £710m total for BDUK schemes, from which £330m can be accounted as capital expenditure and £380m as operational expenditure.

      There is no word on the profile of the operational expenditure: how many years is it calculated over.

      There’s an interesting table that shows a breakdown of capex expenditure by Openreach.

      The breakdown is especially useful because it shows how much was spent on fibre capex, and how much was spent on BDUK capex, which will be exclusively fibre too).

      For the last 6 years, plus the forecast for next year, the numbers (in millions) are:
      Fibre: £128m, £262m, £313m, £360m, £233m, £165m, £217m
      BDUK: £0, £2m, £11m, £12m, £56m, £142m, £262m

      That speaks of capex expenditure for BDUK, up until March 2015, as being £223m. And expected to have become £485m by March 2016. In line with the £276m quoted for September 2015.

    5. Steve Jones says:


      There’s a supplier projection (as it was called) for £356m, but that’s not a contractual amount as such. In any event, where’s the evidence BT have not been making the appropriate capital expenditure? OR capex has been running at over £1bn in the last financial year, and with the commercial rollout largely complete then there’s plenty of room for the required run-rate, especially as most of the BDUK phase 1 projects are not complete.

      I repeat, it’s the auditors who have access to the invoices who have access to the actual figures, you do not, and it does have to be done on a contract-by-contract basis.

    6. NGA for all says:

      @Steve That really simple. Divide the total aid receipts (in BT accounts) by an estimate of the cabinets delivered. £750m / 20,000 to Decemeber, and you will see the Feb 9th written submissions need to be questioned.
      As of Feb 9th written submission BT was still quoting £500 per premise passed. This is also in their oral evidence. That’s the BT Gambit still alive and well.
      £26,000/ 200 premises = £130 ppp of which half needs to be paid by BT.

    7. fastman says:

      I assume that 26 is the cost to the LA not the Total costas these a gap funded and will have investment from Openreach in

    8. AndyH says:

      @ NGA – As you have repeatedly been told, take your evidence to the SFO. You’re accusing BT of one of the biggest corporate scandals in history in the UK, so why not do something about it?

    9. Steve Jones says:


      So you’ve assumed that there are no other significant elements delivered under BDUK? There’s FTTP for a start. It may be a relatively small proportion of properties passed, but the costs for each are much higher. Then there costs for enhanced backbone deliveries for some exchanges. Then there’s your assumption that there are about 200 lines per cabinet (to arrive at the 4m properties passed). That’s most likely on the high side as smaller communities get enabled and more of those combined DSLAM/junction box cabinets get installed for EO lines and other places where network reorganisation is required.

      In any event, this stuff is all audited with invoicing. The only part where capital costs might be questioned is on internal labour for things like project management (external labour is, of course, externally audited).

      Now it’s very probable that the way the call-off contract system works does lead to some distortions on the way, and there are rebalancing points from what I recall, but the costs reported to data appear to be consistent with the NAO reports.

    10. Steve Jones says:

      I also ought to point you to the 2013 NAO report. In particular, it says that 36% of the total costs are down to cabinet enablement, and the total capital element is 77% (the rest is opex). Indeed, the total FTTP capex is expected to be about 50% of that on cabinets (17%, most of which it states is FTTP). That implies street cabinet enablement is rather less that 50% of the expected capex. Of course, it’s very possible that there are differences between what the written evidence includes in its capital costs of enablement and what the NAO report uses, but it makes the point that it’s simply not possible to divide the total grant by an uncertain estimate of the number cabinets to work out the average capex attributable to a cabinet.

      See fig 11, part 3 page 33. The average cost per cabinet quoted was £28,900 (but with a huge range).


      It’s unclear to me just how much grant will eventually be made to BT (it’s far from the case that all the project money goes to BT – some will be absorbed by the projects themselves). However, it must be substantial, and it is to be expected that there will be increasing amounts of FTTP.

    11. NGA for all says:

      @AndyH – The Select Committees and NAO are helping BDUK to at least keep the money in play. These are the only institutional options open and these are being used.

      Why does quoting say the £179m capital accrual for BDUK in BT Q3 accounts amount to an accusation of fraud? How does referencing an NAO report amount to an accusation of fraud?

      It is a matter of public record that BT Group and Openreach execs told the CMS Inquiry the cost was £500 a premise passed. We can at least highlight the error and try and get a record straight so those meant to benefit stand some chance.

      More interesting is what happens the best part of £1bn of public funds when phase 1 is no more that £26,000 x22,000 cabinets before BT capital.

      Steve @ FTTP is less than 1%. More has been spent planning FTTP and then putting on hold than doing it.

    12. Steve Jones says:


      Perhaps I can also point you to the Oxera report on the issue.

      See para 4.37 (page 76)

      “BT provides invoices for all costs incurred under BDUK contracts, and costs
      can be recovered only where they are evidenced to a pre-agreed standard.
      The accounting requirements for the costs of delivering BDUK-funded
      schemes are the same as for BT’s commercial business. BDUK has created
      standardised cost and milestone reporting templates for local bodies to use to
      ensure that milestones have been reached and the expenditure incurred is
      permitted capital expenditure. BDUK has also produced cost-comparison
      reports that analyse differences in the actual costs incurred across intervention
      areas. These processes have been in place since the inception of the National
      Broadband Scheme, and Oxera is confident that BT has not been overpaid
      relative to the costs that it has incurred.”


      There are certainly criticisms that might be made of BDUK objectives, communication, impact on competition and so on, but the continuous complaints that, somehow, costs are being exaggerated (especially in terms of capital costs) simply does not hold water.

    13. NGA for all says:

      @Steve – You need to be careful using the Oxera report as the EU did not see fit to renew the state aid measure having read it.
      It had a huge flaw in that it never quoted the LA funding in the entire report, and it never referenced the status of the BT capital payment either.

      We may learn more in the next two weeks as more evidence is due on the status of BT’s capital is published.

    14. NGA for all says:

      @Steve your presentation of the NAO I report is a bit misleading, not withstanding on DEc 9th 2015 BT’s oral evidence and written evidence of Feb 9th was still portraying costs at £500 per premise passed.

      The first NAO report was good work and BT was dismissive of it, but 77% was not all opex but other solutions, big allowances for core network enablement and the USC was buried in there as well. All have proven illusory as BT failed to tool up for the job.

      Audit Scotland got closest to the Opex, they referenced £10 a year for 10 years again on a per premise passed basis. This is the closest anyone got to presenting a rationale. I do not have the reference to hand but can dig it out.

    15. AndyH says:

      @ NGA “As of Feb 9th written submission BT was still quoting £500 per premise passed. ”

      Sorry, but you really do selectively pick things and use them in the wrong context to suit your argument. BT give the signed contract cost of £500, but the actual spend of £230 per premises in their written evidence.

  2. Steve Jones says:


    Heaven knows as that was all in the individual BDUK bids. This is a gap funding system with an overpayment clawback system, so it’s essentially the difference between the costs (capital and operational) and the expexted revenue over a seven year contract (albeit not all the capital cost attributed to that seven year period). It’s immensely complicated, the formula on contribution varies BDUK project by project according to circumstances and needs auditors with access to actual figures to work out. It requires auditors with access to actual figures to work out.

    In any event, it doesn’t matter a jot as this is a contractual issue and you an @NGA (assuming you are actually different people) can conjecture all you like. What matters is what was contracted, that there are systems for getting value-for-money and that it doesn’t breach EU state assistance rules. This is the responsibility of the NAO and an independent report on conformance was also produced independently.

    One thing to note is that BT’s contribution to capex is very specifically taken into account in the clawback process. Any expected “over recovery” is split between the BDUK project and BT according to the proportion of capital investment made. So if BDUK paid for 80% of the capex, then they will get back 80% of the expected over-recovery money for reinvestment.

    1. NGA for all says:

      @Steve .. clawback was triggered by a change in the take-up assumption..see BTplc 2015/16 Q1 notes…. so the overcharges from use of proxy costs (first 7 contracts including Wales) are a separate item and the BT capital contribution a condition of the state aid measure is another item.

      I have not met Mr Newton and I would not share his views about BT and I think these events under discussion are the actions of a few.

  3. PeterM says:

    “The cost per cabinet completed to date (FTTC only) is currently £26,500”

    Looks like the original NAO and poster NGA on here were not far off with their £25k estimates, certainly much closer than the idiots that continue to argue it is and was significantly more, i think one of them claimed £40k plu at one point LOL.

    1. Steve Jones says:

      At one point I seem to recall they were claiming somebody from BT has said it was £90k or some arbitary figure. As it is, the numbers so sound pretty well in line with what NAO reported. Individual cabinet costs will, of course, vary massively according to circumstances.

      I think there’s reasonable criticism that BT have (in effect) been able to re-risk much of the investment as they were able to do their investment cases on a rather conservative 20% take up, but that doesn’t seem to be the claim. It’s actually in BT’s interest to get as much of the BDUK money spent as possible on extending infrastructure as that way they get revenue faster and it makes competing networks more difficult to financially justify. It’s no doubt all constrained by available resources.

    2. TheFacts says:

      @PeterM – ‘idiots’. Welcome back.

    3. MikeW says:

      I recall that @NGA himself was the one arguing about costs being £40k.

      When I had discussions with him over the North Yorkshire project, he insisted on using the full £26m budget to perform his calculations; over 660 cabinets this is indeed £40k. IIRC, he ended up nearer £47k, but I don’t remember how.

      I pointed out that £5m of the budget was due to be used for USC work, and that some (unknown) amount would be used for FTTP. He ignored those arguments. There is also some budget allocated to project management, some to the local team, and some for demand stimulation and business development – none of which was for BT.

      Ignoring those extras, and the USC budget, plus the 10 extra cabinets that turned up in the project, takes the actual average down to £31k. However, this still does not leave any budget for FTTP, which has happened, but impossible to figure out.

      With North Yorkshire likely to have longer fibre deployments than urban areas, you’d expect it to have figures higher than the norm. But it seems in line with an overall average of £25k.

    4. MikeW says:

      I should say this … that I’ve never said what I think the cost per cabinet *is*; I’ve only reported what North Yorkshire’s budget has said … and then attempted to undo the damage of @NGA’s own interpretation (or misinterpretation) of the numbers.

      Indeed. For ‘PeterM’ to refer to ‘idiots’, and to know the numbers that were being thrown around 2+ years ago might just tell us something.

    5. themanstan says:

      The original NAO cabinet cost was confirmed via a FAO request as not including all costs … which is still being selectively ignored…

    6. Mark Jackson says:

      Note to PeterM: Don’t throw personal abuse at other posters. You might disagree and argue a point, but personal abuse is against the rules and future posts may be removed when we see that.

    7. themanstan says:

      Should have said FOI not FOA…

    8. NGA for all says:

      @MikeW – North Yorkshire numbers are published. NY were subject to proxy costs something like £230 a premise passed, multiplied by 200 and NY have like Wales and few others paid over the odds.

      The £40k (which are evidence of overpayments) can also be seen from the £750m state aid receipts reported in BT accounts divided by the cabinets delivered. These are vast overpayments which Wales and indeed North Yorkshire were subject too due to the use of proxy costs. The underlying costs were no more than those observed in Northern Ireland in 2010/11, and the subsidies ought to be not much more than those observed.

      You have not engaged me. Contact me and I will take all your questions, and give you the public references.

    9. AndyH says:

      @ NGA – Where is FTTP in your calculations? You always miss this out…

    10. NGA for all says:

      @andyH – FTTP vulumes less than 1% of the 3.6m – so much do you wish to allocate from £750m of state aid receipts for 36,000 FTTP connections?

  4. themanstan says:

    What is generally ignored is the FTTP costs, which given its being done in fairly small numbers is likely to be disproportionately expensive for each BDUK project.´
    So everytime a calculation for cabinet cost is done with the whole value of a given project it excludes any FTTP costs.

  5. Mike says:

    Have BT told the truth about anything with regards to their rollout?
    Lied about costs
    Lied about the amount of FTTP
    Lied about completion date
    At least they are consistent.

    1. AndyH says:

      Where have they lied about costs or FTTP rollout? Source?

    2. AndyH says:

      That’s not a lie though – they planned a wider roll out, but scaled back due to the costs/time.

    3. Steve Jones says:


      No, they changed their investment plans in favour of FTTC as the latter could be delivered 10x as fast in terms of premises serviced and it made better business sense. Companies revise their investment plans from time-to-time, and that is not a “lie”. It would only have been a lie if they’d never intended to do it and were always planning to do FTTC anyway.

    4. peter says:

      Nope he is right…
      Quote “BT has unsurprisingly abandoned their original 2009 “””commitment”””…..”

      “an engagement by contract involving financial obligation”

      “a pledge or promise; obligation:”

      Please learn what words mean instead of trying to twist them to your own agenda.

      Original promise…

      “will now see 2.5 Million homes covered by their fastest 100Mbps Fibre to the Home ( FTTH / FTTP ) technology instead of just 1 Million.”

      Not that they have even managed 1 million have they?

    5. AndyH says:

      The word commitment is used by ISP Review and not BT. You do understand the meaning of the word plan?

    6. Steve Jones says:


      Try reading what BT said and not the wording a website puts on a product announcement. The OR spokesman said:-

      “This figure was provided many years ago and was always an estimate as opposed to a firm target”.

      It’s clearly a change in investment plans.

    7. Luke says:

      BT are liars through and through. They quoted my company one price in writing for a leased line and then for 3 months tried to charge almost double. The connection was not symmetric as promised either with the upload running at 2/3rd of the download rate. They relented when they faced going to court and tried to charge the original price, i refused scrapped it entirely and went to Virgin. The service from Virgin was installed a day early and the service has been all but flawless with only a single problem with a domain name inside of 2 years which got fixed in under 10 minutes. The same can not be said for BT who you are lucky if you are on hold for 10 minutes.

    8. Mike says:

      “The word commitment is used by ISP Review and not BT. You do understand the meaning of the word plan?”

      Ah the old BT employee everyone is a liar except BT excuse

  6. fastman says:

    the reality is that Openreach supports 540+ service providers of which 100+ offer FTTC and about 4 of those 100 offer FTTP

    1. peter says:

      The reality is they did not deliver what was first promised.

    2. AndyH says:

      They never promised anything.

    3. GNewton says:

      AndyH: In 2009, BT announced Openreach would connect 2.5 million British homes to ultra-fast FTTP by 2012 and 25% of the UK. However, as of September 2015, only 250,000 homes were connected. Not even its Fibre-on-Demand can be ordered at the moment. So why should we trust BT as regards its current announcements on future widespread G.Fast?

    4. FibreFred says:

      No-one is asking you to trust them.

      Don’t and move on

    5. Mike says:

      “So why should we trust BT as regards its current announcements on future widespread G.Fast?”

      BT statements are not promises or commitments as pointed out by the employees here they are just excrement that flows from their gobs like water runs along a stream.

    6. Abuse alert says:

      Unacceptable language, please delete.

  7. fastman says:

    so why would you build massive amounts of FTTP

    1. fastman says:

      peter if you can advise where you are — somenone might be willing to help you – I I assumne your issue is that your not personally covered

    2. NGA for all says:

      @Fastman Perhaps you build the appropriate level of P, but this relies on having accurate information in the public domain.
      Everything we are learning, is that overlaying fibre to the cabinet is really cheap (comparatively) and thus pushing on with FTT dp for in-fill is not controversial. Analysis Mason have an interest report about effective FTTP was in Cornwall.
      FTTP into business parks with existing duct is not controversial. Doing so in town centres is not controversial. It provides BT with the opportunity for a lower long term cost base. You can certainly ask and be granted a sunset date for PSTN on the back of such works.
      Your work in Fell End and now in Great Asby has a great deal to be commended.

    3. fastman says:

      Fell end nothing to do with me

  8. fastman says:

    Have BT told the truth about anything with regards to their rollout?
    Lied about costs —
    Lied about the amount of FTTP
    Lied about completion date
    At least they are consistent.

    Mike just incase you are not aware

    Spent 2.5bn spent in commercial programme (of own Money) and inexcess of 1m alrerady in BDUK as part of match funding so spent in excess of around 4bn of their own money !!!!

    1. peter says:

      According to the latest costs that 2.5 billion figure is also dubious. Lied about cost per cabinet previously also, haven’t they.

    2. fastman says:

      This site used to have some sensible grown up date but seems now to something significantly less and getting lesser by the day and I’m seriously wondereding why I bother being part of it — the 2.5bn is a commercial company money — nothing to do with Government or anything else — the cost are the not the total they are the gap for the LA —

    3. Mike says:

      “the 2.5bn is a commercial company money — nothing to do with Government or anything else — the cost are the not the total they are the gap for the LA —”

      Explain how they have spent that amount when cabinets are cheaper than BT tried to first claim and the amount of FTTP is nowhere near the amount they claimed they would roll out.

  9. FibreFred says:

    More trolling, it ruins the site Mark

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