Openreach Says “copper will run out of steam” and Calls for FTTP Support

Openreach’s (BT) Chairman, Mike McTighe, has told the Broadband World Forum that “we are getting to the point where the copper will run out of steam” and there’s a need to focus on “full fibre” (FTTP/H), but he warned that this could only be done with ISP support and “increases in wholesale pricing.”

Openreach is currently in the process of rolling out their Gigabit capable Fibre-to-the-Premises (FTTP) based broadband network to 2 million premises by 2020, while the majority of their other deployments remain dominated by much cheaper hybrid fibre / copper solutions like FTTC and G.fast (both are quick to deploy but remain much slower and less reliable than a “full fibre” network).

Since the summer Openreach has been consulting upon an aspiration to conduct a large-scale deployment of FTTP (here), possibly to 10 million premises by around 2025, which they say could cost £300-600 per premises passed (total of between £3bn to £6bn); plus £175 – £200 to connect. Deploying to 20 million would cost more than double as costs increase disproportionately when coverage is extended into harder areas.

However Openreach has made no secret of the fact that they can’t do this alone and to that end they’ve been examining different models (e.g. co-investment with ISPs), as well as calling for a softer regulatory regime. On top of that they’d probably need to retire their copper network in tandem with the new FTTP one going live, which is necessary in order to keep costs under control. All of these points have once again been made at the BWF.

Mike McTighe, Openreach Chairman, said (UBB2020):

“It is imperative that we don’t end up trying to manage and run two networks. We need the ability to switch off the copper network and in support of that we are going to need modest increases in wholesale pricing of services to retail service providers.

Openreach wants to build and deploy a full fibre network for the UK but it will take a long time and we have to get started. We need the industry… to get behind this and figure out collectively how to make it happen, and we need the government and Ofcom to play their part if we are to come up with a compelling investment case that we can take to shareholders.

We cannot do this on our own.”

McTighe also called upon the industry’s ISPs (likely targets being TalkTalk, Sky Broadband and Vodafone) to “stop bickering” about broadband and support their proposals. But such sharp words are unlikely to sooth over years of built-up distrust and scepticism about the operator’s motives, forged as they were through years of competitive disputes.

On top of that Openreach also faces a regulator that often seems fixated on maintaining lower pricing and competition through hard regulation (the Government has cautioned Ofcom about this). Unpicking years of complex rules around copper lines will be no easy task and there’s plenty of scope for the odd legal challenge, unless the industry can find a more productive way forward.

Suffice to say that, with so many different viewpoints and competing interests involved, it’s hard to see how any of this will result in a neat agreement that everybody can agree on. In the meantime Openreach have told ISPreview.co.uk to expect an update on their FTTP consultation when BT publishes their Q2 results next week.