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Openreach Unveil New UK Pricing for FTTP on Demand Ultrafast Broadband

Monday, October 30th, 2017 (12:03 pm) - Score 26,824
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Recent talks held between Openreach and ISPs appear to have today resulted in the decision to introduce new wholesale pricing and 12 month contracts for their FTTP on Demand (FTTPoD or FoD) ultrafast broadband products, which can be installed in areas where FTTP isn’t currently available.

We should start by saying that it’s fairly easy to get native Fibre-to-the-Premise (FTTP) “ultrafast broadband” services confused with FTTPoD because the two solutions function in identical ways, although their cost, contract and deployment methods have tended to be significantly different. In a native FTTP setup the fibre optic cable should already be running outside your property (e.g. down your street), which makes it fairly quick and inexpensive to get connected.

By comparison FTTPoD is designed to be requested (‘on demand‘) in slower FTTC capable areas where Openreach’s pure fibre optic cables have yet to reach, which in some cases will attract significant distance based construction charges (civil works) worth thousands of pounds (in the past we’ve seen quotes of nearly £18k from some ISPs but that’s very extreme).

Some ISPs have also tended to balance the high deployment cost of FTTPoD by charging a lot more for the service rental and connection fees. On top of that FTTPoD has until now come with a 36 month contract, which all but cements its position as a product for SME businesses and rich home owners.

The result has been that very few providers actually offer FTTPoD (e.g. Cerberus Networks, Spectrum Internet [South Wales] and FluidOne), not least because it sits so close to leased line prices and yet lacks some of the advantages of those products. However, after much discussion, Openreach has today announced a new approach to FTTPoD pricing and contracts that could make all the difference.

The New FTTPoD Pricing Proposal

* The new pricing operates on a 12 month minimum term.

* In addition to the existing 330Mbps (30Mbps upload), 500Mbps (165Mbps upload) and 1000 (220Mbps upload) variants, customers can now order two more variants: 160Mbps (30Mbps upload) and 330Mbps (50Mbps upload). The additional variants were already expected and match Openreach’s new G.fast and native FTTP tiers.

* Reduced connections and rentals, which will be charged in line with standard FTTP prices.

* Withdrawal of the distance-based charging (no more cost per metre approach), replaced by a FTTP on Demand build charge, established through a planning/survey phase.

* Quotes are subject to survey. Openreach will provide an initial, non-binding estimate of the level of build costs. Upon confirmation by the communications provider, they will proceed with the planning phase, and establish a final firm price which is valid for a period of 30 days. At this stage, if the ISP does not want to proceed then it is liable to pay the survey and design fee of £245.14.

* Deductions will be made on the build charge for:

– Each FTTP on Demand order in the PON build.
– Any additional premise passed by the PON build.

* Multiple FTTP on Demand orders in a geographic cluster can be processed simultaneously:

– The build charge deduction per PON will apply for each FTTP on Demand order.
– Provides an opportunity for the build charge to be shared by multiple end customers.

The new pricing is expected to be introduced from 1st February 2018 and you can see Openreach’s detailed price update here. The changes are significant and very welcome, although we’ll have to wait and see how ISPs go about the task of actually implementing these before we can gauge whether or not FTTPoD has just become more viable as a consumer service.

However the adoption of a build charge (after planning/survey) instead of the old distance-based charging method doesn’t necessarily mean that such work will magically become cheaper, although FTTP deployments have become easier since the original FoD service was launched. It may also make it a little more difficult for individuals to guesstimate how much such work might cost, without having a survey done first.

Similarly the charge for a failed order could discourage a lot of people from giving FoD a try, but on the other hand that may help to remove less committed customers from the process and thus save resources. The price table also suggests that only the first order in a specific area may attract the largest cost, while additional orders could be cheaper as they would take advantage of what has already been built (this was also true of the old system but now it seems more specific).

We already know that Cerberus Networks intend to adopt the changes and will probably be among the first to show how it will impact their pricing in the near future. Lest we also forget that the Government has a new “full fibre” focused voucher / subsidy scheme for small businesses on the way (here).

One small caveat in all this is that existing customers will continue to pay the old tariff until they complete their minimum period of service.

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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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64 Responses
  1. Avatar AndyH

    This will be welcome news to quite a few people who use this site, however it will be unwelcome news to those who already have orders or a service because they will be stuck on the old pricing and minimum terms.

    • Avatar CarlT

      You know I’m one of those people. This is potentially a game-changer.

    • Avatar NGA for all

      Great to see. It provides a great context for the Capital Deferrals to be brought back into play. This makes a great of sense in fulfilling the B-USO.

    • Avatar AndyH

      I fail to see how the capital deferrals come in to play here at all.

      This is still a bespoke product/service for people already in FTTC areas. I doubt public funding would be allowed for a small minority to get a premium product.

    • Avatar Gadget

      Equally the availability of getting FTTPoD is, AFAIK, limited to existing FTTC areas, where the vast majority are already getting more than the currently proposed BB-USO of 10Mbps.

    • Avatar NGA for all

      1200 metres beyond the cab is a white area. Such Post codes are being re-inserted. There are now c85k cabs, so it is a very important in-fill.

      What else will the Capital Deferral will used for unless the plan is to hand it back? The only surprise is that it was not planned in the first place.

    • Avatar CarlT

      This is a commercial product and is nothing at all to do with BDUK. That delivers native FTTP on the taxpayer’s expense while this will deliver native ISP on the expense of the first person, or operator, who orders to trigger the PON build.

      Outside of the 5% or so that’re going to need thousands each in subsidy no-one cares about BDUK. Those of us in areas that have to generate demand and pay the bills ourselves however care about this. It’s promising.

      Now, where did I put that limited company and voucher?

    • Avatar NGA for all

      CarlT mention the voucher and it has everything to do with BDUK and extension of affordable services as deep as possible into rural.

      It can be used in non-bduk areas as well.

      How can it not be BDUK, what fibre cables do you think your extending?

    • Avatar AndyH

      @ NGA It has nothing to do with BDUK or capital deferrals. I believe the existing broadband voucher scheme was closed and new vouchers were part of the government’s Digital Infrastructure Investment Fund.

    • Avatar Steve Jones

      @NGA

      This clearly has absolutely nothing to do with capital deferrals. Capital deferrals is just money put aside by BT which it knows it will have to pay BDUK projects due to the operation of gainshare (which the BDUK projects can either reinvest or can reclaim at the end of the year).

      This (which is a big announcement) is a commercial offering for anybody within reasonable reach of an aggregation node, whether it’s a purely commercial one or one put in under BDUK. Any capex spent on FoD will just be booked as normal.

      In the meantime, local BDUK projects are steadily signing new contracts to reinvest that gainshare money and the capital deferral will shrink away as it’s used to extend coverage. That, by the nature of what needs to be done, will involve a higher percentage of FTTP premises and general extension of the fibre access network. However, it will not involve spending money of FoD.

      I do, however, wonder what Ofcom might think about in terms of other network providers being allowed to extend their networks to consumers using OR fibe aggregation nodes.

    • Avatar CarlT

      If I were to order, NGA, it would be extending the fibre that was installed to service commercial cabinets. In the case of areas where BDUK was used it would use that infrastructure, certainly, though the extension would be nothing to do with BDUK funding.

      BDUK will I presume continue to fund FTTC and native FTTP. Gainshare or whatever is nothing to do with this at all, BT do have fibre and duct in the ground that wasn’t subsidised.

    • Avatar NGA for all

      Steve, only £130-£150m of the £466m has been made available for re-pointing. The notion that those funds could not be applied in some way to enabling deeper rollout using this revised product has to be nonsense. Hand the money back, convert into vouchers, what ever it takes?
      It is good to see what is a standard FTTP-GPON product with affordable rentals being properly readied for this purpose.
      There is nothing stopping BT retail taking orders.
      What is your understanding of the exception charge of £700 per premise in note 5? Do we interpret that as the starting price per premise to be connected?

    • Avatar CarlT

      It’s an exemption, it’s not the price of anything and it’s per PON, not per premises. Openreach will pay the first £700 of building a new PON, and will pay an additional £50 of the costs for each premises the new PON passes.

      These builds cover more than just one premises, they are not point to one.

      All the premises passed by the new PON would be FTTP enabled.

      This product is aimed at service providers more than individual businesses or homes.

    • Avatar Steve Jones

      @NGA

      I would characterise any uncommitted money in the capital deferral figure as not yet having been taken up the local BDUK projects rather than not released. There will only be a cash repayment at the end of the contract, and there’s no way to turn that money into vouchers that I know of.

      As for the exemption items listed, it is not exactly explained so I can only assume it’s some adjustment for the PONs and actual, or potential sharing of costs. Exemption implies that it’s an allowance which will be automatically included in the build costs from a somewhat generous reading of the notes.

    • Avatar NGA for all

      Carl T – thanks, that’s a low contribution from OR, but I guess that will change. If customers can switch BT R FTTC within a year then I guess this will evolve.

    • Avatar NGA for all

      Steve, the Capital Deferral above £150m is definitely stuck. Nothing in the new state aid measure blocking it, so I am guessing it is some letter between EU and DCMS to close old one.
      The issue was raised at EFRA Select Committee March 29th 2016 (Tourism and Broadband!), the answer was fluffed. Q.427. Premises in white post codes could be able to access what was intended for them.

    • Avatar Gadget

      I’m not sure it is “stuck”…..my understanding is that any gainshare is not contractually payable until the end of the contract, and what is happening is that many authorities are taking advantage of an “early conversion” from what gainshare is visible now and converting it, quite wisely IMHO, to coverage now.

    • Avatar NGA for all

      Gadget – we can see what your suggest for the first £150m -(although I have only see a press releases for £133m), but not the remaining £366m owed. That could sit there until 2023 I think. If the side letter covering this possibility was published, it could be easily challenged for white areas where no competition exists.

    • Avatar Steve Jones

      @Gadget

      I’ve been trying to tell NGA that for what feels like forever. You are quite correct that the money is available for reinvestment now, but that it is up to the local BDUK project to negotiate and sign new contracts to do so. Also, the capital deferral won’t just disappear overnight even when extensions are signed as (from what I understand) it acts rather like a call-off which is used for gap-funding. So BT would invest the cash and it would be reflected by a reduction in the capital deferral, and as payment is only made (in this case a reduction in the capital deferral) is only made after installation, then it’s bound to go down gradually, not in large steps.

    • Avatar NGA for all

      Steve, you have not addressed the evidence that a significant proportion of the Capital Deferral is stuck or resting in BT’s accounts. The question was posed in Select Committee and no answer was forthcoming.

      The scale of the Capital Deferral was being denied as late as April 2015 – ‘tens of millions’ was the quote by BT CFO, and begun building from June 2015 in BT’s statements, a £130m for extra 10% to 30%. The extra 9% take up if has taken this to a now £477m, and is likely to climb further, as there is another £500m public funding from the £1.7bn left to do.

      There is still inadequate transparency on BT’s capital contributions but that may get going this year as the data is not being published.

    • Avatar Gadget

      The gainshare money is not “stuck” but it is “resting” and that “resting” from what I can see from redacted contracts is exactly what it is required to do until return payment is contractually due.
      As for its increase over time the gainshare is only created once the takeup rises above the set amount (which if I recall was 20% in the early contracts) and then rises pro-rata with the increase in takeup about this threshold, so gradual increase is exactly the way I would expect it to rise – nothing initially then after the total takeup increases above the threshold a rise as the takeup continues to increase.

  2. Avatar CarlT

    Virgin Media, especially VM Business, are going to find this alarming.

    So much for 350Mb (200Mb here, network needs upgrade) with 20Mb upload as a top package.

  3. Avatar Joe

    The charge is def going to be an issue. My FTTP was ‘free’ due to no FTTC on my cabinet but given they proposed one route and then delayed my order and changed to another 3 times longer had I been paying for a survey i’d have had no way to tell what the cost would be until they came back with the much higher cost.

  4. Avatar alusufferer

    how can i tell how far the nearest fibre aggregation node would be for estimating costs?

    can someone explain the exemption charges on the price list and Note 5 specifically?

    thanks

    • Avatar JAH

      I think the first one is likely to be right next to the DSLAM.

    • Avatar CarlT

      Openreach cover the first £700 of building a new PON, and a further £50 of the build for each premises the PON passes.

      Again this is not a point to point product, network capable of serving multiple premises will be built. Offering these make the product more attractive to its intended audience: service providers Openreach are trying to encourage to migrate off copper.

    • Avatar MikeW

      Given the dimensioning, there are perhaps 3-6 existing cabinets per aggregation node, so don’t expect an agg node at every DSLAM.

      The old Openreach pricelist reckoned that 95% of premises were within 2km of an agg node.

  5. Avatar brookheather

    So after 12 months the monthly cost will revert to standard FTTP pricing instead of waiting for 3 years? Or is OR now going to be charging the same monthly cost for FTTPoD and FTTP from the start of the 12 month contract? That would be a big cost saving over the current FTTPoD monthly costs charged by Cerberus / FluidOne. Surely this move will kill any orders for FTTPoD before Feb 2018.

    • Avatar Webbs

      It might kill any new orders in the short-term, but could mean a lot more new ones once we get past Feb 2018…

      Must admit, I’m intrigued by the idea of the build charge being shared by multiple end customers. All I’d need to do is pester a few neighbours to get on board and it could maybe bring the charge right down (fingers crossed etc).

    • Avatar James Blessing

      Anything ordered on the new tariff pays the same as FTTP from day one, anyone already with FTTPoD will continue to pay the existing rate until their minimum term (36 months) ends and then will pay the new lower rate

    • Avatar Bob2002

      @Webbs

      Anyone remember the early days of ADSL deployment where each exchange had a petition to register interest and once enough people registered ADSL was deployed? Wonder whether “people power” could be applied here?

    • Avatar Gadget

      Bob, I look forward to someone else standing outside the supermarket on a Saturday morning other than the “usual ISP suspects” seeking my interest, or alternatively I’ll be waiting for the surge in purchases of “phonebooks” like last time

  6. Avatar FibreFred

    How can this be? GNewton said it was a dead product 😀

  7. Avatar Webbs

    What does ‘premises passed’ mean? I assume it’s different from an order?

    • Avatar spurple

      Think of it like if you’re running a wire to your master bedroom, it passes your hallway and your kids bedrooms. The kids bedrooms are premises passed as they could easily tap into the wire to gain access to the magic that is carried in the wire.

      The destination of the wire is your bedroom, but in the process, you’ve also made it easy for your kids to sign up for a splice of the wire.

    • Avatar Webbs

      Ah so basically for every home the new fibre cable passes (that could subsequently use it in future) they knock another £50 off the build charge? That would be about 20 premises passed in my case I’d guess, not bad, unless there’s a catch…

    • Avatar GNewton

      @Webbs: Good question, the article isn’t quite clear on that. But if that’s indeed the case then it could lead to nice demand-driven pure fibre coverage for many areas, in connection with voucher schemes.

    • Avatar MikeW

      I suspect it will be quite a narrow definition of “passed”, and not just “every house that the cable passes”.

      From the existing network connection point (the aggregation node), Openreach will need to use one strand of fibre to carry the shared PON (shared by up to 32 premises). That strand would lead to a splitter node somewhere (that could serve from 32-128 premises); houses passed by the strand/cable prior to the splitter likely wouldn’t count as “passed” because the PON wouldn’t serve them. That strand would actually likely be in a cable that carries multiple strands for future PONs/splitters.

      From the splitter, there will be a separate strand of fibre per property, but they’d likely be in the form of a cable of multiple strands. They would lead to a DP of some form (either splice trays in the old style, or connectorised blocks in the new style). Houses passed by the cable to the DP might not count as “passed” either, as they cannot hook into this fibre without their own DP.

      So it might be that “passed” is restricted to just the premises reachable from the DP. Depending on the style, this might be between 8 and 20 premises.

    • Avatar Webbs

      Yes I too suspect the definition of “passed” will be key as you suggest. We’ve got one road in/out of our new build development, and best as I can tell there is one run of underground BT duct passing by each home under the near side pavement. I’d tentatively guess at least 9 homes are passed right outside before mine, double that if you count those on other side of the street.

    • Avatar alusufferer

      if @MikeW is correct and that its based on reachable premises from the DP. what kind of distance could a DP be from a house?

      i’m assuming they wouldnt just put it next to the person who ordered and it would be strategically placed to cover the ordering house and as many other nearby as possible?

    • Avatar Webbs

      We won’t know until it’s live and out in the wild I guess. If it’s cheaper (in a given scenario) to install one DP to serve multiple premises I’d assume that’s what they’d do. I good be a decision they make on a case by case scenario as part of their planning/design phase for each order.

    • Avatar Joe

      @Mike

      “From the existing network connection point (the aggregation node), Openreach will need to use one strand of fibre to carry the shared PON (shared by up to 32 premises). That strand would lead to a splitter node somewhere (that could serve from 32-128 premises); houses passed by the strand/cable prior to the splitter likely wouldn’t count as “passed” because the PON wouldn’t serve them.”

      Woulnd’t every joint be a potential point a new splitter point that could be inserted though? From what i can see OR can a lot of joins in their fibre runs.

  8. Avatar GNewton

    This new FTTPoD product is something that I have suggested for ages and certainly makes sense for many small businesses. Of course we have to wait and see what the actual construction charges will be this time. But keeping the monthly rental costs similar to those of other native pure fibre and G.Fast is a big step in the right direction.

    • Avatar FibreFred

      Hahah it isn’t new. It’s new pricing, nice wriggling attempt, but a fail.

    • Avatar MikeW

      The old pricing was one attempt at balancing the total costs against the total income from the punter.

      This pricing seems to meet one deficiency of the old pricing – that there was no transparency over the fact that FTTPoD would create a shared PON that helped other installations.

      But what this has now made less transparent is what the build cost will be. For a single subscriber, we could find that we have reduced monthly charges, but vastly increased installation charges. Or we might not.

    • Avatar Webbs

      @Mike W

      I guess we’ll find out come Feb. Could backfire on Openreach (PR-wise) if it turns out they’ve simply shifted the cost onto the install charge, then again they might not care how that looks.

    • Avatar AndyH

      lol…this is the GNewton/JNeuhoff that said FTTPoD is “practically a dead product” and that “BT is not able to provide economic FTTP on a larger scale, its whole mentality is not up for this!”

    • Avatar NGA for all

      @Fibrefred-AH, the switch back from the concept of provision a single private circuit to planning a shared PON takes us back to 2013, so this is a welcome and necessary change.
      I assume this has always just been a resource issue, which only encouraged the gaming of costs and capital.

    • Avatar FibreFred

      Fttp on demand was once a private circuit? You sure?

    • Avatar AndyH

      @ NGA

      The build of FTTPoD has not changed one bit. The only difference is that ISPs will be encouraged to get multiple customers in the same area to sign up for the service.

    • Avatar NGA for all

      AndyH ..The positioning and pricing have changed from treating the sale as a partial private circuit to a FTTP-GPON. The pricing is not quite native FTTP-GPON but the components used are the same, making that possible in the near future.

      Acknowledging the change will permit it to be appreciated more.

    • Avatar Gadget

      NGA – FTTPoD has never been, and will never be a possible component for a partial private circuit, its pricing and commercial terms have no relation to its functionality, sorry!

    • Avatar FibreFred

      Indeed BT fttp is pon BT fttpod is pon.

      Always has been.

    • Avatar NGA for all

      FibreFred, Newton .. https://www.ispreview.co.uk/index.php/2017/03/clearing-confusion-bt-business-fttpod-broadband.html#comment-176472. There are other articles in TB where ‘business grade’ was being emphasised.

      So we are going from building a PON and charging/punishing the first customer as if was a private circuit to a PON where the costs are shared.

      Another small step, which is most welcome, that FTTP is not something exotic, but a better medium with cheaper long term operational costs suitable for a deep deep deployment.

      Let’s hope someone is planning how the £477m Capital Deferral is converted into coverage. It is not referenced in the OR FTTP consultation or the BT’s B-USO offer. It needs to be.

    • Avatar GNewton

      @NGA for All: BT Business had decided quite some time ago to stop offering its Infinity on Demand product “due to low demand” and have instead chosen to continue focusing upon their dedicated ultrafast Ethernet products instead, much like most other ISPs. So for all pratical purposes the old FoD was a dead product even if Openreach continued listing it as a product.

      I think the important aspect with this new FTTPoD product is the possibility to share the install costs between different users. Also, the fact that the monthly charges will be similar to native FTPP from day one will make a big difference.

      As regards private circuits: I am not sure whether the first 2 iterations of FTTPod were ever based on private circuits, though the current cost regime for a FTTPoD had similarities with a leased line setup. But as I said, we can expect it to change once the new FTTPoD offer becomes available nearly next year.

      Mark Jackson published a good article on the situation and difficulties with the current FTToD at https://www.ispreview.co.uk/index.php/2017/03/clearing-confusion-bt-business-fttpod-broadband.html from which we can see the need why FTTPoD has been revised by Openreach.

    • Avatar FibreFred

      NGA,

      Ok… but, it was never a private circuit.

      GNewton,

      It isn’t a new product.

      When FTTC pricing changes, it doesn’t become a new product.

  9. Avatar Bill

    This is indeed a much more credible offering than the original product.

    Let’s hope it takes off, it would do much to address the market of those willing to pay more than standard prices but not as much as leased lines.

    • Avatar baby_frogmella

      The new OR pricing means nothing if more ISPs don’t start selling the product. At present just a grand total of 2 ISPs (Cerberus & FluidOne) are selling it. If the status quo continues beyond Feb 2018 then don’t expect monthly charges to come down by much – with niche ISPs the bulk of their monthly costs will be BT Wholesale bandwidth charges which aren’t cheap. Though build prices may come down and obviously a 12 month min term is much more palatable than a 36 month term. I don’t think mass market ISPs such as BT retail will sell this but if the likes of AAISP, Zen, IDnet etc get onboard, then indeed this could be a game changer. Time will tell I suppose!

    • Avatar CarlT

      This isn’t for marketing to individuals. It’s too allow CPs to help fund FTTP deployments in return for early access to the infrastructure. Tying customers on a PON into contracts before it goes live by ordering simultaneously.

      Also brings the product into play as one that can be sold to residential customers. Previous one was, of course, not due to contract length.

  10. Avatar ChrisP

    This reads like a huge 2 finger salute to OFCOM.
    Look what OR can do without the price meddling, kickings and over bureaucracy banded aboutby the so called regulator. Why didn’t OFCOM come up with this comprehensive idea?

  11. Avatar Colin Hacker

    I was excited to see this and once the new pricing was live I requested a quote from Cerberus. Unfortunately my hopes were once again dashed when I received OR’s estimated build charges of £19,500! So obviously that’s a non starter. OR seem to think that only two other premises would be passed so that too isn’t going to make a significant difference.

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