Openreach Unveil New UK Pricing for FTTP on Demand Ultrafast Broadband

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.