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Government May Reject BT’s Voluntary 10Mbps UK Broadband USO Offer

Monday, November 20th, 2017 (8:19 am) - Score 2,118
10Mbps UK Broadband USO

Newspaper reports indicate that BT’s voluntary proposal to spend up to £600m on delivering a 10Mbps minimum broadband speed across the United Kingdom, which would implement the Government’s proposed Universal Service Obligation (USO), looks increasingly likely to be rejected.

According to the Sunday Telegraph, sources “close” to the negotiations have hinted that the talks are “close to collapse” due to the threat of legal challenges from rival ISPs (details) and other concerns, such as the scale of financial penalties for missed deadlines. The outcome would force the Government to impose the full weight of a “legally-binding” USO upon Openreach rather than adopt BT’s quick voluntary fix, which could take longer to deploy and may miss the 2020 implementation target.

The USO itself would focus on the final 2% of UK premises that are not expected to gain access to “superfast broadband” (24Mbps+) speeds under the Government’s national Broadband Delivery UK programme. The Telegraph wrongfully uses Ofcom’s old 1.4 million premises figure to reflect the gap that needs to be filled by a USO, although by 2020 the gap will actually be much smaller (estimated at around 600,000 premises).

A Spokesperson for Openreach said:

“We believe BT’s plan would be faster and more efficient than a statutory Universal Service Obligation, because we’d build the network proactively, rather than waiting for individual customers to place orders.

We don’t want people in not-spots to wait longer for decent broadband and this is an opportunity for the industry to unite behind a project that would help to close the digital divide, boost social cohesion and increase productivity across Britain.”

BT had voluntary offered to deploy a softer USO (here), which would cost between £450m – £600m (to be recouped from charges on existing products and services). But this plan would not complete its fixed line rollout until late 2021 or 2022 and so the operator offered to use a fixed wireless fix as an interim measure. Inferior Satellite would then handle the final 0.3% of premises that are too remote to reach (this is also true of the Gov’s model).

However, there are several points of conflict with this plan, not least over the operator’s call for Ofcom to soften the significant price cut that could be imposed on Openreach’s 40Mbps FTTCfibre broadband” tier. The Government also want the regulator to take a less aggressive approach here because they fear that it would make it harder for providers’ to invest in and sell newer “full fibre” (FTTH/P) ultrafast broadband technologies (here).

On top of that BT’s rivals (e.g. Sky Broadband, TalkTalk, Hyperoptic and Gigaclear) fear that a voluntary USO could stifle competition (here), even though BT’s investment would be commercial and no other providers’ seemed to be even remotely interested in helping to deliver the USO (except for KCOM in Hull alone).

Part of this opposition from rival ISPs stems from Openreach’s plan to use Long Reach VDSL technology (a modified form of FTTC / VDSL2 that is faster over longer copper lines), which works best if older ADSL services are disabled first on related cabinets. But some ISPs have spent big to build their own unbundled (LLU) platforms inside Openreach’s network and would not want to lose that. The fact that FTTC services are more expensive than slower ADSL is another problem (ISPs could be nervous about forcing a more expensive upgrade on their users that may also require a new router and create confusion).

The government has also continued to insist that any USO should be “legally binding” (otherwise it’s more of a toothless USC – Universal Service Commitment), with consequences for failing to deliver. Agreeing terms and penalties under BT’s proposal was always likely to throw up disagreements.

At this stage it’s unclear whether the Telegraph’s piece is just a reflection of the usual hard-ball approach to last minute negotiations or a sign that the Government will ultimately have to push for a stricter USO, which may or may not need to recoup its costs from other areas (industry levy, public subsidy etc.). A true legally-binding USO at 10Mbps could cost up to £1bn to implement, although figures vary depending upon the cost threshold applied and number of premises served (examples here and here).

The Government had intended to announce their decision by the end of this year and we suspect that the plan might have been to make a decision in time for this week’s budget announcement.

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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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62 Responses
  1. Avatar CarlT

    If a major argument in rejecting LR-VDSL is that Sky, TalkTalk, et al can’t continue sweating ADSL that wouldn’t bode well for the future at all. Openreach will be wanting to retire copper as part of a larger scale FTTP build not have it sitting there potentially requiring maintenance and fault repair on the off-chance people want obsolete and slow Internet access.

    • Avatar NGA for all

      I have not seen the appetite to retire copper as yet. CEO Selley was talking last week of FTTP by stealth, 200k installs last year. 2015 – OR personnel were still being forced to reference G.Fast as a panacea pointing to G Pattersons press releases. The re-balance of G.Fast and FTTP will be a test for the independence of OR.

    • Avatar AndyH

      “200k installs last year”

      I am confident to say there were not 200k installations of FTTP last year.

      Can you link to Gavin Patterson’s press release about G.Fast as a panacea? It certainly wouldn’t seem that way from his investor briefings.

      G.fast is the quickest and most cost effective way to deploy ultrafast speeds to millions of people. It’s a natural upgrade for FTTC and it will test the appetite for ultrafast speeds (uptake so far with those invited onto the trials has been very low).

    • Avatar AndyH

      Carl is right that Openreach will want to retire copper as part of a large scale FTTP deployment. They made this clear from the summer consultation on FTTP with the cutover model being clearly their favoured approach:

      “Cutover would also open up the prospect of simplifying Openreach’s network architecture over time, for example by enabling us to close exchanges that do not house FTTP head-ends. It could also enable the recovery and resale of some copper cable.”

    • Avatar NGA for all

      AndyH – 2015, pre Selley there was no plan to actively provide FTTP, so G.Fast was presented as a panacea. There was nothing else in 2015 so that was all that anyone could point too formally.
      The 200k for last year was used by Selley in an interview reported in the REg, Kim Mears provides a lower figure here..https://www.uswitch.com/broadband/news/2017/03/openreach_ramping_up_ultrafast_fttp_capacity/

      G.Fast is great, more throughput for those closer to the cabinet, as long as it is not occurring at expense of denying those too far away it is great.

      Interesting to see the greater ambition and the resource plan to match it.

    • Avatar NGA for all

      AndyH I favour a telephony sunset date, there was even room and budget for BT to propose some limited FOX in the £1.7bn BDUK work, but that opportunity was lost to folk pretending a cabinet cost £100k and as late as the CMS Inquiry into Broadband 2016 BT were informing Parliament that FTTC cost £500 a premise passed.

      To justify a Telephony sunset date, you would need a capacity to do 1m lines a year minimum.
      Even a request for telephony sunset date shows how out of date the 10Mbps thinking is and highlights the shortcomings of an over reliance on copper gain technology.

    • Avatar AndyH

      @ NGA

      You need to be careful of what you’re saying. There is a huge difference between an installation and premises passed by the FTTP network.

      You also need to be careful about your comment ‘200k for last year was used by Selley’. This comment came from Clive Selley a couple of weeks ago and is referring to this year (“He points out that the firm is still investing in full-fibre, with 200,000 premises this year. “That is a lot more than last year, and last year we built a lot more than the previous year, so by stealth we are scaling.”). Most of those 200k premises passed will be new build sites and businesses.

      “there was no plan to actively provide FTTP, so G.Fast was presented as a panacea.”

      But this isn’t true. In BT’s ‘From superfast to ultrafast’ press release in April 2015, they stated that they were “also planning to develop a premium fibre broadband service for those residential and business customers who want even faster broadband, of up to 1Gbps.”

    • Avatar AndyH

      @ NGA for all

      Once again (and for the millionth time), BT never stated that “FTTC cost £500 a premise passed.” This is complete nonsense and you know it.

      This is what BT stated:

      |The total Government funded programme (including Cornwall and Northern Ireland ) over the lifetime of the signed contracts has a total public funding of £1.550m and BT spend of £910M (set out in more detail in the resulting in a total cost for these contracts of £2.5bn to deliver to 5m premises, ie, £2.5Bn for 5m premises = £500 per premises. However, this figure includes the costs to BT of operating, running and maintaining the resultant networks over the lifetime of the contract. Thus the actual cost to just build the network is slightly less if we remove these operating costs with a figure of around £400 per premise averaged across the whole public funded build.

      For the BDUK contract builds up to September last year, it has cost £905m to get to c.3.9m premises, ie, a lower value per premises of around £230 per premises reflecting the focus on lower cost, fast to deploy premises first in the programme. Of the total spend to date on BDUK, BT has contributed £276m with the remaining £629m reclaimed from BDUK.

      The remaining 1.1m premises to get the overall 5 million current planned total are expected to cost £1bn ( or approximately £879 per premises) as we have completed the cheapest premises first. These remaining premises are planned to include a much large percentage of FTTP connections than the current build that will be reflected in the cost.”

    • Avatar NGA for all

      AndyH 1.) But 200k is new and it points to a capacity. What number would you prefer I use? Can you point to preferred press release highlighting OR capacity for FTTP?

      G.Fast was presented as a panacea until the changes occurred during 2015 and the appetite for FTTP was re-started.

      I am of the opinion that OR will have to fight very hard for its FTTP activity. It is essential for instance that the management of the Capital Deferral, which is money intended for rural infrastructure should be managed by Openreach not some BT Group Finance function. The remaining monies would fund a substantive amount of funds needed for the 1,800 engineers coming on board.

    • Avatar Steve Jones

      @NGA

      “I have not seen the appetite to retire copper yet”.

      Except in the last month OR have stated that they will need the power to retire copper in the relevant areas for any fibre roll-out. Given Ofcom mandate that MPF must be available, it is up to Ofcom to make a policy statement with regard to that as it is not in OR’s power. Given that the LLU ISPs are raising objections to LR-VDSL in principle (and even, it appears, on cabinets or where they have no LLU presence or where the ADSL service is abysmal), then it seems those ISPs might have a de-facto veto, not just on LR-VDSL deployment, but on copper retirement in general. This is really needs to be cleared up by Ofcom as this pandering to the interests of a few, albeit large, ISPs is a roadblock.

      I should also add that some of the major ISPs seem opposed in principle to cross-subsidising the USO via higher GEA product prices, even though that accounting principle is used on MPF & WLR.

    • Avatar AndyH

      @ NGA

      Capacity is the wrong word. We’re talking about premises passed (whether residential or business).

      Total premises passed for FTTP crossed the 500k threshold in October and is set for around 650k premises by April 2018 (latest investor conference call). It was made clear that most FTTP deployment is now coming from new builds.

      “G.Fast was presented as a panacea until the changes occurred during 2015 and the appetite for FTTP was re-started.”

      Again, BT and Openreach never said this. What Gavin Patterson said several times is that the focus should be on the speed, rather than the technology for delivering that speed. The telecoms industry should be free to self-innovate to meet the future requirements, rather than be told that “you must deploy XXX technology”.

    • Avatar NGA for all

      AndyH ..That is so lazy. Fundamentally it is not speed but throughput.. Why Ofcom is standing by and permitting a cost recovery process to spawn which has an inverse relationship to the distance is intellectually a very weak place to be. Permitting a cost recovery process which encourages another digital divide is shortsighted.

    • Avatar Steve Jones

      @NG

      If you do want speed-based charging, then look to the ISP level, as it is they that benefit from having to supply less backhaul bandwidth for slower customers. The costs of the part covered by wholesale price regulation do not reduce with distance. Rather the reverse, the costs of provision and maintenance of long lines is a lot higher than urban ones. Those long lines are subsidised.

      Until the GEA product set came along, Openreach weren’t even a supplied of broadband products. Ofcom’s policy had been to encourage LLU, even to the point where they imposed artificial price floors on BTW’s ADSL product set to guarantee LLU operator margins. OR’s GEA-FTTC was delayed by Ofcom by a long consultation in a forlorn hope that some other operator was going to deploy VDSL using SLU (only a few niche companies and the disastrous Yorkshire local authority project did that).

      There is a little bit of speed based pricing on GEA-FTTC in that OR charge lower prices for the slower products but, in general, the costs to OR are not much different whether it’s a 40mbps or an 80mbps service.

      So if the principle is that wholesale prices are to be cost-based, then logic would be that prices in urban areas would be lower (which they are on LLU services) and more expensive in rural ones. The corollary of that is it would encourage more rural investment.

    • Avatar CarlT

      So this escalated quickly.

      ‘Fundamentally it is not speed but throughput.. ‘

      Elaborate on what is meant here by speed and throughput?

    • Avatar NGA for all

      Carl T – a little abstract but crucial. I am a fan of copper gain kit as long as the distance limitations are acknowledged and we do not loose sight of the need to provide a service to all customers. In that context the average cost would include copper gain + an an allowance for full fibre where copper gain does not work. Hence Ofcom 40/10 needs to include FTTP costs where FTTP is needed to support 40/10.. or some base package.

      In a copper gain only world, a brief 2014/15 fantasy world, the notion arises that ‘speed’ which arises from the shortness of the line relative to DSL, makes it more valuable in terms of prices being charged (pricing freedom) but more strangely costs can be allocated based on the shortness of the line. This looks most strange when modelled in a price control.

      It highlights that once we shift from a copper gain world where a nomenclature is invented to accommodate its shortcomings (standard, super..ultra,) you can change the language to reflect the underlying inputs, where throughput (not speed) is a variable and the costs/value derived do not arise indirectly from the limitations of the service but the end to end service provided.

      WE need to shift from describing a service defined by its ‘up to’ limitations to one defined by the volume and quality needed. Quality is currently best efforts and best efforts is very good, because of the properties of light. Currently industry wants to define FTTP as an extension of copper gain, hence the use of ..Giga.. to try to represent a change from copper to fibre.

    • Avatar NGA for all

      Steve, I am not sure what point your making. The success of GEA needs applauding. As an embodiment of IP networking it simplicity represents a challenge to legacy networking.
      The point I was attempting to make is that with current efforts to model a price control, there is this strange outcome arising from mistaking ‘speed’ for ‘throughput’.

      If, as we do routinely mistake ‘speed’ for throughput then it now appears to be impacting on the oddity of allocating more costs to shorter and shorter lines in the copper gain world. Perhaps as the plans for BT FTTP are advanced, part of the case needed will be the capacity to recover more costs as average throughput potential rises across all lines.

    • Avatar CarlT

      Okay.

      I still don’t understand your point and doubt I will. The quality of FTTC services is great up to the exchange. The variability and deficiencies are in maximum speeds due to distance limitations.

      I haven’t a clue how FTTP could address end to end throughput. Replacing the last few hundred metres of copper with fibre aren’t going to change the characteristics of the hundreds or thousands of kilometres of fibre that make up the rest of the connection.

      I haven’t a clue how, unless you completely throw network neutrality away, any kind of guarantees of performance on services outside of an ISP’s network could be provided.

      I would suggest that being able to sell broadband services based on end-to-end quality of service to applications presents a far worse scenario for the not actually that prevalent digital divide than hybrid networks versus full fibre ones possibly could.

      If I’m reading what you want correctly you are talking about software defined WANs, SD-WANs, running right from the network of the website to the end user.

      I’m not aware of anyone who thinks this is viable. Delivering sufficient bandwidth across the entire path is cheaper and more sensible. That sufficient bandwidth doesn’t care whether it’s running on fibre, copper, copper coated steel or RF in the air.

    • Avatar NGA for all

      CarlT .. I think your bound by the current wholesale managed broadband backhaul prices of £40-£60 per Mbps/s for peak hour, so solving access just pushes the problem to the backhaul costs. The underlying cost (not price) is £5 per MBps/s and falling. It is also uniform across the country. We were discussing access and you have now switched to backhaul, which also needs addressing. I am unsure of the process of challenging the price you pay and the underlying costs. What I do know is that BT’s core has a 10Tbps capacity with 3Tbps currently lit.

    • Avatar CarlT

      I’m extra confused now. You’re the one talking about throughput and speed. Throughput obviously is dependent on way more than just the last few hundred metres and FTTC scores great for quality.

      ‘What I do know is that BT’s core has a 10Tbps capacity with 3Tbps currently lit.’

      I presume that refers to BT Wholesale but whether Wholesale or Retail is wrong.

      ‘The underlying cost (not price) is £5 per MBps/s and falling. It is also uniform across the country.’

      No it isn’t and no it isn’t. Getting backhaul to the Shetland Isles and running it is considerably more expensive than backhauling from an exchange near where you’ve a POP.

      You can’t just take the cost of IP transit and transpose that onto the cost of transport networks. They are completely different things with completely different challenges.

      If you could write in plain English rather than this soup:

      ‘It highlights that once we shift from a copper gain world where a nomenclature is invented to accommodate its shortcomings (standard, super..ultra,) you can change the language to reflect the underlying inputs, where throughput (not speed) is a variable and the costs/value derived do not arise indirectly from the limitations of the service but the end to end service provided.’

      That would reduce the confusion.

      No-one cares about the nomenclature of standard / super / ultra beyond marketing people.

      I have no idea what inputs you’re talking about, presumably you mean the services running on the networks. I have never heard of anyone referring to them as ‘inputs’. Inventing your own language, as you have in the past, helps no-one, it’s just confusing and opaque.

      Costs/value can’t reflect end to end service provided without, as I said, abandoning network neutrality and running software defined networks with specified endpoints. There are already services running on hybrid networks with minimum throughput guarantees to the edge of the provider network however whatever the access network it is not possible to assess costs/value via end to end service as there is no metric of an end to end service. The Internet is an interconnection of many networks and any measure of performance is between the user and a single point on those networks only.

      I respect your desire for innovation but recommend you spend some time working with people who actually know the reality of things rather than having vague aspirations of how they think it should be. Your comments are so divorced from reality as it stands in 2017 it’s downright bizarre reading them.

      Due to the combination of factual inaccuracies, opaque language, incorrect conceptualisation and a lack of knowledge of operational networks and ‘reality’ in the field it’s extremely difficult to take what you are writing seriously. Evangelists are rarely taken seriously by realists.

    • Avatar CarlT

      I should probably clarify a few things.

      ‘What I do know is that BT’s core has a 10Tbps capacity with 3Tbps currently lit.’

      I don’t think you’ve any idea what you’re writing here. The BT core is not a single link or chain of links of 10Tb/s each of which 3Tb/s is active.

      The biggest network interfaces on routers at the moment that’s in common use is 100Gb/s. There are proprietary 200Gb/s and 400Gb/s interfaces alongside relatively newly standardised 400Gb/s links.

      The 10Tb/s number would refer to the capacity of the entire network. If someone fired 10Tb in a single stream at the BT network it would buckle. Any network would because they all have multiple entry and exit points and are structured to balance load between a number of nodes and links.

      The idea that there is only 3Tb of capacity available on BT Wholesale’s network is absurd. TalkTalk have about the lightest users in the game and shift 4Tb/s over their 5 million users, a mere 800kb/s per customer. Both BT Wholesale and BT Retail have many more clients than that traversing their networks.

      BT retail have 9.3 million customers of which 5.2 million are on FTTC/P. All of these are on the BT Wholesale network. There is no way that these are all being served by 3Tb/s of capacity.

      As a guide, Virgin Media have around 5 million customers that consume somewhere between 7 and 8 Tb/s, 1.4 – 1.6 Mb/s each.

      As an aside to this just look at that again. The ISP that almost certainly has the heaviest users of the big players requires less than 2Mb/s per customer.

      Remind me why FTTP is so urgent for ‘throughput’ reasons?

    • Avatar NGA for all

      CarlT – Linx https://www.linx.net/ peak hour capacity is as stated here for the UK internet. BT’s cores capacity (80 main switching centres) was referenced by BT at the Royal Society events. I will get you references to Ofcom’s work on uniform costs for the UK.

      It is not theory, FTTP is being made available is some very remote locations. The native FTTP pricing is a reflection of the underlying uniform costs to deliver. The subsidies are comparatively low and mostly recoverable.

      FTTP(apart from the reasonable demand clauses) is within Ofcoms WLA current market definition. Net neutrality is outside the question of basic dimensioning.

      This is very different as you say to the ‘reality’ of todays wholesale managed bandwidth charges, but it is not evangelistic as the change is occurring now and the only matter to debate is the rate of change.

    • Avatar CarlT

      I must be confused again. Are you saying you know BT have 3Tb/s of 10Tb/s lit on their core due to LINX traffic stats?

    • Avatar CarlT

      ‘CarlT – Linx https://www.linx.net/ peak hour capacity is as stated here for the UK internet.’

      I’ve just re-read this. Do you genuinely think all UK Internet traffic goes through the LINX public peering LAN?

      ‘It is not theory, FTTP is being made available is some very remote locations. The native FTTP pricing is a reflection of the underlying uniform costs to deliver. The subsidies are comparatively low and mostly recoverable.’

      The native FTTP pricing is a reflection of the cross-subsidy that BT and in turn Openreach have long practiced between areas of the country. Suggesting it’s a ‘uniform’ cost to deliver in rural hamlets and dense urban terraced houses is crazy. FTTP would be a <300GBP/premises passed job here, ten times that in some BDUK-subsidised deployments.

      'Net neutrality is outside the question of basic dimensioning.'

      No, it isn't. While I appreciate you seem to think all UK Internet traffic flows through LINX so may not be aware of this there are many paths to most destinations some higher quality than others in terms of latency, loss and bandwidth. Traffic will have to be treated differently to ensure quality, simply delivering an abundance of bandwidth everywhere won't be adequate. Gaming traffic taking lowest latency and loss path, voice low loss but can tolerate a little more latency, bulk downloads merely uncongested bandwidth with no real concern over loss or latency, etc.

      I'm ignoring the obvious commercial implications of having a huge amount of bandwidth everywhere on the off-chance that any particular link is used.

      'This is very different as you say to the ‘reality’ of todays wholesale managed bandwidth charges, but it is not evangelistic as the change is occurring now and the only matter to debate is the rate of change.'

      Not really. Operators can and do take GEA feeds directly from exchanges to cut some of BT Wholesale out. However, that it costs them the same amount to do this wherever will I imagine be news to them. They seemed to be under the impression that costs of backhaul depended on things like location, availability, length of link, resiliency options, whether they interconnect in an existing PoP, want a 'meet me' chamber connection or the supplier to provide a feed to their network directly, or whatever.

      Some operators will never want to purchase interconnects to everywhere so will pay a wholesale price. BT Wholesale do actually provide a service to these companies – they aggregate traffic from many exchanges and deliver it to the provider. There is obviously going to always be a charge for doing this as it's active network, you can't simply throw a bunch of VLANs onto dark fibre through a mux and hope for the best, higher level network components, routers and switches, have to be used. Once you start using layer 2 and 3 devices you have crossed from unmetered, unlimited capacity provided by purely optical transport to managed IP services.

    • Avatar NGA for all

      CarlT .1.) .Thanks for the exchange. I cannot disagree with extra costs incurred when creating a differentiated service. I would dispute cross subsidy where cost recovery is based on replacement cost while choosing to invest on the basis of make and mend basis.

      The UK is not rural is the way Australia or the USA. It is geographically tiny and so the variation created is not big enough to justify a differentiated set of tariffs.

      One of the successes of the BDUK activity is the funding of transmission systems into the Scottish Isles, thus enabling and permitting a uniform service. An even bigger success but more difficult to claim, will be showing just little funding was needed, revealing the extent to which the fibres upgrades were being withheld. This includes the possible lack of investment in Market A exchanges relative to the costs being recovered. The latter argument is set out by Frontera, so a second source is needed to support.

    • Avatar NGA for all

      CarlT – Chapter 4 is worth a read.https://www.ofcom.org.uk/__data/assets/pdf_file/0020/107048/Vodafone-Frontier-report.pdf
      But we need a second source. The underlying cross sectional bandwidth costs are supported by previous Ofcom work and international benchmarks. Market A under investment needs a second source, but is consistent with investment based on make do and mend while recovering costs on a replacement basis.

    • Avatar CarlT

      If there really is so much margin in the BT Wholesale operation why aren’t they more profitable and why aren’t Vodafone selling more wholesale access via the LLU network they purchased from Cable and Wireless?

      I have no doubt BT shuffle revenue and profit around their group, but price dropping by nearly 3/4ths in a year due to increased volumes? This take account of that BT Wholesale had a bunch of upgrades to do on their own network, had to swap out n x 1 GE LAGs for 10 GE circuits, replace chassis, etc?

      We need regulation changes to drive the cost of the backhaul down and, to be honest, the packages that operators supply make it abundantly clear that they aren’t paying even close to list price.

      I note the lack of response to my pointing out that not all traffic goes via LINX and the other slightly more technical points away from accounting I mentioned.

      You’re welcome. I would very strongly recommend studying this rather than taking research prepared for BT’s competitors as gospel and rehashing for the 3000th time the same arguments over BDUK as it supplies the basis on which the rest is built.

      I’m sure you must be bored of doing the same things over and over again and learning a little about capacity planning and how networks are built saves giving people something to pick at when you appear to think all Internet traffic goes through one set of peering LANs and that guaranteeing end to end experience is doable just by throwing bandwidth at things.

    • Avatar AndyH

      @ NGA

      There are two weak divisions within BT Group at the moment, BT Wholesale and BT Global Services.

      If you look at BT Wholesale’s revenues from broadband/data services, these have fallen over the past year despite the exponential growth in bandwidth used. Q117/18’s revenue for data/broadband was £131m (compared to £139 a year earlier). Q217/18’s revenue for data/broadband was £131m (compared to £143m a year earlier).

      “I think your bound by the current wholesale managed broadband backhaul prices of £40-£60 per Mbps/s for peak hour, so solving access just pushes the problem to the backhaul costs. The underlying cost (not price) is £5 per MBps/s and falling. ”

      I don’t think you’ve ever been able to produce numbers which either make sense or can be substantiated. However, I can assure you that the underlying cost is not £5 per Mbps. If it was, then BT Wholesale would be one of the most profitable divisions within BT (operating profit fell 20.3% and 15.5% in the last two quarters).

      How much do you think it costs to provide the backhaul from over 6,000 exchanges around the country? If the cost was as low as you claim, why do smaller ISPs not build their own backhaul?

    • Avatar NGA for all

      CarlT I will dig out the Ofcom work on cross sectional bandwidth costs. It is old. The contracted through LINX is 20Tbs so I am not questioning your argument there, but the observed peak is a useful reference point.
      Any H .. The margins might be driving people to make alternative arrangements, hence BTW is struggling, but I will find the public references. Ofcom are now happy to reference Frontier in the lack of BT investment.

    • Avatar NGA for all

      Carl T, Any H, to close this for now. I have not been able to find the Ofcom annex but the findings I am read are consistent with this https://blog.cloudflare.com/the-relative-cost-of-bandwidth-around-the-world/ Costs continue to fall. I will keep researching on the Market A -costs v price which looks to be a problem.

  2. Avatar NGA for all

    The ‘wash up’ legislation requesting 10Mbps was divorced from the events which will permit BDUK to reach 98%+. The BT offer, which might be the last act of BT Group in the UK looks odd as the resource needed to fulfil this offer is the same as that needed to complete the BDUK activity in the same time scale which is already funded.

    The Openreach response to the Ofcom consultation on the B-USO did not reference which wholesale products it would offer. The separate BT response from its downstream divisions did not comment on the retail products it was willing to support the B-USO.

    The idea of penalties for failure to re-sell an already available satellite service in the final 1% is peculiar.

    Overcoming an ill informed request from Parliament demands DCMS to empower Ofcom to divide the appointment of B-USO provider(s) from the service offered. The upside is that the 10Mbps could be met or blagged without B-USO legislation just by converting all the BT capital deferral owed (£477m -£130m already allocated) into coverage by 2020.

    • You are talking total garbage…

      There is not £470m – £130m available, a chunk of this is what will get the superfast to the 97-98% ambition and the continued financial pressures on local authorities is likely to see more and more not wanting to spend more on broadband but to take the money back into the LA account in 2021/2022

    • Avatar NGA for all

      Andrew, Ofcom modelling and costing was for 5%, so the price control as modelled is out of date as it never fully considered the Capital Deferral available, in the same way it never considered the ambitions or funding available to wales, Scotland and latterly NI.

      The 10Mbps was called for Nov 9th 2015 at a time the CD was only £130m, so the policy was not informed. 6 months later the then Minister was saying reporting to CMS select committee the capital was paid when in Oct the new minister had to correct.

      You do not need a B-Uso to support the provision of satellite in the final 2% when it is already available.

    • Urm fully aware of what Ofcom modelled and I AM fully aware that the deferred money is not automatically considered available for USO tasks. There are going to be some local authorities that keep recycling it until they reach 100% superfast but others that won’t.

      So you CANNOT presume the deferred money is available, it may, it may not.

      Also the deferred money is bound to BT contracts, so cannot be withdrawn until end of contract and spent with other providers and if you had not noticed they is a small movement that does not want BT involved in the USO.

    • Avatar NGA for all

      Andrew three things .. At least half the monies is DCMS so this would need returning.
      Just as BT released the first £130m, there is nothing in the new state aid notice preventing those monies being put to work early.
      The representations to Parliament reinforce that these funds were intended for rural and to go as far as possible, hence we have crept slowly from the 96% referenced by DCMS in the early consultations to this more Ministerial 98% as the more light was shed on the numbers.
      We have not yet reconciled BT’s capital or the capital for overbuilding 1m Virginmedia premises.
      What you cannot say is that Cameron and the Tories or indeed Parliament were appropriately informed to make such a call given the lack of information. This has to be reflected in how Ofcom are instructed to take this forward.

    • And am fully aware that some of the money will becoming back into DCMS, but again you make the assumption that this is 100% going to be spent on broadband?

      The pressure for full fibre might be such that it gets recycled into full fibre for business parks where many can already get superfast.

      In short you are stating things that no-one knows for sure as if they were fact

    • Avatar NGA for all

      Andrew, ‘no one knows for sure’ .. we do know why the money was allocated in the first place. It is set out very well in Perm Sec evidence to the 2013 PAC, his opening statements are very clear.

      Why would business parks with duct need subsidy? The lack of FTTP-GPON in business parks today is only because we tolerate the mis-selling of private circuits to solve a distance problem. For instance the provision of 13 subsidised cabinets at the Cambridge Science Park is a deeply cynical expropriation of subsidy where the duct available would have permitted FTTP.

  3. Avatar MikeW

    @Mark
    “The outcome would force the Government to impose the full weight of a “legally-binding” USO upon Openreach rather than …”

    I’m confused about this remark.

    I thought the whole point of the existing USO consultations was about how to come up with a USO scheme that imposed USO on “the industry”, not “on Openreach”. And specifically, it would allow for other operators to come in and perform the work. The aspect least handled is how “the industry” would be funded to actually achieve this work.

    It is well known that the consultations have not yet resulted in anyone other than Openreach saying that they are willing to perform USO work … but that is a long step away from the government “imposing” the work on Openreach or “imposing” the funding implications on Openreach either.

    To me, it looks like the issue is about how the USO gets funded.

    • Avatar NGA for all

      Talk Talk, Sky made clear in their responses that inflating a price control for FTTC(VULA) to fund a B-USO had no legal precedent. They indicated B-USO should use and augment the existing USO legislation. It certainly looks as if can be held up for some time if this approach is pursued.

      At least the Ofcom modelling showed how easy it would be to accommodate a bigger ambition for FTTP(VULA) within the current price control proposals and permit wholesale prices to remain the same or rise a bit which is what industry wants.

    • Avatar Steve Jones

      @NGA

      If a USO were to be imposed on OR, then it would still need funding and, unless that was by an industry-wide levy of through some form of state-funding, it would have to be via increased wholesale rates for GEA products than would otherwise be the case.

      There is an alternative, and that would be to charge higher wholesale charges on those lines provisioned under the USO to reflect the higher costs, but I can’t see that being done.

    • Avatar CarlT

      I’m extra confused now. You’re the one talking about throughput and speed. Throughput obviously is dependent on way more than just the last few hundred metres and FTTC scores great for quality.

      ‘What I do know is that BT’s core has a 10Tbps capacity with 3Tbps currently lit.’

      I presume that refers to BT Wholesale but whether Wholesale or Retail is wrong.

      ‘The underlying cost (not price) is £5 per MBps/s and falling. It is also uniform across the country.’

      No it isn’t and no it isn’t. Getting backhaul to the Shetland Isles and running it is considerably more expensive than backhauling from an exchange near where you’ve a POP.

      You can’t just take the cost of IP transit and transpose that onto the cost of transport networks. They are completely different things with completely different challenges.

      If you could write in plain English rather than this soup:

      ‘It highlights that once we shift from a copper gain world where a nomenclature is invented to accommodate its shortcomings (standard, super..ultra,) you can change the language to reflect the underlying inputs, where throughput (not speed) is a variable and the costs/value derived do not arise indirectly from the limitations of the service but the end to end service provided.’

      That would reduce the confusion.

      No-one cares about the nomenclature of standard / super / ultra beyond marketing people.

      I have no idea what inputs you’re talking about, presumably you mean the services running on the networks. I have never heard of anyone referring to them as ‘inputs’. Inventing your own language, as you have in the past, helps no-one, it’s just confusing and opaque.

      Costs/value can’t reflect end to end service provided without, as I said, abandoning network neutrality and running software defined networks with specified endpoints. There are already services running on hybrid networks with minimum throughput guarantees to the edge of the provider network however whatever the access network it is not possible to assess costs/value via end to end service as there is no metric of an end to end service. The Internet is an interconnection of many networks and any measure of performance is between the user and a single point on those networks only.

      I respect your desire for innovation but recommend you spend some time working with people who actually know the reality of things rather than having vague aspirations of how they think it should be. Your comments are so divorced from reality as it stands in 2017 it’s downright bizarre reading them.

      Due to the combination of factual inaccuracies, opaque language, incorrect conceptualisation and a lack of knowledge of operational networks and ‘reality’ in the field it’s extremely difficult to take what you are writing seriously. Evangelists are rarely taken seriously by realists.

    • Avatar NGA for all

      Carl T – I have tried to address further up.

  4. Avatar Optimist

    The ISPs should take a leaf out of the EU’s book and refuse any more consultations with the government unless they are given billions of pounds. Mrs May will immediately comply.

  5. Avatar Adam Jarvis

    “Even though BT’s investment would be commercial and no other providers’ seemed to be even remotely interested in helping to deliver the USO”

    A very skewed statement. Let’s not forget, alt-net providers rolling out full FTTP irrespective of location, are helping deliver something much better than BT’s pathetic offer of a 10Mbps USO deep into the network, Gigaclear, B4RN etc. They just aren’t helping BT do so.

    It needs to be a minimum of 30Mbps, so that the technology used for lines longer than 500m/(250m as crow flies) is full FTTP so that BT can’t just ‘patch up’ to meet 10Mbps thresholds by replacing 0.5mm Copper with 0.63mm/0.9mm Copper to just meet targets on a “dry summer’s day”.

    The 10Mbps USO also totally ignores those customers with 3Mbps-10Mbps, who won’t even bother, either for technical – bamboozled, obfuscated reasons and sheer apathy due to the effort involved to achieve very little in terms of additional Speed.

    • Avatar Optimist

      Are people fretting too much about this problem? There are so many alternative delivery systems coming on stream now that it strkes me we are approaching a tipping point when the legacy copper network can be left to quietly fade away. Openreach will become a memory. Openrust?

    • Avatar AndyH

      “Let’s not forget, alt-net providers rolling out full FTTP irrespective of location, are helping deliver something much better than BT’s pathetic offer of a 10Mbps USO deep into the network, Gigaclear, B4RN etc.”

      But they aren’t rolling out a full FTTP service irrespective of location, in fact they are very location dependent.

      B4RN cannot deliver a service to urban areas for example. Their model is reliant on community cooperation in rural areas. If you asked them to deliver a service in London, they wouldn’t be able to do it.

      As for the 10Mbps USO, well that’s set by the government. They could have said 50 or 100Mbps, but ultimately it comes down to cost.

      “the legacy copper network can be left to quietly fade away”

      I firmly believe that BT wants to retire the copper network as and when it deploys full fibre networks. However, they are legally not allowed to do this and there is firm opposition from the likes of Sky who have significant legacy assets across the country.

    • Avatar Adam Jarvis

      AndyH,
      “But they aren’t rolling out a full FTTP service irrespective of location, in fact they are very location dependent”

      FFS. Everyone understands what I meant there, you are just being obtuse. Irrespective of location, in terms of the location they are building out their network (currently), then, which is very different to BT’s cherry picking G.fast/FTTC approach.

      The whole reason a 10Mbps USO was ‘conveniently’ chosen and “lobbied for” by groups favourable to BT, was so to fit BT’s own technical network requirements of a potential rollout of LR-VDSL and patching existing copper to just meet contract 10Mbps thresholds, in effect allow BT to do as little as possible to their existing copper carcass network by replacing 0.5mm aluminum/copper with 0.63mm/0.9mm copper, rurally.

      This USO effectively ignores customers with lines longer than 500m (250m as the crow flies) in terms of minimum acceptable 30Mbps+ speeds going forward. The is no long term solution being put in place here for those customers.
      10Mbps is pittance, handing out crumbs, effectively ‘make do, plebs’ approach.

      A 10Mbps USO wasn’t chosen independently of BT by Government, it was chosen on the say so of BT’s (technical) blessing.

      i.e (Gov/Ofcom) Dear BT, we are thinking of introducing a USO? What do you propose a good minimum USO? BT (and it’s lobbying friends) answer: 10Mbps would be an excellent USO to strive for (knowing full well it isn’t).

      It’s rearranging the copper deck-chairs and is out of date before it’s even being agreed.

    • Avatar Adam Jarvis

      Simply, the whole point of ‘chosen’ 10Mbps USO is not to upset the apple cart in terms of BT’s Copper Carcass Network on lines longer than 500m (250m – crow flies) for the foreseeable future – 10 years.

      It’s just another weasel Ofcom backed delaying tactic to prevent the required FTTP replacement of copper lines longer than 500m which a 30Mbps USO would force.

      BT know this, hence why the want a ‘no change’ 10Mbps USO. The legislation allows for the USO to be increased, but if the Government were to increase the USO to 30Mbps, importantly, there is no way BT could upgrade those longer copper lines in that legislative timeframe, i.e. 12-24 months.
      That’s why we need to start now, legislate that all new longer lines (start at 500m+) from now on are Fibre, ditch copper once and for all, going forward.

      A 10Mbps USO (if implemented) would be pretty much fixed in stone for longer copper lines, with no easy fix, even if the USO was increased. BT would not be able to meet the new 30Mbps (or even 50Mbps/100Mbps) USO quickly. Because to do so, requires a fundamental change of those longer lines from copper to full fibre FTTP (and no, G.fast nodes are no cost effective to do this).

      That’s why a USO of 30Mbps from the off, is so important because it changes the fundamental technology (to full fibre FTTP on lines longer than 500m) being used by BT to achieve those minimum speeds.

      Yes, it’s ambitious, but it’s not unachievable, rurally Wales is showing how quickly full fibre FTTP cab be deployed via reinforced fibre cables on telegraph poles, to the green splitters at eye level, deep into the local loop.

      Actually, while slow to get going, recently has seen a real surge in the full Fibre FTTP deployment in places like Ceredigion, but even here, its taken 6-7 years under the Superfast Cymru programme.

      The important minimum 30Mbps USO means BT having to start dismantling their copper carcass network for longer lines, that has to be the goal now, starting in 2018, because it’s going to take 10 years minimum.

    • Avatar AndyH

      “The whole reason a 10Mbps USO was ‘conveniently’ chosen and “lobbied for” by groups favourable to BT, was so to fit BT’s own technical network requirements of a potential rollout of LR-VDSL and patching existing copper to just meet contract 10Mbps thresholds”

      But Openreach have scrapped LR-VDSL for the USO, so how does that fit in with your argument?

      It was OFCOM that came up with the 10Mbps, without any outside influence. I believe they came up with the number in 2015 using data from 2013 (“Past analysis by Ofcom shows that, today, a download speed of 10Mbit/s would enable consumers’ full participation in a digital society.”)

      “A 10Mbps USO wasn’t chosen independently of BT by Government, it was chosen on the say so of BT’s (technical) blessing.”

      It was chosen on the basis of being achievable within the 2020 target and within the government’s expenditure limits. Of course, BT were significant in OFCOM’s consultation as they are the nationwide telecom’s operator and no one else came forward to present their plans for a USO.

      “That’s why we need to start now, legislate that all new longer lines (start at 500m+) from now on are Fibre, ditch copper once and for all, going forward.”

      LLU operators are a thorn in the side when it comes to this. Openreach do not want to run dual fibre/copper networks once fibre is deployed to an area, but they do not have the regulatory and industry support to retire copper.

  6. Avatar TheFacts

    Why does everybody disagree with @NGA?

    • Avatar FibreFred

      I would struggle to find any posts on any subject by NGA that anyone has agreed with.

      That in itself speaks volumes.

    • Avatar NGA for all

      The voluntary offer is likely to be rejected and all you can do is sledge. Openreach could do the following, ..explain how far the Capital Deferral could go in extending fibre? (confirm the 98%) Explain what it would take to go from c150,000-200,000 FTTP passed a year to 500k FTTP passed a year or 1m FTTP passed a year?
      Openreach explain the impact of Gov recovering the Capital Deferral on the planned engineering recruitment?
      Update Gov on the productisation of FoD to support the FTTP commitments made in Wales and how this is intended to be used elsewhere.
      Explain how much FTTP is needed to support a 40/10 product where copper gain kit cannot deliver such a service. The impact of such a proposal would deliver a ‘price control’ more to industries liking including the SoS.
      In short, get BT Group take its finger off the suicide button which has been denying the nation the network upgrades needed.

    • Avatar Gadget

      NGA – There is the possibility that those points were covered in the proposal and subsequent discussions between Openreach and the Government, just that no-one told you about them.

    • Avatar CarlT

      Most of the posts here are of a more technical nature, NGA is an accountant.

    • Avatar NGA for all

      Gadget .. None of these points were raised in the Openreach FTTP consultation or associated briefing.

    • Avatar Gadget

      The consideration is if the information was made available to the Government in Openreach’s proposal and subsequent discussions – which you raised, nothing to do with if anything was in the consultation or industry briefings.

  7. It is actually incredibly depressing reading the cycle of comments, where people attempt to point out flaws but nothing ever seems to be learnt.

    The overall conclusion is that there are those that wish to see BT Group dissolved and some new unicorn created that will solve all ills.

    • Avatar NGA for all

      The fact that costs for FTTC were half that portrayed in 2009 and take up higher is deeply encouraging. FTTP costs are now appearing much lower than portrayed as well.

      There is a significant number in Openreach wishing to acknowledge the above and move forward. This is a good time, compared to 2014/15 and there are further upsides to come. But these need to be fought for, rather than settle for some mediocrity.

      Delaying an ill-thought out B-USO while the BT Capital Deferral is converted into coverage delivers a much better outcome.

      It is depressing that 1m Virginmedia premises were overbuilt with subsidy, but this can be rectified, ditto FTTC outside business parks. It is peculiar BT did not tool up for FTTP in 2012/13 given the budgets available to do so. Explaining the latter is worthy of your attention.

    • Avatar TheFacts

      @NGA – Of the 1M VM overbuild how many non VM premises were covered by those FTTC cabinets?

    • Avatar TheFacts

      @NGA – What are the contractual arrangements for FTTC cabinets part covering VM areas?

  8. Avatar Guy Cashmore

    An interesting read. I do wonder though if any of the commenters on this page are actually having to live, work and run a small business with a sub 2 Mbps connection like me. With still no prospect of a solution in sight it might just change your focus?

    • Avatar Davek

      I agree with you.
      Living with a sub 1mbs speed on a very long line. All I want is a usable broadband speed and soon.
      Not some vague promise of something in 4 years time with a get out clause of satellite.
      It’s so frustrating to see speeds increasing at expernential rates and I am still left with sub 1mbs speeds and unproportial increase in costs to me every year.

    • Avatar Ultrafast Dream

      I have to agree.

      I am classed as Rural – just over 1.5 miles from the cabinet that serves me from my local town. I live on the main road that takes you directly to the cabinet and I must admit I am fortunate that I currently receive 6 – 7 Mbps ADSL.

      Hundreds of Lorries, Cars and buses trundle up an down my road daily, I don’t live up a mountain or in a hard to reach location but clearly I am also ‘very difficult to reach’! Well, no, I’m not really hard to reach at all, BT just see my need for Superfast Broadband as not ‘business viable’ for them so they turn their backs on me at every request.

      I have been fighting with BT since the days of Liv Garfield at OR over Fibre Broadband and had direct communications with her and over the course of my journey I have taken my plight to the top of OR (again), the top of BT Retail (twice), local council, local MLA (I am in NI) and even to the top of our government (when we had one) and received the final response from our then Minister for Economy and what was the outcome… sweet FA. I have a personal need to keep pushing and still do, which I won’t discuss on here.

      I can tap into 60Mbps Broadband (which is a god send at times) as and when I need to by tethering my tiny little mobile phone, but it isn’t realistic and the data cap is woeful so I am largely dependant on the fixed line ADSL product, a very large Mobile phone bill or the loss of my Mobile Contract for abuse of the tethering facility.

      The USO is the last hope for us all, Ofcom need to pull their finger out and rubber stamp it though. If we have a right to demand it by 2020 yet they don’t finalise things until mid 2019 there will be a mad rush to request it which will likely equate to further significant delays in delivery!

      Can we put our orders in now….

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