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Vodafone UK and Cityfibre Target Gigabit Broadband for 5 Million Premises

Thursday, November 9th, 2017 (7:19 am) - Score 3,885
fibre optic broadband and ethernet network cable

In a major development Cityfibre and ISP Vodafone have this morning announced a new “long-term strategic partnership” that will bring Gigabit-capable “full fibre” (FTTH) broadband to “up to” 5 million homes and businesses across the United Kingdom by 2025, with the rollout starting by mid-2018.

The development follows Cityfibre’s announcement in July 2017 (here), which saw the company raise a further £201.8 million in private investment to help support the construction of a new 1Gbps Fibre-to-the-Home (FTTH/P) broadband network for 5 to 10 UK towns and cities. At the time no related cities or ISP partnerships were named.

At the same time Vodafone has been repeatedly hinting that they too have been exploring the potential for a joint investment on a “large-scale” FTTH/P build in the UK, although until today nearly all of the talk that surrounded this has centred on the possibility of a partnership with Openreach (here). Instead Vodafone appears to have gone in the other direction and teamed-up with Cityfibre.

The New Plan

The language used seems to differ between the press releases, although Cityfibre’s remarks offer a bit more clarity. At present Cityfibre already has a Gigabit capable FTTP network in parts of 42 cities and large towns across the UK (many were purchased from KCOM), which is expected to reach 50 by 2020, although these are mostly focused upon catering for specific businesses and public sector sites (except in York and Bournemouth).

Under the new agreement Cityfibre’s Phase One deployment – due to start during H1 2018 – will seek to reach a “minimum” of 1 million UK homes in 12 of their existing cities and towns, which according to Vodafone is expected to be “largely complete” in 2021. After that there’s the “potential to extend” this to up to 5 million homes (approximately 50 towns and cities and representing 20% of the current UK broadband market) by 2025.

Vodafone actually states a slightly more pessimistic top figure for the later phase by saying that “both parties have the right to extend the commercial terms of this agreement to expand coverage to a further four million homes and businesses by 2025.” We take this to mean that the final figure could be anything between 4-5 million premises.

Greg Mesch, CEO of CityFibre, said:

“This agreement will unlock the UK’s full fibre future and is a major step forward in delivering our vision for a Gigabit Britain. With this commitment from Vodafone, we have a partner with whom we can transform the digital capabilities of millions of homes and businesses and establish an unassailable wholesale infrastructure position across 20% of the UK broadband market.”

Nick Jeffery, Vodafone UK CEO, said:

“Vodafone is already playing the leading role in building the Gigabit Society across Europe by providing customers with high-speed, high-quality broadband. The UK has fallen far behind the rest of the world, trapped by the limited choice available on legacy networks. We look forward to working with CityFibre to build the Gigabit fibre network that the UK needs and deserves.”

Cityfibre expects the indicative cost to construct the FTTH/P network at maturity should be in the range of £350 to £480 per home passed (excluding the final customer connection charge), which would be roughly in keeping with their earlier Joint Venture FTTH deployment in York with TalkTalk and Sky Broadband.

The agreement is expected to “de-risks” Cityfibre’s rollout of FTTH/P with “minimum volume commitments for FTTH services from Vodafone in return for marketing exclusivity, city by city, for consumer grade FTTH services largely during the construction period.

Over 20 years the first phase of the agreement for 1 million homes is estimated by the operator to be worth over £500 million, which is based on the current build profile and includes revenues from connections and ancillary charges. This also assumes that a 20% minimum volume guarantee penetration rate is maintained throughout the subsequent 10 years.

CityFibre targets a revenue yield on the net capital expenditure for the FTTH/P network of 18%-22% at maturity (net of up-front fees paid by customers for fibre connections), being 5 to 7 years following construction. The first actual customer connections are expected to go live by the end of 2018.

Market Impacts

Vodafone said that today’s agreement is similar to the approach they’ve taken in other countries (e.g. Spain) and will provide them with “access to a superior product at a lower cost and with better service conditions than the regulated wholesale terms offered by the incumbent operator [Openreach] for access to its legacy copper telephone line broadband network.”

vodafone_ftth_cityfibre_deal_ceos
Left – Nick Jeffery, CEO Vodafone UK
Right – Greg Mesch, CEO CityFibre

The deal suggests that any prospect of a co-investment agreement with Openreach might well have gone out of the window and instead it will surely create some extra competition for both Openreach (BT) and Virgin Media, albeit only in urban areas (both now face more pressure to do more FTTP/H and less hybrid fibre FTTC etc.). Other urban ISPs, such as Hyperoptic and Community Fibre, may also need to stay on their toes.

On the other hand Vodafone’s requirement for market exclusivity will impact ISP choice and could create additional consumer confusion, although it’s an understandable desire given the high costs and commitment required in order to deliver such a network into an already aggressively competitive market. NOTE: Cityfibre’s existing ISP partners are more business orientated, while the exclusivity seems more residential focused.

The operators said that their deployment “would deliver 50% of the UK Government’s target for full fibre rollout to 10 million premises” (except the Gov’s target is set for the end of 2022). The rollout will also try to use the Gov’s new £400m Digital Infrastructure Investment Fund for altnets, which is match funded via private investment to deliver a pot of around £1bn to help support altnet ISPs. However the operators said they are “not dependent” on this as a source of funding.

After today it’s still possible that Vodafone could sign a co-investment deal with Openreach, but in our view this would be incredibly difficult because of the different models involved. The two different networks would also, from a consumer perspective, need to then adopt almost identical pricing in order to avoid confusion and that would require some big changes that Openreach may not be able to make.

In terms of pricing, we’d expect something similar to the affordability seen via Cityfibre’s deployment in York with Sky Broadband and TalkTalk. The latter offers a 1000Mbps service for just £21.70 per month, although that’s perhaps a bit too cheap and on Sky the same top tier is £48.99. So something between £30-£50 for the fastest tier would seem viable, although no doubt slower and cheaper options will exist.

UPDATE 9:45am

Openreach has given their response.

An Openreach Spokesperson said:

“We welcome this news and the competition. As we’ve said consistently – investing in more Fibre-to-the-Premises technology across the UK will need commitment from the whole industry.

For our part, we’ve invested more than £11bn over the last decade to upgrade Britain’s digital infrastructure – helping it to become the leading digital economy in the G20.

We hope this plan to reach one million front doors by 2021 can complement our own programme of upgrading two million premises, which is already well under way. We have also been consulting our customers on an ambition to reach 10 million homes and businesses with FTTP by the mid-2020s, and we’ll give an update on that process before the end of this year.”

UPDATE 11:46am

The Government has also sent in their response.

Matt Hancock, UK Minister For Digital, said:

“Full fibre is the future of cutting edge connectivity. We are investing more than £1bn to boost the roll-out of gigabit-speeds through full fibre and 5G to as many homes and businesses as possible.

We warmly welcome this new partnership between CityFibre and Vodafone as an important step to drive investment and help build a full fibre Britain. Reaching an additional five million premises by the middle of the next decade would be a significant contribution to connecting modern Britain and meeting our manifesto commitments.”

UPDATE 3:37pm

A couple more comments, this time from some of Cityfibre’s existing partner ISPs.

Mark Cowgil, Co-founder & Director of Exa Networks, said:

“As launch partners of CityFibre in multiple regions nationwide to deliver dark fibre to businesses, we are delighted to see that they are progressing the roll out of FTTP to the residential market with the announced Vodafone partnership.

In business we have seen the benefits of multi-gigabit technology and the revolutionary workflows it enables, yet, residential Internet provision has been lagging behind for some time. With average downloads for UK homes being just 36.2Mbps and uploads being a woeful 4.3Mbps it can often be a barrier to flexible working or an annoyance to an average family who are now more online, with television and music streaming services, gaming and generally spending more time ‘in the cloud’ often maxing out a households bandwidth.

The residential roll out will also generate a larger duct network, passing more businesses and schools who then can take advantage of Exa’s DarkLight service.”

Jonathan Burrows, CEO of Ask4, added:

ASK4 uses CityFibre as a wholesale connectivity provider, as do many ISPs, telcos., local authorities and others. We do not use CityFibre to connect individual houses. We welcome today’s significant partnership announcement between CityFibre and Vodafone, as any commitment to invest in FTTH infrastructure increases customer choice and improves service speed and quality.

Furthermore, the significant network build (c. 1m premises in first phase) will expand CityFibre’s network which may also benefit its wholesale partners through increased capacity and reach to non-residential buildings.”

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Mark Jackson

By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.

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84 Responses
  1. Boddy

    Wow. But which will be the first cities to benefit? I can see a few likely candidates on Cityfibre’s current estate but they’ve not confirmed any.

    • This is just my own snap guesstimate based purely on the maturity of Cityfibre’s different networks, scale and how much control they have over those that are live today (not a complete list).

      Coventry
      Milton Keynes
      Peterborough
      Leeds
      Bristol
      Portsmouth
      Plymouth
      Reading
      Slough
      Southend-on-Sea
      Northampton
      Bradford
      Huddersfield
      Hull
      Edinburgh

  2. Asrab

    Good On Vodafone – I really dint think any deal would work out with Openreach, the have to many other customers to satisfy (TalkTalk, Sky)

    Openreach better get their act together and upgrading their FTTC to FTTP,they know the costs are now more minimal given the advances in reducing the deployment costs, they are just dragging their feets hoping the ISP/CP will chip in,

    Get a move on BT/Openreach

    • AndyH

      I wouldn’t exactly call the costs more minimal. Openreach estimate that to deploy FTTP to 10 million properties would cost £3-6bn.

    • brian

      Why? people just aren’t buying fast speeds. Even when they have fttp, vast majority are buying the lowest speed tier. If city fibre start overbuilding fttc that’s a short cut to bankruptcy.

      The uncomfortable fact that, outside of echo chambers like this forum, people just don’t care about speeds over a few 10s of mpbs.

  3. Kevin

    Openreach already have the “conduits “ to provide fibre to premises either by underground channels like outside my house or telegraph poles so what’s the problem with them rolling out a cost effective FTTH?

    • AndyH

      Openreach doesn’t have ducting or overground poles everywhere. Many areas have just buried cables.

      The largest cost in FTTP deployment is the labour element. Remember that every single splitter (32 homes) needs a fibre direct from the exchange.

    • Mark

      Just the minor issue of them being inept?

    • Asrab

      My point exactly – BT/Openreach already have Poles and Duct infrastructure in most places, these can be deployed immediately specifically FTTC areas,

    • AndyH

      Of course, it’s really simple. Click your fingers and you have fibre networks built at an instant for no cost.

    • Asrab

      @AndyH

      My Point is Openreach should be ahead of the curve in deployment not Vodafone, but if they wish to loose permanent market share in the world of broadband delivery sure they should take a step back and let all the other players take over, combined the alt nets could soon become a formidable force if they all partnered with vodafone,

    • AndyH

      BT will deliver 2 million premises with FTTP by 2020 and is consulting on 10 million by 2025. That is the main curve at the moment as far as FTTP deployment in the UK is concerned.

    • CarlT

      As of 2019, assuming completion on schedule, VM will have the largest FTTP network in terms of premises passed.

      As of 2020 OR will be of similar scale and alongside VM will have about a third of the premises passed. This assumes VM stop building in 2019 which is unlikely. Lightning was always intended as a first phase.

      Be interesting to see how Openreach proceed and, if they do carry on, how they decide where to go in this timescale.

      I certainly don’t see a business case for deeper G.fast nodes as standard: FTTP unless no infrastructure to re-use for it.

    • MikeW

      I hadn’t thought about VM’s targets in that way … that they’d overtake Openreach for a while, but you’re right, if VM hit those targets.

      But that “if” is highly suspect. VM is over halfway toward that end-2019 deadline, but hasn’t yet reached 1m premises (including both FTTP and Coax portions).

      Last quarter’s progress of 150k premises was the best yet (bar the fallacious report at the end of 2016), but they need to be at 350k premises for the next two years to hit target. At current speed, they’ll get there by the end of 2022 instead.

    • Ultraspeedy

      Of course that assumes BT actually reach their 2 Million by 2020 doesn’t it?

    • brian

      Already have poles and duct…? And of course all these are available and not already full of coper cables and in pristine condition.

      The pravailing attitude seems to be OR can easily deploy fibre at the touch of a button, make oodles of cash at next to no cost. And yet because of some nebulous idea that OR are inept they have not realised this.

  4. more-competition-oh-no-wait-thats-not-what-were-getting-here

    “in return for marketing exclusivity, city by city, for consumer grade FTTH services largely during the construction period.”

    I wonder how CityFibre’s existing local ‘partners’ feel about this exclusiviity, which I guess would only be for the new build parts of the network rather than the existing assets…

    But they wouldnt be the first one at the dance to ditch their date when a more attractive partner came along!

    • I’m currently asking some of them this very question, but I suspect the replies will be entirely diplomatic. However the press release only references this for “consumer grade FTTH” and not business connectivity, while most of their existing partners are business or public sector orientated.

    • more-competition-oh-no-wait-thats-not-what-were-getting-here

      elsewhere this is phrased as:

      “In this role, Vodafone will have exclusive rights to market and sell ultrafast, full-fibre consumer broadband services to homes and businesses as the CityFibre network is deployed”

    • Both PRs from each operator only talk about consumer or consumer grade HTTP/H, so I’m not sure where the bit about business has come in.

      For the avoidance of doubt, here’s what Vodafone says:

      Under the wholesale agreement, Vodafone will have a period of exclusive rights (predominantly during the build phase of each city network) to market ultrafast consumer broadband services on the FTTP network to be built, operated and owned by CityFibre.

      ..and Cityfibre:

      In turn Vodafone has been granted a period of marketing exclusivity, city by city, for consumer grade fibre-to-the-home (‘FTTH’) services largely during the construction period.

      So either the operators haven’t given us the full picture or, more likely, a journo somewhere has extrapolated a step too far.

    • The key to the exclusivity will be that I do not expect this to be new cities but as Mark has also said the Gigabit cities that exist today, so the local partners are already selling and the majority of those are SME/business ones and those are where the build may still need 100 to 200m of fibre roll-out.

      Todays news is about exclusive access to build where the fibre is just 5 to 10m from the property, i.e. bigger commitments needed

  5. more-competition-oh-no-wait-thats-not-what-were-getting-here

    While the Press Release (http://www.iii.co.uk/research/LSE:VOD/news/item/2572961) says:

    “Vodafone has made a minimum volume-based commitment for 10 years which increases over the period to 20% of the initial one million premises. In turn, Vodafone has been granted a period of exclusivity, city-by-city, for consumer FTTP, predominately during the construction phase.”

    • CarlT

      Not sure what your point is here?

      Are you expecting Vodafone to be paying 9-figures to build a brand new network and make it open access immediately?

      This is competition. A new ultrafast option will be available to those covered. Just because Sky can’t use it straight away as a TV customer retention tool or TalkTalk or Plusnet sell on insanely low margins on it doesn’t mean it isn’t competition.

      Those who don’t use Vodafone may also benefit as this improves the business case for Openreach and VM to invest more.

    • GNewton

      @CarlT: How is the business case for Openreach improved as a result of the upcoming Vodafone fibre projects?

    • MikeW

      It changes numbers in the cost-vs-income spreadsheet. Customers lost to a non-BT network represent a higher level of loss than a BT-Retail customer lost to an LLU company.

      As a consequence, keeping a customer from churning is worth a lot more to BT as a whole, as is persuading a customer to move back.

      This alters the amount of income that BT (as a whole) could expect from an upgrade … which might be enough to change it from unviable to viable.

      Competition in action, courtesy of the finance department.

  6. New_Londoner

    An interesting development however it is only a commitment to cover 1 million premises with FTTP (roughly doubling what is available today), with Voda only committing to CFH to sell the service to 200,000 customers over 10 years. So not exactly upending the market!

    Of the other 4 million premises, nothing has been committed:

    “Both parties have the right to extend these terms to further roll-outs reaching up to four million additional premises by 2025.”

    In reality this means somewhere between 1 and 5 million premises will have three ultrafast options by around 2025, given all are likely to be covered by Openreach and Virgin too.

    • Ultraspeedy

      “In reality this means somewhere between 1 and 5 million premises will have three ultrafast options by around 2025, given all are likely to be covered by Openreach and Virgin too.”

      What are the solid figures for FTTP deployment from BT AFTER 2020? I thought BT had only committed 2 Million by 2020 and anything after that is still only aims, discussions or hopes.

    • CarlT

      No-one said anything about them being convered by Openreach FTTP, just by Openreach.

    • Ultraspeedy

      What other 1-5 Million premises and technology by Openreach is he refering to when he quotes “Ultrafast” then?

      Its certainly not G.Fast or FTTP as Openreach AFAIK have not made any plans for either beyond 2020.

      So how he thinks another companies rollout of potentially 5 million premises will overlap any similar “ultrafast” product from BT in 2025 i guess only he knows.

    • New_Londoner

      @Ultraspeedy
      The Openreach ultrafast commitment is for 12 million premises by 2020, 2 million FTTP and 10 million G.Fast. So broadly similar in scope to the current Virgin Media cable network. Both dwarf the above CFH/Voda commitment to cover 1 million premises.

      Is that clearer?

    • Ultraspeedy

      “ultrafast commitment” is for 12 million premises by 2020, 2 million FTTP and 10 million G.Fast.”

      Since when did G.Fast Guarantee “ultrafast” or speeds of over 100Mbps? You sure that is a 10 Million commitment also and not just another BT aim?

      “So broadly similar in scope to the current Virgin Media cable network.”

      Except VM also have not finished expanding either.

      “Both dwarf the above CFH/Voda commitment to cover 1 million premises.

      Is that clearer?”

      Of course that assumes BT actually reach their 2 Million by 2020 doesn’t it?

  7. alusufferer

    and now the constant checking to see if Aberdeen gets announced begins!

    • Leeab37

      I was thinking the same thing. The fibre line is only about 100m from my front door so fingers crossed aberdeen is on the list!

  8. TheManStan

    Finally, some form of additional proper competition beyond VM.

    It will be all geared to urban, but let’s leave those areas to competent players in the field such as Gigaclear.

    • GNewton

      Why is more urban competition good? You don’t have multiple gas pipes, water pipes, electric lines from different network providers going into each property, why should it be different for telecom lines? Also, the Vodafone/Cityfibre project is for urban areas only, it won’t help small towns or rural communities.

    • Of course gas, electric and water are fairly linear utility supply services that are controlled in a different way, which is not very comparable to the complexity and diversity of broadband and telecoms connectivity. If somebody is willing to come along and build another FTTP/H network, presumably because they’ve found an economic model to make it work, then that’s a good thing.

    • CarlT

      Much as the taxes we’ve paid currently providing 4-figure per premises subsidies for FTTP to hamlets won’t be urban dwellers, or how urban dwellers pay higher telco bills to subsidise rural areas paying the same.

      Some urban areas can support 3 infrastructures, some rural areas none without subsidy. Get over it.

    • MikeW

      I wonder whether we’ll see VM vs G.Fast vs VodaFibre all in the one location?

    • CarlT

      Without doubt. Even in those areas 20% penetration is perfectly feasible and those will be the areas where cost per premises passed will be in the target range.

      Suburbs are unlikely. These will probably be residential areas adjoining the major urban centres and close to the CityFibre rings.

  9. CarlT

    This is far more of a threat to VM than Openreach.

  10. Asrab

    The telegraph reports:

    “Vodafone UK chief executive Nick Jeffery said the partnership does not rule out joint investment with Openreach in other areas of the country. The two companies are also in talks over ultrafast broadband projects in cities, with Openreach seeking to share the multibillion-pound burden of reaching 10 million homes by 2025”

    http://www.telegraph.co.uk/business/2017/11/09/vodafone-backs-ultrafast-broadband-five-million-threat-bt/

    • Yes the news “does not rule out” a separate deal with Openreach, but as I wrote in the article above it would make it incredibly difficult because of the different models and costs involved (Cityfibre vs Openreach approach). The two are quite far apart and that would be a roadblock to a simplified service and package structure.

  11. Very detailed article, well done Mark. Two of the key people behind the deal will speak at INCA’s conference next week in Newcastle, http://www.inca.coop. We also have Mike McTighe from Openreach, plus involvement from Matt Hancock, James Heath, Director of Telecoms at DCMS, Jonathan Oxley, of Ofcom and a host of leaders from the altnet sector.

  12. Matthew Williams

    This is very good news for the U.K. I am wondering if any of Vodafone’s own Fibre Assets they got from C&W will be used in this as well. They have expanded there core network across lot of U.K. so could be useful in some towns and cities where Cityfibre doesn’t have a huge presence.

    Always knew Vodafone would likely rollout FTTH in the U.K.

  13. A_Builder

    Is that the sound of somebody starting to nibble bits of OpenReach’s lunch that I hear getting increasingly loud?

    It is all very well OR moaning that they need to spend £6bn to connect 10m homes but the reality is that if they had been spending a steady £500m/yr over the last six years (we are nearly into 2018 now), since the FTTC investment, then they would already be about half way there. But we are not and I suspect OR’s shareholders will be soon starting to ask why this was not done faster/earlier.

    As BT cannot respond with their usual spoiler tactics everywhere anyone starts to build a fibre network, there are just too many being built now in too many different place: the sound of lunch nibbling is only going to get louder and turn in full scale lunch eating.

    If OR don’t respond pretty fast they could start to be cut out of whole areas of the country.

    Anyone know why the GFast date keeps being pushed back. I’m guessing it is a hardware related issue? 96 port card shortage perhaps?

    • Carl T

      Given 96 port G.fast cards don’t exist there might well be a shortage of them 🙂

      I’m not aware of any G.fast dates being pushed back as Openreach haven’t given any G.fast dates for individual cabinets / exchanges?

    • 125us

      Remember the telco finance director’s mantra; “Build it and you’ll go bust.”

      Given the lack of people willing to pay any more for their broadband than they do today I think OR’s investors would probably have been more annoyed if they had have spent lots of money on FTTP over the last decade.

    • Ultraspeedy

      Are they happy at the FTTC expense, having it available to around 25 Million but only having around 5 Million signups? Is that actually turning a profit then?

    • FibreFred

      Are you saying they should have just stuck with an ADSL network?

    • AndyH

      @ Ultraspeedy

      Where did you get the 5 million from? According to BT’s latest results, 8.6 million premises are connected to FTTx with Openreach.

    • Ultraspeedy

      BTs customers are at the 5 million mark for FTTC…
      https://www.ispreview.co.uk/index.php/2017/11/bt-creeps-9-3-million-uk-retail-broadband-subs-ultrafast-fibre-grows.html

      Which is the main figure to look at if we are talking BT Group PLC and shareholders.

      Neither Openreach nor BT make much from other providers of FTTC do they? Or at least that is what you and other BT posters seem to say when any story about Ofcom and pricing levels being too low comes up.

      Then again even if you want to still argue 8 Million is the right figure, are the shareholders happy to have spent out on a product to 20 Million and not even have a 50% take up?

      Is FTTC even generating profit yet? Would like to know how and if it is why the BT share price keeps plummeting with such a profitable success on its hands.

    • FibreFred

      How does BT’s FTTC take up/coverage compare to other telcos?

      e.g. TalkTalks LLU product, what is their take up compared to coverage?
      e.g. Skys LLU product, what is their take up compared to coverage?
      e.g. Virgins Cable product, what is their take up compared to coverage?

    • Alan

      Two of those have not spent millions if not billions on rolling out a nationwide FTTC product and the third has always been willing to spend money, since the Liberty Global take over have had more of it to spend, not to mention the obvious that their network is not FTTC so can not even be compared.

      If BT FTTC has been such a success and was the right choice over FTTP for shareholders then im also now curious why the BT share price is deep in the toilet???????

    • FibreFred

      They are all network deployments, do you have the figures?

    • AndyH

      @ Ultraspeedy – I don’t understand your logic here.

      Openreach’s revenue from FTTx will cross the billion £ threshold in the current financial year. The revenue from fibre services has now passed that of ethernet services and it’s likely to surpass LLU revenue this financial year. If this happens, it will be Openreach’s second highest source of revenue (with WLR remaining the highest source).

      BT do not publish the profit breakdown on the respective products within their business lines. This is management data and there is no reason to publish it.

      I think it’s very naive to ignore a billion pound revenue for being the “wrong figure” and making comments like “Neither Openreach nor BT make much from other providers of FTTC do they?”. Why would Openreach be investing hundreds of millions deploying G.fast and FTTP at the moment if they don’t make much?

      The UK has some of the highest take up of FTTx services in the world. The fact that the BT has had to defer so much capital under the BDUK contracts is a fairly big clue that they are making a decent return on their FTTx investments.

      As for the comment about BT posters complaining about OFCOM’s pricing levels, well this is common sense. If OFCOM desires a full FTTP network, then it has to create the right regulatory environment to allow the investment. Pushing for low wholesale pricing for fibre products and then wanting billions of investment do not go hand in hand. There is a very good reason why so many global telecommunications operators have avoided investing in the UK.

    • Ultraspeedy

      Perhaps you could answer the politely asked questions i made. None of which were about revenue. If they are making such a decent return, why so slow about FTTP deploying and why moan when Ofcom want lower pricing?

      In addition to BT Group PLC shares plummeting could you also explain why the debt figure keeps on going up when FTTC is supposed to be so successful.

      Your synapses makes no sense. Successful products increase a company share price not reduce it, profits improve a company share price not decrease it. Explain why the share price is so low and the debt still grows if BT and FTTC are such a success.

    • Ultraspeedy

      “How does BT’s FTTC take up/coverage compare to other telcos?…
      e.g. Virgins Cable product, what is their take up compared to coverage?…
      They are all network deployments, do you have the figures?…”

      Do you want FTTC take up figures or network takeup figures for individual ISPs and NOT THEIR GROUPS?

      In Virgins case if you want FTTC coverage figures that would be 0% as everyone here knows they do not do FTTC

      If you want Network take up figures of their DOCSIS Vs BT FTTC internet product then…

      Virgin Media cover around 33-50% of the country or between 10-15 million premises (based on there being 20-30 million premises in the UK total).

      They have 5 Million customers out of that 10-15 million coverage figure. Which gives you the 33-50% rough figure.

      BT Retail and FTTC as pointed out already in an earlier link have about 5 Million subs out of an availability to over 25 Million. Or around 25%.

      If you want to compare beyond RETAIL divisions and the organisations which are head of the relevant group PLCs then we will have to look at BT Group PLC/Openreach Vs Liberty Global AS A WHOLE and you wont like those figures either.

      As for the LLU providers there is no such thing as True LLU FTTC yet is there?. The closest (even though they are not an LLU) i know of a company which has its own cabinets and does FTTC is Warwicknet.

      If you want to compare LLU Vs Broadband in general the prior link also shows there are just over 20 Million broadband lines in the UK of which just over 10 Million are MPF or SMPF… Or in other words thats about a 50-50 split.

      To requote the link with these figures…
      https://www.ispreview.co.uk/index.php/2017/11/bt-creeps-9-3-million-uk-retail-broadband-subs-ultrafast-fibre-grows.html

      I trust that covers the shifting goal posts queries.

    • FibreFred

      I’m not shifting goalposts.

      You said the take up wasn’t good, I’m asking what good looks like. How does the take up compare to other telco’s network, regardless of technology.

      Pretty easy to understand, or.. so I thought

    • AndyH

      @ Ultraspeedy

      “Perhaps you could answer the politely asked questions i made. None of which were about revenue. ”

      Profit = Revenue less Costs. So I am confused why you

      “If they are making such a decent return, why so slow about FTTP deploying and why moan when Ofcom want lower pricing?”

      I never said they were making a decent return. Investments decisions are based on various criteria, one of which they have to meet the company’s set IRR. If

      “In addition to BT Group PLC shares plummeting could you also explain why the debt figure keeps on going up when FTTC is supposed to be so successful.”

      Increased regulation of Openreach (which represents some 30% of BT’s EBITDA), compensation payment to Orange/DT, lower forecast revenues from global wholesale divisions are some reasons for the drop. However, over the last 5-6 months the pattern has been seen by the telecom’s sector as a whole across Europe – https://www.stoxx.com/index-details?symbol=SXKE

      As for net debt; it doesn’t keep going up, it’s fallen each year over the last 2 years.

      “Your synapses makes no sense. Successful products increase a company share price not reduce it, profits improve a company share price not decrease it. Explain why the share price is so low and the debt still grows if BT and FTTC are such a success.”

      Why don’t my synapses make sense? They are basic anatomy.

      I suggest you look through the reports. Net debt isn’t increasing. FTTC is a success, it’s surprised everyone in the telecom’s industry how high the take up percentage has been. However, it’s a regulated product that OFCOM wants to drive to rock bottom wholesale costs, which does not align well with investment for deeper fibre penetration.

    • Ultraspeedy

      “How does the take up compare to other telco’s network, regardless of technology.

      Pretty easy to understand, or.. so I thought”

      Answered very clearly above, Virgin Media 33-50% Takeup, BT Retail 25% takeup. One is better than the other, even easier to understand.

    • Ultraspeedy

      “I never said they were making a decent return.”

      I suggest you re-read your statements before i address any of your other latest contradictions……..
      https://www.ispreview.co.uk/index.php/2017/11/vodafone-cityfibre-target-gigabit-broadband-5-million-uk-premises.html#comment-183723
      2nd to last paragraph you state…
      “The fact that the BT has had to defer so much capital under the BDUK contracts is a fairly big clue that they are making a decent return on their FTTx investments.”

      As for other figures including debt clearly that has gone up…
      https://www.ispreview.co.uk/index.php/2017/11/bt-creeps-9-3-million-uk-retail-broadband-subs-ultrafast-fibre-grows.html

    • Ultraspeedy

      Thats the…
      “* BT Group total net debt = £9,520m (up from £8,810m)”
      in case you have trouble remembering not only your own but other stated material.

    • AndyH

      Net debt as of 30 Sep 2017 stood at £9,520m and net debt on 30 Sep 2016 was £9,567m. That is a decrease in net debt.

      You cannot compare quarter by quarter arbitrarily because of the nature of cash flows. Net debt in the current quarter will fall because the in the previous quarter, BT paid its dividend and completed a share buy back.

    • AndyH

      “Answered very clearly above, Virgin Media 33-50% Takeup, BT Retail 25% takeup. One is better than the other, even easier to understand.”

      Virgin Media do not have to wholesale their product. It’s is pointless and useless to compare Virgin Media’s uptake to that of BT Retail.

      Virgin Media have 14,679,000 premises passed and they have 5,451,500 internet customers (36.8%). Openreach have 27.1m premises passed and c. 8.6m premises connected to their FTTx products (32%). I don’t know where you get the 50% figure for Virgin Media.

    • Alan

      “Net debt as of 30 Sep 2017 stood at £9,520m and net debt on 30 Sep 2016 was £9,567m. That is a decrease in net debt.”

      LMFAO are you serious? At that rate of decrease each year they should be done and debt free in about 8 million years. Only they wont cos they are likely to borrow more if they want to continue with their latest FTTP aspirations.

      In 2016 the debt reached highs of £9,838. Since 2011 (a nice 5 year gap if you insist on looking at things long term) the debt has ping ponged up and down, with no real significant decrease at all.

      “You cannot compare quarter by quarter arbitrarily because of the nature of cash flows.”

      Using that logic we can not compare their customer figures quarterly either due to customer churn/flow.

    • AndyH

      @ GNewton/Carpet Burn/Deduction/Alan/Bryan/Ultraspeedy/JNeuhoff

      It really is childish and pathetic how you have to create so many different identities on here just to support your own comments.

    • MikeW

      Its always funny to watch threads like this, when the comedy double-act comes out to play, full of straw men and redirection, and self-support.

    • Ultraspeedy

      “Virgin Media do not have to wholesale their product. It’s is pointless and useless to compare Virgin Media’s uptake to that of BT Retail.”

      It was not me that wanted to compare them.

      Having said that…

      “Virgin Media have 14,679,000 premises passed and they have 5,451,500 internet customers (36.8%). Openreach have 27.1m premises passed and c. 8.6m premises connected to their FTTx products (32%)”

      Im glad you agree with my analysis that BT has a smaller takeup percentage.

    • Ultraspeedy

      “It really is childish and pathetic how you have to create so many different identities on here just to support your own comments.”

      It is more childish to make accusations which are untrue. My personal comments here were supported by pointing to news items from this very site. Pity about the takeup figures eh?

    • TheFacts

      Why is it a pity about the take up figures? Please explain.

    • GNewton

      @TheFacts: Why do think that the takeup figures are not pitiful? And why don’t you look them up for yourself? And what difference would it make to you once you know them?

    • TheFacts

      @GN – surprisingly not everyone is obsessed with superfast broadband. If, as some say, the take up is pitiful then it implies there would be a lack of demand for FTTP everywhere.

      However it is not that simple. Is the question ‘why are not all people buying superfast’? Many people are happy with their ADSL speed.

    • Alan

      Up and down the BT debt goes.. Where it stops not even the biggest fan knows…

      https://i.imgur.com/Rfq285w.png

    • FibreFred

      “Im glad you agree with my analysis that BT has a smaller takeup percentage.”

      So 32% vs 36%, sounds ok to me bearing in mind that FTTC is relatively new (and still growing) compared to the well established cable network.

    • GNewton

      @TheFacts: I agree, not everyone will go for a high-end FTTC service. Your points actually lead me to think that the new G.Fast service might be difficult to market because its planned rollout will be mostly in urban areas near cabinets which are already well served by cheaper FTTC or VM or (soon to come in some areas) Vodafone Fibre.

      Multiple infrastructure providers make it more difficult for each one of them to have a commercial case. Vodafone’s efforts are to be applauded if they manage to break into this difficult market, its success isn’t yet certain.

    • Ultraspeedy

      “Why is it a pity about the take up figures? Please explain.”

      “surprisingly not everyone is obsessed with superfast broadband”

      If you have no real interest in Superfast broadband then you need not worry about the takeup of it.

    • Ultraspeedy

      “So 32% vs 36%, sounds ok to me bearing in mind that FTTC is relatively new (and still growing) compared to the well established cable network.”

      Im glad after all that you are happy with a lower take up.

    • TheFacts

      @US/CB – why should this takeup number concern you? What would you consider to be a good number and why is it not higher?

    • Ultraspeedy

      “why should this takeup number concern you?”

      It doesn’t i asked right at the beginning of this conversation if it made the share holders happy. I do not have BT shares so its no concern to me.

      “What would you consider to be a good number and why is it not higher?”

      I do not think i said anywhere if the take up number was good or bad did i? I simply pointed out it is lower than others, which obviously upset some people. As to why it is not higher i do not work for BT so could not tell why it is lower than others either.

  14. FibreFred

    It all sounds very promising but then so did TalkTalks association with Cityfibre and there ambition of 10 million homes.

    That ambition started and ended in York.

    Voda are a more serious player than TT though so let’s hope they actually do what they say they will.

  15. A_Builder

    Well a number of leading investors have openly said that OR should be investing more on a rolling basis. So I don’t buy that line at all. Also even copper has a finite physical life due to corrosion and slow breakdown of insulation and at some point it is going to need to be replaced. It simply isn’t true to say that small industrial estates won’t take FTTP type products as many others have proved time and time again. We are 200m from a major BT/Or exchange and a competitor if diverting is to provision us. We also have incredibly good duct access where we are.

    • MikeW

      In 2013, it looks like Openreach capex was averaging £270m per quarter, at a time that BT said the capex on NGA was running at 300-400m per annum. That’s £100-200m short of your desired figure.

      However, for the last 2 years, Openreach capex has been averaging £100m per quarter higher than this, and we can almost certainly allocate the bulk of the extra to NGA (the non-NGA capex is mostly regulated, and is meant to be decreasing year-on-year). A large chunk, perhaps half, is enforced capex due to the high takeup of BDUK NGA services.

      I’d probably say that Openreach have actually been at your target figure for the last 2 years out of choice, with higher expenditure forced through the BDUK gainshare.

      With expenditure now going on G.Fast and FTTP, while still continuing the BDUK rollout (and whatever share they get in the re-spending of gainshare), I’d say it will continue for the next couple of years too.

  16. MikeW

    I had Vodafone pegged as the company most likely to get involved withe rolling out residential fibre, so it is good to see them take the plunge here.

    I had CityFibre pegged as one with potential, particularly in using PIA. Their PR had hyped “gigabit cities” without offering much more than EAD competition, so I wasn’t that sure they’d step forward, so again, good to see.

    Anyone else waiting in the wings?

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