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BT End 2018 on UK FTTP and Gfast Broadband Cover of 2.6m Premises

Thursday, January 31st, 2019 (8:09 am) - Score 6,846
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BT Group has released their results to the end of December 2018 (Q3 – 18/19 financial), which reports that Openreach’s FTTP and G.fast based “ultrafast broadband” (100Mbps+) UK ISP network has grown its coverage from 1.97m premises passed to 2.6m in the last quarter. Take-up of FTTP is 29.9% and G.fast just 0.88%.

As usual we’ve seen a number of developments from the BT Group over the past quarter, although the main ones have reflected Openreach’s most recent roll-out announcements for their hybrid-fibre G.fast technology (here) and “full fibre” FTTP lines (here); the latter also included news of a plan to hire 3,000 extra engineers during 2019.

On top of that Openreach recently reached a deal with their ISP customers regarding Ofcom’s forthcoming scheme of automatic compensation for broadband faults and delays (here) and they’ve just started a trial of the future self-install service for G.fast lines (here).

The operator has also had to defend against rival operators, which appear to be concerned that Openreach may hamper “full fibre” (FTTP) competition in the commercial market (here). But separating such concerns from the dynamics of natural commercial competition in urban areas will be a tricky argument to win.

Elsewhere BT’s sibling mobile operator EE has announced the first 16 UK cities for their commercial 5G roll-out (here) and confirmed the removal of Huawei’s kit from their core network (here). Sadly during the quarter EE was also fined £6.5m by Ofcom for overcharging customers (those on discounted deals) who wished to leave their contracts early (here).

Financial Highlights – BT’s Quarterly Change
* BT Group revenue = £5,982m (up from £5,908m)
* BT Group profit after tax = £594m (up from £503m)
* BT Group total net debt = -£11,114m (down from -£11,895m)

The previous quarterly results from BT were particularly interesting because they revised the operator’s assumptions about clawback / gainshare via the government’s Broadband Delivery UK roll-out programme. More take-up in BDUK’s areas means more public money that can be returned and reinvested by councils further down the road, which will be used to help “superfast broadband” cover to reach 98% of the UK by 2020 (example).

The prior update included a new “life-time view” of BT’s BDUK linked contracts, which predicted that take-up of their “fibre broadband” (FTTC/P) network within those could eventually reach 61% and this might result in up to around £712m being returned to help reinvest in further network coverage. Today’s report doesn’t appear to change that.

BT Group’s Capital expenditure

Capital expenditure for the nine months to 31 December 2018 was £2,810m (2017/18: £2,571m) including network investment of £1,514m, up 17% due to increased investment in FTTP and the increase in our base-case assumption for customer take-up under the Broadband Deliver UK (BDUK) programme announced last quarter, partly offset by lower mobile investment as the Emergency Services Network (ESN) passed the peak deployment phase.

Other capital expenditure components were up 2% with £683m spent on customer driven investments, £494m on systems and IT, and £119m spent on non-network infrastructure. Excluding the effect of the increase in our BDUK base-case assumption, capital expenditure was £2,641m.

Separately it’s worth remembering that BT stopped providing customer figures for their own consumer broadband service earlier this year (i.e. covering up for some declines), although it’s noted that 70.5% of BT’s own retail broadband ISP base now takes a “superfast broadband” connection (up from 68.4% last quarter and mostly via FTTC / VDSL2), while just 0.6% are on their “ultrafast” (FTTP/G.fast) services (up from 0.4%).

Openreach’s Network Coverage

The following table offers a very useful breakdown of fixed line network coverage and take-up by technology. Being Openreach the totals given below apply to all ISPs on their national UK network combined (e.g. BT, Sky Broadband, TalkTalk, Vodafone etc.).

openreach q3 2018 network coverage and takeup

As remarked earlier, FTTP is delivering extremely good take-up, although this has to be weighed against the fact that it’s slower to deploy and is a much more established technology (i.e. both physically and in the eyes of consumer familiarity). In fact we may even see take-up fall away as Openreach’s roll-out will ramps up significantly over the next year.

By comparison G.fast is clearly struggling and a take-up of 0.88% is abysmal for a service that will soon cover 2 million premises. On the other hand it’s significantly faster to deploy (the true commercial roll-out only began last year) and at present is not being widely promoted like slower packages (i.e. few people are familiar with it). Some significant ISPs, such as Sky Broadband, have yet to even offer the service.

On this point we note that G.fast take-up more than doubled over the last quarter, so while it might be low it is growing at a considerably faster pace than FTTP. On this point it probably doesn’t help that most of the major price comparison websites aren’t promoting any Openreach based FTTP or G.fast packages, although that’s largely the fault of ISPs.

As usual our own ISP Listings page has been displaying both ultrafast broadband products for a long time because we don’t force ISPs to pay a commission in order to be shown.

Gavin Patterson, CEO of BT Group, said:

“We have continued to deliver consistently against our strategic objectives in a tough market, resulting in another sound quarter of operational and financial performance.

In Consumer we launched the next version of our converged consumer offering, BT Plus with Complete Wi-Fi. Following successful trials in London we announced our plan to launch 5G in 16 UK cities in 2019. Openreach accelerated its FTTP commissioning and has now passed 890,000 premises. We are ready to expand our FTTP programme up to and beyond 10 million premises if the conditions are right.

Our overall outlook for the full year remains unchanged, with EBITDA around the top end of our guidance for FY 2018/19. We continue to expect regulation, market dynamics, cost inflation and legacy product declines to impact in the short term before being more than offset by improved trading and cost transformation by our 2020/21 financial year.

I am handing over the business with good momentum behind its ongoing transformation programme and wish my colleagues all the best for the future.”

Crucially this will be the last set of quarterly results for Gavin as Philip Jansen will be taking over as the new Chief Executive from 1st February 2019, which is always exciting because a new boss tends to mean a new direction and big changes.

As we’ve said before, our expectation is that the new CEO will be followed by the long-awaiting announcement of Openreach’s final strategy or agreement for delivering 10 million FTTP premises by around 2025 (expected to cost c.£3bn to £5bn). On the flip side such a plan is almost certain to worry the operator’s rivals, which will find themselves in an even more aggressively competitive commercial environment.

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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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29 Responses
  1. Avatar Phil

    G.Fast seem very slow to roll out but maybe Openreach choose FTTP is a better way forward. Hope G.Fast will be abolished one day because it will not benefits for everyone because it will be too far from the street cabinet distance.

    • Thanks for your input / trolling as always Max. If you bothered to read that properly you’d know that the G.fast roll-out was actually going very fast and take-up is also rising at a more rapid pace than FTTP, although at present it’s weak vs the total. I don’t disagree that FTTP is a better way forward though.

    • Avatar Optimist

      Quite right Mark.

      ISPs are in business to provide services to their customers, who demand reliable, fast broadband at a reasonble price. If they are dissatisfied with the service provided by the ir ISP, they will go to another.

      Whether the technology used to deliver the service is Gfast, FTTP, Cable, VDSL, elves or well-behaved mice is immaterial to the customer experience.

    • Avatar Joe

      Not strictly true except where the service speed is the same for all techs. The idea adsl is ‘immaterial to the customer experience’ is bonkers.

    • Avatar Joe

      Mark, Not sure if you read TB already but I think the explanation of the take up of G.Fast -v- fttp there is very sound (bold and below section).

  2. Avatar Phil

    G.Fast is unfit for purpose!

    • Avatar graycoll

      Actually, our company is very happy with our G.Fast connection, so a random comment like yours is far from the truth.

    • Avatar Jrhop

      Why is it unfit for purpose? Sure its not the long term solution which FTTP is, but in areas where it is easy to install it makes sense. We can get it in our area and are able to get 200Mbps+

    • Avatar Paul

      It’s not unfit, I have it and it works well thank you. Love having 300mb down and 50mb up.

      It is a stop-gap solution, never understood why Openreach don’t bite the bullet and lay FTTP. But again I underastand, G-Fast doesn’t need anything more being laid under the roads.

      FTTP is the future and OR need to do what they can to get us there, not just OR though. There are other companies out there playing their part.

    • Avatar A_Builder

      @Phil

      I would rephrase that in that Gfast is variable for purpose and does not provide a universal robust solution.

      Our business has two Gfast connections at different locations. One that OR would be proud of that is over perfect copper and gives 290/48 ish. The other is little better than FTTC and is a waste of time.

      I would agree with others that Gfast is a hurried stop gap to prevent swathes of the UK moving over to VM and others.

      I would also agree that a lot of the time and effort spent on ramming FTTC into unsuitable semi rural would have been better spent on more FTTP deployment.

      Looked at on an long term ROI basis the semi rural FTTC deployments will prove to be poor value for shareholders as they will have to be overtaken by FTTP. Likewise it would have been better to have pressed the button on Fibre First and not bothered with Gfast the only issue being that FF was late to the take so Gfast had to be deployed to prevent OR being played out of the game.

      Gfast, as we know it, is the last remnant of Gavin’s fibre to the pole strategy which did make some sense as once fibres were on poles, maybe to a connectorised block, then a volitional approach to fibre to the drop was pretty logical if not quite bullet proof.

    • Avatar Mike

      Big risk on the horizon for OR is people dumping FTTC for 5G.

      4G is already quite competitive despite lacking a bit in the latency department.

  3. Avatar Rob

    I can see the frustration some people have with G.Fast, especially if you’re line is more than 300 – 400m from the PCP and G.Fast has been added to the cabinet.

    I’d love to see some form of reduction in FTTPoD costs for properties in a G.Fast enabled area that can’t benefit from it, however that will never happen.

    Those stuck in that mid-area where their line gives them at least 24Mbps VDSL but not much more are essentially stuck until FTTP comes along unless they want to pay extortionate amounts of money to get close to what some just up the road will essentially get for a fraction of the price.

    What we end up with in the short to medium term though is a widening gap between those who get access to affordable (in comparison to FTTPoD) ultrafast and those who don’t get that option.

    • Avatar Meadmodj

      Yes but their frustration should not be with G.fast it should be with the previous strategies and reliance on FTTC for semi-rural, rural and EO lines. FTTC has brought faster speeds to more people than otherwise would have been the case. In my view the cutover to Fibre First should have come a lot earlier. G.fast is in parallel and has limited impact on the resource availability for FTTP.

      Despite the restrictions of G.fast based at the cabinet it will bring ultrafast to more people over the next 18 months than otherwise and the take-up will increase as the differential between these minimum speed guaranteed services and basic “up to” FTTC is small. It is also transferrable (subject to cabinet compatibility) with capacity being balanced if demand varies at some locations. A shame so many EO cabinets are ECI as EO picks up so many businesses.

      Once the self-install is fully operational and ISPs have sufficient supply of G.fast capable modems I can see it increasing significantly particularly if TV advertising starts to refer to it. OR need the revenues to pay back the BT investment and fund their FTTP development elsewhere.

    • Avatar A_Builder

      @Rob

      “I’d love to see some form of reduction in FTTPoD costs for properties in a G.Fast enabled area that can’t benefit from it, however that will never happen.”

      What is more maddening is when you ask for FTTPoD and are then told you cannot have it as even though there is an enabled DSLAM on one corner of the block because the block you are on is not FTTC enabled there is no FTTPoD.

      Yes really.

      No FTTC then no FTTPoD inspite of the fact that the FTTC footprint has nothing to do with it and where the AggNode is has everything to do with it.

      A great case of copper senselessly ruling the roost over fibre.

  4. Avatar Marty

    G.fast is nothing more than an in term solution until FTTP gets deployed on a massive scale. G.fast is cheaper and quicker to deploy and can provide competition to Virgin media which overall isn’t a bad thing.

    Some other providers have started to offer G.fast packages https://shop.ee.co.uk/broadband

    It will be interesting to see what router sky come up with. Hopefully without the horrifying wifi standards with there routers.

  5. Avatar Chris J

    I had 5 meg broadband for 5 years up until December there when I was able to order FTTP, I now get 311mpbs down and 50 up.

    The street I live in was extremely lucky to get FTTP as I live in Motherwell in Scotland and openreach decide it was more cost effective to install than upgrading the cabinet.

    • Avatar Ryan BT

      I Live in Coatbridge over 800m away from the cabs at the time capsule! No chance for me. Though Langloan is fairly populace maybe they will replace the cab to there or install FTTP!

    • Avatar New_Londoner

      @Ryan
      ?

      No idea what your post means.

  6. Avatar davidj

    I look forward to the day when BT do not have to combined G.FAST and FTTP figures to make things look good….. I will not be holding my breath waiting for that day.

    • Avatar CarlT

      Err there’s a breakdown of them near the start of the article?

    • Avatar davidj

      NO the figure for coverage is combined G.Fast and FTTP it states…
      “reports that Openreach’s FTTP and G.fast based “ultrafast broadband” (100Mbps+) UK ISP network has grown its coverage from 1.97m premises passed to 2.6m”

      The take up figures/percents after that of each i do not really care who is buying it.

      FTTP coverage stands at only around the 1 Million(ish) mark currently. So that figure is combined.

    • Avatar Gadget

      Sorry, but the first sub-table in the article shows coverage for “Ultrafast G.Fast” and another row for “Ultrafast FTTP”. Does this not answer your question?

    • Avatar GNewton

      893 000 FTTP premises passed in 2018/19 Q3.
      267 000 FTTP premises connected in 2018/19 Q3.

    • Avatar davidj

      LOL only another 9.1 Million to go to reach their pie in the sky 10 Million FTTP aims then LOL

  7. Avatar Gregory

    Does anybody know how long fttp infrastructure takes to complete as openreach put the fibre cables around our poles with a connector up the top of the poles on the 13th November 2018 we had been told there was a wayleave problem.

  8. Avatar Gary Hilton

    If openreach install gfast in areas already getting what most in that area feel is good enough and then suffer low take up then, so far as I’m concerned that’s great. If people want gfast then pay for it gfast on demand, similar to the only option I have, fttpod if I want better than the 2meg adsl I have the option of.

    • Avatar davidj

      The only problem is if nobody takes the G.Fast option, who do you think is going to end up paying for it?

    • Avatar Fastman

      Gary Hilton its not your only option you could work with your community via community fibre partnership to see if a solution could be brought to your area.

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