BT Wholesale Pricing for 550Mbps and 1Gbps FTTP Irks UK ISPs
The wholesale division of BT, which sells broadband and other services to a large number of UK providers, has recently published their pricing for Openreach’s new 550Mbps (75Mbps upload) and 1000Mbps (115Mbps upload) Fibre-to-the-Premises (FTTP) tiers. But not all ISPs appear to be happy with the proposed charges.
Openreach are expected to introduce their new tiers from 23rd March 2020. The base rental for these top consumer tiers will be £27.28 +vat per month for 550Mbps and £31.28 +vat for 1000Mbps from 1st April 2020, with both also attaching a £98.48 +vat one-off connection fee.
Naturally providers that buy direct from Openreach, such as major unbundled providers with strong capacity links (e.g. TalkTalk, Sky Broadband), should be able to create some competitively priced packages. Meanwhile those who buy from BTWholesale, particularly smaller players without economics of scale, may struggle more to compete.
BTWholesale’s Prices (Wholesale Broadband Connect)
550Mbps (12 Months) £50 +vat per month
1000Mbps (12 Months) £75 +vat per month
The standard charges represent a mark-up of £22.72 (+84%) on the 550Mbps tier and £43.72 (+140%) for 1Gbps by BTW, which is of course before the retail ISP adds its own costs on top to make the price we all pay (e.g. 20% VAT, profit margin, network / capacity, service features, support costs etc.).
Suffice to say that at those levels the consumer packages are going to struggle to be competitive with gigabit tiers from rival services like Virgin Media, Cityfibre (Vodafone etc.) and so forth, which is something that a lot of retail ISPs on the BTW platform were hoping to deliver. Mind you such pricing is perhaps to be expected when it comes to BTWholesale.
We privately asked a number of BTW using ISPs about this and received some mixed feedback. One provider felt as if the pricing was “very short sighted” and could undermine Openreach’s efforts to upgrade the UK’s digital infrastructure, while another said it was a “complete non-starter” that would get no sales and push them toward working with rival FTTP networks. A few also wondered aloud if it wasn’t an attempt to protect leased line sales.
However some ISPs took a more neutral stance and one of those pointed out that it was far easier for BTW to test the waters with a higher price at first, not least because it’s easier to reduce prices later than to increase them if you get it wrong. Similarly others felt as if the price was a way to test both demand and manage the impact upon network capacity (catering for such fast tiers is an expensive business).
Quite how all of this will be impacted by Openreach’s secret (well.. not so secret anymore) plans to introduce big discounts on their FTTP tiers later this year remains to be seen (here), but for the time being there’s a fair bit of unease with BTW’s approach.
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 X (Twitter), Mastodon, Facebook and Linkedin.
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Summed up best by that quote – “a complete non starter.” BT really take the prize for making a complete pig’s breakfast of things.
Mr Band. I’ve been expecting you.
Shocking. Absolutely shocking!
“There’s a saying in England. Where there’s smoke, there’s fire.”
“You plan on launching an FTTP product, but not sell it to anyone? Why? But of course… BT Wholesale! I assume they’ve set the price so high that it’s a non starter?
The entire Openreach FTTP supply of the UK would be inactive for years…
I apologize, BT. It’s an inspired deal! Wholesale get what they want, Openreach keep their leased lines… broadband chaos in the UK. And the value of your FTTP increases many times.
Here’s to Operation Grandslam!”
As much as I’d normally advocate for a free market, in this case it’s just *not* working. I really think Ofcom need to step in and do something about expensive FTTP pricing.
Even FTTP packages at the same speed as FTTC are more expensive – and BTW’s pricing is just downright anti-competitive.
The fact that BT Wholesale are doubling the Openreach wholesale price says it all. Blatant daylight robbery. This is not a free market, but an oligopoly. If the Openreach market price itself was used, a relatively simple markup and VAT would bring the consumer retail price to something more akin to the CityFibre/Vodafone or Hyperoptic offerings. Although those are symmetrical services, it would the create some FTTP competition.
A true free market needs competition and a level playing field. Also a free market does not have someone with a clear conflict of interests as a stakeholder in an entity that is offering products to competitors.
Sky, Vodafone and Talktalk will be selling these without using BT Wholesale.
ISP’s will be able to use Talktalk backhaul without paying BT Wholesale prices.
It’s only these higher 2 tiers that have priced sky high.
Very few would order it anyway, but they still can without using BT Wholesale.
Most people who take FTTP only order 40/10 or 80/20.
This won’t stump the FTTP rollout in the slightest.
John
You cannot assume most people would or will order that. It is not up to BT Wholesale or anyone else to deny people a product. That isn’t a free market. I am sure “most people” only use trains which travel slow and are really late in our country. But if someone built a bullet train on the same route, you’d find a hell of a lot of people would start using the better train for their journey.
If FTTP is available, the product offering on BT itself shows 150 and 330 today. If there are options up to 1000, there will be takers. Let the CONSUMER decide what they want with a full set of choices. That’s a proper free market.
The Openreach price and marking it up would allow an ISP to at least roughly price itself in line with Vodafone Gigafast, Hyperoptic etc. The BT Wholesale price seems insane. If BTW is owned by Spectre this might make sense to cause chaos, but as the article states, such pricing is a “Non starter”.
Nothing stopping anyone from building that bullet train to service a route.
Nothing stopping anyone from purchasing directly from Openreach or those who do purchase directly from offering a wholesale product.
Obviously both have business cases to be satisfied but the fundamentals are that a company could do either if they so choose.
OMG should have used my other comment here. BT Wholesale is so expensive. What we will see is fewer ISP’s using Wholesale and more sitting on the back of talk talk and Sky’s network selling their Openreach FTTP. The Markup that BT WHolesale put on is insane.
Wholesale is being squeezed out of the Market but their own Openreach. Openreach used to simply operate the passive network i.e. copper and fibre cables. But now they operate in the active space with FTTC and FTTP cabs and lit fibre Wholesale is becoming less and less relevant.
If I needed a 1Gbps download product (I don’t), I’d prefer that it was properly provisioned with an appropriate amount of backhaul rather than being offered on a pile it high and sell it cheap (but highly contended) basis.
Wholesale charge per Mbps per month on top of the product rental charge. They also charge for interconnect capacity to them on a fixed annual rate, too.
They have absolutely no excuse for piling this much margin on, especially given it’s not like it’s from thousands of exchanges, headends only.
The only things I can think of are that they will have some provocative special offers/agreements or they don’t actually want to sell anything right now, preferring to stall for a while, keep uptake low and continue to upgrade their network, which isn’t exactly abundant with spare capacity.
But the point is that BTw charge for the bandwidth separately to the end connection, i.e. on top of that charge the ISP pays ~£40/mbps/month to backhaul the data across BTw’s network
See https://www.btwholesale.com/help-and-support/pricing/service-provider-price-list.html
Must be carrying the data on platinum-plated Nokia 7750s, Boggits. Diamond encrusted line cards. Bling broadband.
I have some good news for folks based in Salisbury where we’ve unbundled the exchange.
We’ve lowered our pricing for the higher bandwidth offerings since our original press release.
We’re going to offer the 500Mb and 1Gb services for £57 and £67 per month respectively to our home FTTP broadband customers.
This is the inc VAT figure.
£55 set up including a 4×4 dual band 802.11ac router.
24m term. 12m break clause in case you move out of area.
So that’s less than the BT Wholesale raw charges, before you add transit, profit, amortise set up costs etc!
https://www.giga.net.uk/salisbury-broadband-launch/
Our new 10Gb/s backhaul is going in within a few weeks, hopefully by 23rd March when these higher bandwidth services are due to go live, so we’ll have the capacity.
(Not all users will use the network at the same time and max it out, so 10Gb/s doesn’t mean 10 x 1Gb/s FTTP customers before people may start questioning that. However we can add in more 10Gb/s backhauls if we need to. Our aim is not to be the bottleneck :))
Sadly, for the rest of the UK, we’re forced to use wholesale routes to market as we haven’t unbundled the 1000s of parent exchanges.
However in addition to Salisbury, we’ve unbundled Basingstoke and Winchester, and Basingstoke has been recently announced as a Fibre First city by Openreach, so we’ll be competitive in those locations too where Openreach FTTP is available. 🙂
We’re really excited and can’t wait to help out in the areas we’ve unbundled.
Our website orders should be opening within a week or so. Just sorting some final snags.
Matt Skipsey
CTO & Head of Giganet
http://www.giga.net.uk
Any chance you guys can make your way up to Andover? 🙂
I know the estate I’m living on lots of people would absolutely love to get away from BT but unfortunately they are only FTTP provider available (except obviously others like Zen).
Poor you Andrew. I would love to have BTW FTTP here. All I can get is ADSL so I have Giganet’s expensive 1Gbps business option at £598 a month! (need it) 500mbps is a bit cheaper but time is money
Oh to have 1Gbps for £67…. sounds like putting a price on a dream!
I agree that it is to suppress initial demand. BT’s priority will be business sales at this speed and are stretched to invest across the board if significant uplift is required so it will be taking a cautious approach. Pricing will change over time.
There wasn’t ever going to be much of it so bemusing.
Looking at Virgin Media £62 a month is a tad rich for most people. Very few take 330 right now let alone more expensive products where available.
The demand would be so low as to be relatively inconsequential. If it’s scary to them that in itself is scary.
@CarlT I think that VM’s takeup distribution is skewed towards 200mbps because that’s how they want it. You know how research shows that people tend to buy the mid-priced item, which for VM is the 200m tier. On their website, They do a good job of pretending that their max speeds are 352, which makes the 200 look like an easy compromise between price and speed.
I live in a Gig1 area, it says so, but doesn’t list speeds faster than 352mbps as options on the order form.
I guess I would make the point that even if Openreach take another £10 off the price of 1000/115 through discounting and Wholesale pass that on in full to their own customers it still means £65/month + VAT rental alongside £40/Mbps/month + VAT bandwidth charge ensuring that the product will roll in at over £100 a month unless there a serious discounts and deals elsewhere.
This is astonishing. This is backhaul from headend exchanges, not tiny village exchanges serving 50 premises. Openreach take care of that part.
NGA being used to subsidise ADSL. Bizarre and highly detrimental to Openreach’s investment in infrastructure.
I get that backhauling ADSL from very rural areas can be expensive. That doesn’t wash for GEA. BT have an 18 Tb+ utilisation network. The idea that it’s anywhere near £40/Mbps/month network-wide is laughable, let alone that it’s that kind of price to shift data from the NGA headends.
BTw are extracting the urine here. There is absolutely no reason to be fearful of pricing too low – they charge for usage on top and other costs are fixed.
I really don’t understand this. Predictable but bizarre.
Time for BT Consumer to have a chat with TalkTalk Business I reckon. Get access to Openreach FTTP at more sane pricing.
Again, I assume here that there won’t be a sweetheart deal for BT Consumer’s ‘Broadband Complete’ service they purchase from Wholesale.
Agree on the tail cost but it’s worth remembering very few BTW customers are paying even close to the £40/Mbps/month list price.
Openreach’s ‘special offer’ pricing really does undermine this further, i.e. Wholesale are adding £50 on top of the Openreach price just for transmission from Exchange to their POP’s. The only way this can be due is that the existing connections from the exchanges can’t cope with mass 1Gb high utilisation lines and would need upgrading, as BT don’t have any data for utilisation of 1Gb consumer connections. Combine that with the spotty nature of FTTP and it becomes difficult to upgrade / plan for.
TalkTalk, & Sky do have experience with consumer lines of those speeds though. Also given the ‘Special offers’ Openreach are running its means they might be able to do pricing not far off their existing CityFibre based pricing assuming they have enough capacity from exchanges.
Demand should drive capacity?
TBH I think wholesale are cutting themselves out of the picture here. And probably being given a little encouragement to do so. I smell internal politics here.
Looking at it objectively BTW are a cost layer that isn’t offering much.
BTW have stuffed this up – let’s see what happens – BT central need good take up rates to justify FTTP investment. If BTW kill that then they become the problem and not the solution pathway……we all know the script.
If they want good take up they’re better off targeting areas with already low speeds.
Mike
I agree. Areas which had negligible speeds which have been upgraded to FTTP would take up 330, 500, and 1000 products up in a heartbeat at a reasonable price.
What is the difference here between Openreach and BT Wholesale? Don’t BT, Sky, TalkTalk, Vodafone, etc etc, pay rental to Openreach itself?
If you take the Openreach discounted price for 1000, add VAT and let’s say a £15 premium on, that would still give a potential consumer price of £55 a month for “Ultrafast 900” which would then be roughly in line with Vodafone Gigafast 900 at £40-48 a month. The BT Wholesale price seems to be vastly higher than the CONSUMER price of £48?!?
Most people on OpenReach FTTP only take 40/10 or 80/20.
People w talking like this will hurt BTw and the general FTTP rollout.
This won’t deter anyone from taking FTTP. If just means some will avoid the top tiers.
Shocking pricing but the average user wouldn’t buy this anyway so predictions of killing rollouts and back firing are a bit off.
Very true. It’s not going to be harmful to Wholesale, it’s more likely to hurt Consumer, etc.
The PR from offering gigabit for close to twice the price of the c. £60 mark that VM charge and TalkTalk, Vodafone and Sky can achieve isn’t going to be good.
Wholesale are basically untouchable. They can charge what they want and Consumer, Business and Enterprise have to pay it.
Hopefully they’ll lose a bunch of other business. This has certainly made wholesale reselling of Openreach more attractive for those with decent GEA networks.
@CarlT
“
Wholesale are basically untouchable. They can charge what they want and Consumer, Business and Enterprise have to pay it.
Hopefully they’ll lose a bunch of other business. This has certainly made wholesale reselling of Openreach more attractive for those with decent GEA networks.
“
You could try and explain to Philip Jansen that one of his divisions is messing up the commercials and is untouchable………..personally I wouldn’t like to get too close to that conversation if I was working in BTW…..
CarlT
“The PR from offering gigabit for close to twice the price of the c. £60 mark that VM charge and TalkTalk, Vodafone and Sky can achieve isn’t going to be good.”
Exactly what I’m saying. It’s like scuttling one’s ship in full view of everyone at the grand unveiling/ribbon cutting ceremony. Can Openreach itself not simply sell this directly to the likes of BT, Vodafone, Sky, whoever?
If you markup the original Openreach price, then you’d get a consumer/retail price of something much closer to (possibly in between) the Vodafone and VM price. It’s just baffling as to the BT Wholesale price, unless BT is now owned by Spectre.
Openreach already sell directly to Vodafone and Sky. TalkTalk and Zen among others too.
BT Consumer are Wholesale’s anchor tenant and have no choice but to purchase from them. BT Group don’t give them any choice in the matter as far as I can tell.
There were some rumours about the then Retail division buying directly from Openreach. The man in charge of Retail left the company.
@Felix
“A true free market needs competition and a level playing field. Also a free market does not have someone with a clear conflict of interests as a stakeholder in an entity that is offering products to competitors.”
Completely agree. It should be possible for smaller players to buy direct from Openreach – they shouldn’t have to go to BTW, who are a direct competitor, and without regulation have no incentive to sell at a competitive (or even *realistic* price).
Does anyone know if Openreach publishes what volume is required to purchase directly from them?
Anyone can purchase directly from Openreach. It’s making the financials work that’s the issue.
@Colin
@CarlT
I agree. A true free market needs a level playing field. So can anyone purchase from Openreach directly and just bypass BT Wholesale?
If lines have been upgraded to FTTP, are these not Openreach’s to rent out?
I do not understand why anyone (BT Retail, Vodafone, Sky, TalkTalk, John Lewis Broadband, etc etc) could not go directly to Openreach itself? A markup on that price would perhaps bring the FTTP 1000 product in line with the Vodafone CityFibre pricing roughly and provide some interesting prices to the consumer.
The issue is whom is providing the GEA from the headend?
The product purchased from OR generally only runs back to the headend.
When you buy through BTW you buy OR + BTT bundled up.
So if you have a private GEA backhaul network you are fine. And if you don’t you either need to create one or buy in.
That is what CarlT was, I think, alluding to in terms of making the financials work as there is a minimum critical mass per exchange to make private/hybrid networks work.
Indeed.
The only people with a substantial GEA presence are Sky, TalkTalk and Vodafone.
BT Consumer are obliged to use Wholesale by BT Group.
Plusnet and their associated brands much the same story. Ditto EE.
The issue with GEA is having enough customers to make the investment worthwhile. Most smaller operators don’t have the scale.
BT Retail has currently taken all FTTP products off sale for any customer who has a working 1000/220 fibre cable passing by their front door but doesn’t yet have an ONT installed.
Can’t think why Openreach engineers can’t work in people’s homes now when removal men and gas and heating engineers all can with no problems……………..