TIDMBT.A
RNS Number : 0293V
BT Group PLC
31 October 2017
Tuesday, October 31, 2017
Industry welcomes Openreach ambition to build
a large FTTP broadband network
-- First major confidential consultation led by a more independent Openreach
-- Communications Providers (CPs) agree - Fibre-to-the-Premises
(FTTP) technology would future-proof Britain's digital
infrastructure
-- Several enablers needed to make the plan viable, including
'FTTP switchover' and a supportive policy and regulatory
environment
-- Deciding how to recover costs fairly will be critical
-- Some CPs are interested in co-investment and risk sharing models
The UK's Communications Providers have welcomed the ambition of
Openreach, Britain's digital network business, to build a
large-scale Fibre-to-the-Premises (FTTP) network across the
country. There is also broad agreement that FTTP would safeguard
the UK's position as a leading digital economy - but to make the
investment viable, a number of key enablers will need to be put in
place through close co-operation among the communications industry,
Ofcom and Government.
Openreach, which builds and maintains the millions of miles of
wires and cables that connect Britain's homes, businesses and
devices to the internet, has been consulting its wholesale
customers - Communications Providers such as Sky, TalkTalk, BT and
Vodafone, and hundreds of others represented by the Federation of
Communications Services. It wants to see if there's enough demand
for a large FTTP network that could deliver Gigabit speeds and more
reliable broadband services for decades to come.
The consultation, which was open to all CPs and ran from
mid-July to the end of September, found that there is broad support
for Openreach to build a large-scale FTTP network which would bring
substantial benefits for all, including better, more predictable
services and faster, more consistent broadband speeds. It also
highlighted significant benefits for the British economy and
society, such as productivity growth, opportunities for smart
cities, and greater application of e-health and e-learning
services.
In the near term, most CPs expect Britain's existing broadband
technologies to provide enough speed for the majority of consumers
but, whilst there is no consensus on when Gigabit speeds will be
needed, they agree that ultimately a large scale FTTP network will
be a necessity. Given the timescales involved in building that
network, there is strong support for Openreach to start the
engineering work required sooner rather than later.
However, there are still challenges to overcome if the industry
is going to build a viable FTTP business case, and Openreach has
highlighted a number of key enablers that need to be put in place
through close co-operation between Openreach, CPs, Ofcom and
Government. These enablers include:
-- A supportive policy and regulatory environment that encourages investment
-- 'FTTP switchover' - to maximise the benefits for all parties,
Openreach proposes that all customers should be migrated over to
the new network as quickly as possible after it has been built in a
given area
-- Agreeing how investment costs can be fairly recovered
-- Openreach proving that it can build FTTP at scale for a competitive cost
Openreach is working to demonstrate that its engineers can build
FTTP connections at scale in urban and suburban areas for a
competitive price. It has been trialing new deployment techniques
across the country and drawing on the latest techniques and tools
from around the world to bring the costs down. This activity has
already resulted in a halving of the cost of its FTTP delivery over
the last year.
Like other network investors, Openreach is also seeking a more
supportive policy and regulatory environment to build more FTTP in
the UK, including a constructive resolution to the application of
business rates and to Ofcom's Wholesale Local Access (WLA) market
review. The economic case will also rely on local and central
government support to reduce red tape, for example by simplifying
wayleaves(i) and traffic management processes.
Openreach will need to recover the costs of a very large
investment in a new, faster and more reliable network in the
wholesale prices it charges to CPs. A large scale FTTP network is
likely to benefit a broad set of customers over time, so Openreach
believes the costs should be spread fairly across a broad customer
base to reflect that. This would help to keep down any wholesale
price increases required to support the investment case, whilst CPs
and Openreach would benefit from cost savings through the increased
reliability of the network.
CPs acknowledge that charging a large premium for ultrafast
services alone is unlikely to succeed, but question how much more
customers will be willing to pay for the same headline speeds on a
better platform. Openreach estimates that building FTTP connections
all the way to ten million front doors would cost in the region of
GBP3bn to GBP6bn, so deciding how that investment can be recovered
fairly through wholesale pricing will be critical to making a
commercial case work.
The consultation also uncovered broad support for a 'switchover'
approach to FTTP which would migrate all customers onto the new
platform - and retire the old one - as quickly as possible after it
has been built in a given area. But it's clear that the operational
complexity and cost of such a programme would be significant.
Both Openreach and its wholesale customers agree that protecting
service continuity during a switchover - especially for vulnerable
consumers - and communicating the process effectively would be
critical elements of any programme. Having acknowledged that, there
was agreement that migrating customers in this phased approach
would maximise the benefits for all parties and help to strengthen
the economic case for investment.
Some CPs are also interested in sharing the risk of the
investment, but in return for preferential terms on the
infrastructure that's built, with a variety of different models
suggested. There were also a range of views expressed on how
Openreach should decide on the scale, make-up and locations of the
new network, and these will be considered in detail as the business
develops its new network strategy.
Clive Selley, CEO, Openreach, said: "We believe that under the
right conditions, we could build FTTP connections to ten million
homes and businesses by the mid-2020s. We want to do it, we think
it's the right thing to do for the UK, but it's clear that we can't
do it alone, so I'm encouraged to hear that our wholesale customers
support our vision.
"Having said that, we're under no illusions about the challenges
that lie ahead because we need to build a business case that's
workable and fair for everyone. That means we need a regulatory
environment that encourages investment, and we need to agree how
the costs of such a huge engineering project can be recovered
fairly from all those that stand to benefit.
"Of course that's going to be tough, but we need to get into the
detail of that now with our customers, with Ofcom and with
Government. I believe Openreach has a critical role to play in
achieving such an ambitious goal, and the prize for our CP
customers, their customers and the UK as a whole could be
huge."
Openreach is now considering all of the responses and options
carefully as it develops its new network strategy. The business
will then invite views from CPs on a more specific set of proposals
that cover potential pricing, footprint, and a plan for automatic
switchover, by the end of 2017. It continues to welcome discussions
with CPs on co-investment, risk sharing and network architecture
approaches, and will continue engaging with Ofcom and Government to
build an environment that encourages and facilitates
investment.
ENDS
(i) The consent in writing that allows Openreach to carry out
work on privately-owned land.
Notes to editors
For further information
Enquiries about this story can be made to the Openreach PR team
on 0207 809 7950 or at press@openreach.co.uk. All news releases can
be accessed on our web site.
About Openreach
Openreach is Britain's digital network business.
We're 30,400 people who connect homes, mobile phone masts,
schools, shops, banks, hospitals, libraries, broadcasters,
governments and businesses - large and small - to the world.
Our mission is to build the best possible network, with the
highest quality service, making sure that everyone in Britain can
be connected.
We work on behalf of more than 580 communications providers like
SKY, TalkTalk, Vodafone, and BT, and our fibre broadband network is
the biggest in the UK, passing more than 26.5 million premises.
We're also the platform for Britain's thriving digital economy,
which is the largest in the G20.
We're working hard to give people the speeds they need to run
and enjoy their daily lives. Over the last decade, we've invested
more than GBP11 billion into our network and we now manage more
than 158 million kilometres of cable stretching from Scotland to
Cornwall, from Wales to the east coast. And we're continuing to
take that network further - making superfast broadband speeds
available to thousands more homes and businesses every week.
Openreach is a wholly owned and independently governed division
of the BT Group, and it is a highly regulated business, with more
than 90 per cent of our revenues generated from services that are
regulated by Ofcom.
Any company can access our products under exactly the same
prices, terms and conditions.
For the year ended 31 March 2017, we reported revenues of
GBP5.1bn.
For more information, visit openreach.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
UPDFDIEESFWSEES
(END) Dow Jones Newswires
October 31, 2017 03:00 ET (07:00 GMT)
Bt (LSE:BT.A)
Historical Stock Chart
From Apr 2024 to May 2024
Bt (LSE:BT.A)
Historical Stock Chart
From May 2023 to May 2024