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    BT Reach 9.3 Mill UK Broadband Subs as Openreach Moot “large scale” FTTP

    This is a discussion on BT Reach 9.3 Mill UK Broadband Subs as Openreach Moot “large scale” FTTP within the General Computing and Internet forums, part of the Community channel category; BT Reach 9.3 Mill UK Broadband Subs as Openreach Moot "large scale" FTTP - ISPreview UK The BT Group has ...

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      BT Reach 9.3 Mill UK Broadband Subs as Openreach Moot “large scale” FTTP

      BT Reach 9.3 Mill UK Broadband Subs as Openreach Moot "large scale" FTTP - ISPreview UK
      The BT Group has released their latest quarterly report (Q1 2017 calendar), which saw their retail broadband base reach a total of 9,276,000 subscribers (up by 29K vs 83K in Q4 2016) and Openreach has begun a consultation on the “potential benefits and costs of a large-scale FTTP deployment.

      Aside from the lingering impact of BT Italy’s accounting scandal (here), which has also resulted in boss Gavin Patterson losing out on hundreds of thousands of pounds from his bonus pot, most of the major developments during the first few months of 2017 have been related to their voluntary agreement with Ofcom over the future of Openreach (here). As part of that they’ve had to open up their cable ducts to rivals (here), assign an independent board to Openreach (here) and will have to cut the price of their 40Mbps FTTC product (here) etc.

      Elsewhere Ofcom hit BT with a fine of £42 million after they cut compensation payments to other telecoms providers for late installs of high-speed business lines (here). The regulator has also recommended that they cut the cost of their line rental service by “at least” £5 per month for landline-only customers (here).

      Suffice to say that BT has recently taken a few hits, although they have managed to hold on to a big slice of premium sports TV content (here) and continue to run some big special offers in order to attract new subscribers.

      Otherwise the big news today is that Openreach has announced two significant new consultations. The first will examine how best they can deliver on the Government’s proposed 10Mbps Universal Service Obligation (USO) for broadband connectivity, with Long Reach VDSL (LR-VDSL / FTTC) technology expected to play a role. The second will “look at the potential benefits and costs of a large-scale FTTP [full fibre] deployment.”

      At present BT’s roll-out of 1Gbps capable Fibre-to-the-Premise (FTTP) broadband technology is expected to reach 2 million premises by 2020, while their hybrid-fibre G.fast solution will do 10 million premises by the same date and many more by 2025.

      However Ofcom, the EU and the Government all want to see more “full fibre” in Openreach’s future diet and so we could be about to see a change in their plans (we’d expect that this may primarily impact their urban coverage, perhaps swapping out some G.fast plans for FTTP etc.). More on this at the bottom.
      Key Highlights from Today’s Quarterly Report

      • BT Groups’ quarterly revenue hit £6,122m (down from £6,128m in Q4 2016 calendar)
      • BT Group’s reported profits before tax hit £440m (down from £526m)
      • BT Group’s total net debt £8,932m (down from £8,981m)
      • BT Wholesale’s quarterly operating profit hit £141m (up from £135m)
      • Openreach’s quarterly operating profit hit £340m (up from £327m)
      • Openreach’s quarterly capital expenditure hit £470m (up from £409m)


      As usual we’ll also highlight the latest update with regards to BT’s capital expenditure and clawback (gainshare) from the Government’s Broadband Delivery UK roll-out programme (i.e. public investment returned by BT due to high take-up of FTTC/P in related areas), which reveals that £446m (up from £325m last quarter) of public funding may potentially become available for reinvestment into further UK coverage of “fibre broadband” services.

      Over the past few years BT has increased their take-up assumptions for “fibre” on a number of occasions, which is a good thing as it boosts clawback and helps to make the overall economic model for deployment more viable. Most recently we’ve also reported that this latest tweak is having a positive impact upon BT’s Community Fibre Partnerships (here), with many cost estimates being reduced.

      Capital Expenditure and BDUK

      Capital expenditure was £1,022m (Q4 2015/16: £760m). This consists of gross expenditure of £943m (Q4 2015/16: £741m) which has been increased by net grant deferral of £79m (Q4 2015/16: £19m) mainly relating to our activity on the Broadband Delivery UK (BDUK) programme.

      Our base-case assumption for take-up in BDUK areas has been increased to 39% following our review of the level of customer take-up. Under the terms of the BDUK programme, we have a potential obligation to either re-invest or repay grant funding depending on factors including the level of customer take-up achieved. While we have recognised gross grant funding of £41m (Q4 2015/16: £60m) in line with network build in the quarter, we have also deferred £120m (Q4 2015/16: £79m) of the total grant funding to reflect higher take-up levels on a number of contracts. To date we have deferred £446m (Q4 2015/16: £258m).


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      Re: BT Reach 9.3 Mill UK Broadband Subs as Openreach Moot “large scale” FTTP

      Cont.
      Now let’s take a closer look at BT’s different divisions.

      BT Consumer / Retail

      BT remains the largest retail broadband ISP in the United Kingdom and they also hold the biggest single share of “fibre broadband” subscriptions on Openreach’s national UK network (details below), which is hardly surprising as they put a lot of money into advertising and their “fibre” coverage has also been boosted via the government’s Broadband Delivery UK programme.

      However their mobile base continues to bleed subscribers, although on the flip side they’ve improved their geographic (landmass) 4G network coverage of the UK to 80% (99%+ population coverage) and they aim to reach 92% by September 2017, followed by 95% by the end of December 2020. Did 4G subscribers grow from 18.2 million in Q4 2016????

      Broadband Subs TV Subs Mobile Subs + EE
      Fibre Subs
      Q1 2017 TOTAL
      9,276,000 1,747,000 30,036,000 4,935,000
      Subs Change (Q1) +29,000 +11,000 -132,000 +211,000
      Q4 2016 TOTAL
      9,276,000 1,736,000 30,168,000 4,733,000
      Subs Change (Q4) +83,000 +52,000 -80,000 +260,000

      We should point out that EE’s huge Mobile decline largely stems from prepaid (PAYG) customers, with postpaid on the rise. Similarly their 4G subscribers have grown from 18.2 million last quarter to 18.6 million now.

      Elsewhere their TV base took a dive, which is possibly attributed to their removal of legacy BT Vision set-top-box hardware (some subscribers may cancel rather than renew) and the recent price increases for BT Sport.

      The eagle eyed will notice that BT’s total broadband base hasn’t actually changed since last quarter, which is because they conducted a review of subscribers and this resulted in an adjustment of 29k, with another 26k being moved to BTWholesale and Ventures external broadband.

      Openreach & Wholesale


      Openreach’s results reflect the wider market, at least in respect to BT’s national network infrastructure and those ISPs that buy services over it (i.e. the total broadband and “fibre” lines below combine customers from both BT’s own ISP and many other providers that buy their lines from Openreach). We should add that Openreach’s “fibre” network now covers 26.5 million UK premises, with 500,000 via “ultrafast” (FTTP/G.fast).

      Note: Unbundled (LLU) lines are mostly used by ISPs that have installed some of their own kit inside Openreach’s network in order to gain more control over their own products and services (e.g. TalkTalk and Sky Broadband). Fully unbundled (MPF) lines are more popular because they give ISPs the most control and flexibility to differentiate themselves.

      Total UK Broadband Lines
      Fully Unbundled MPF Lines
      Shared Unbundled SMPF Lines
      Fibre Lines (FTTC/P)
      Q1 2017 TOTAL
      20,390,000 9,047,000 1,181,000 7,698,000
      Lines Change (Q1) +82,000 +24,000 +37,000 +520,000
      Q4 2016 TOTAL
      20,308,000 9,023,000 1,144,000 7,177,000
      Lines Change (Q4) +189,000 +73,000 +50,000 +498,000

      It’s worth noting the quarterly increase of +520K in new “fibre broadband” (FTTC/P) lines, which includes the +211K added via BT’s own ISP. The outcome means that BT’s retail rivals (e.g. Sky Broadband, TalkTalk, Zen Internet etc.) accounted for +309K of the total increase (up sharply from +238K in the previous quarter).

      Separately, BTWholesale delivered a total of just 886,000 external broadband lines for other ISPs, which has fallen by -5,000 in the quarter (better than the -17,000 in Q4 2016).

      Gavin Patterson, CEO of BT Group, said:

      “This has been a challenging year for BT. We’ve faced headwinds in the UK public sector and international corporate markets and must learn from what we found in our Italian business. Openreach also received a fine from Ofcom after an investigation into historical Deemed Consent practices revealed it fell short of the high standards we expect. We take these issues extremely seriously and are putting in place new measures, controls and people to prevent them happening again. Learning from the challenges of this year will make BT a stronger company for the future.



      We aspire to be the UK’s digital champion. To achieve this, we’re ready to invest in the UK’s digital infrastructure, in continued improvements in our customer service, and in new technologies to further enhance customer experience. To that end, Openreach has today announced that it’s consulting with customers and industry stakeholders on the business case that could support better rural broadband and a large scale Fibre-to-the-premises rollout across the UK.”
      The tentative aspiration by BT to do more “full fibre” is most welcome, although there’s a clear hint in the report that this may require more direct support from the industry (i.e. TalkTalk, Sky Broadband etc.). At the same time Openreach will no doubt also want Ofcom and the Government to ensure that any such investment is protected against aggressive regulation, particularly since the payback period for FTTP can be very long.

      Overall BT has had a rough few months but they’re far from unhealthy and continue to hold a commanding position in the market. Mind you if you’re one of the 4,000 or so members of staff about to lose your job via BT’s Global Services division then you might well have a different view.

      UPDATE 12:38pm A comment from Openreach rival Cityfibre has just arrived.

      Greg Mesch, CEO of CityFibre, told ISPreview.co.uk:

      “It is laughable that Openreach claim to be the nation’s digital champion when it is responsible for the UK being stuck in the digital doldrums. It has fallen to CityFibre, an independent communications infrastructure builder, to lead the charge to deliver the UK’s full fibre future not Openreach. We have been in consultation with the service provider community for over three years. It was CityFibre, alongside Sky and TalkTalk, that set out to prove the viability of Fibre to the Home with a trial in York, demonstrating over 27% of homes taking a next generation full fibre service in just over a year.

      It is now abundantly clear that infrastructure competition, supported by targeted regulation and government support, is the only mechanism that will guarantee the innovation and investment needed to catch up and compete with other countries. This is CityFibre’s role and our model – expanding on our core fibre infrastructure in 42 UK cities, delivering the UK’s full fibre future and demonstrating the true value of competition.”

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      Re: BT Reach 9.3 Mill UK Broadband Subs as Openreach Moot “large scale” FTTP

      Quote Originally Posted by Scubbie View Post
      Cont.
      CityFibre's comment about BT's "laughable" comment is equally laughable since Sky has decided that it isn't commercially viable to continue with this offering in other areas based on the return that they got. (This might be due to their pricing vs talktalk's in the same trial but that isn't what they said in their most recent comments about the trial). Sky have (seemingly) decided it makes more sense to stick with Openreach for wider fibre (FTTC/FTTP) roll-out plans.

      This is based on their public statements and may not represent their actual market intentions.
      Please note the views and recommendations in my posts are my own and in no way reflect the views of Sky

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      Re: BT Reach 9.3 Mill UK Broadband Subs as Openreach Moot “large scale” FTTP

      FTTP on Demand is gradually being added to more and more exchanges at the moment. However Sky currently doesn't offer a product that could benefit from an 300mb down/30mb up connection.

      I don't know the sales figures, but knowing that many parts of Cornwall off native FTTP from BT, and the fact that we don't see many Cornish members here, I would suggest that Sky is missing a lot of potential sales.

      Sky Fibre Unlimited Pro: Connected at 80,000 kbps / 20,000 kbps
      Previous ADSL2+ Speed 19999 kbps 1153 kbps, Line Attenuation 17.5 db 6.9 db, Noise Margin 7.5 dB 8.7 dB
      Speedtest: 17.15MB/s 0.97Mb/s Ping 31 ms

     

     

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