Really G.halffast. A network where many will get 100-300 megabits is a major improvement, although it's not the 500+ megabits CEO Gavin Patterson envisioned with G.fast. Higher speeds would require running fiber to the millions of distribution points; the money men decided to install fewer than 10% as many boxes, going to some of the 90,000 field cabinets instead.
Going to the cabinets is likely to bring ~300 megabits to less than half and slower speeds to everyone else. The "typical" home is 350 meters, which if lucky can carry 300 meg. Some unknown percentage will get 3 megabits or less.
Without data that BT doesn't release, it's impossible to know how many homes will get between 100 and 300 megabits (not half bad in my opinion) and how many less than 100 megabits. BT also hasn't released an estimate of the typical speed.
Leila Abboud at Bloomberg writes, "BT Group's pledge to connect 12 million homes and businesses in Britain to faster broadband by 2020 is too little and too late. Regulators weighing whether to force BT to hive off the unit that operates the country's Internet infrastructure shouldn't be satisfied. BT is playing a cat-and-mouse game with Ofcom chief Sharon White." Abboud is off-base saying G,fast can't do a decent job, however. A properly designed G.fast network can provide 500-800 megabits, not too shabby.
The half of Britain which gets cable will have a good alternative, 300-400 megabits today and soon a gigabit. The less fortunate half will have to accept what BT offers. Presumably, BT will upgrade first where they have cable competition. Most of the rest will not be reached this decade. Like 20-35% of Germans, millions of Brits will have a slow internet for a decade or more.
Because the cabinets already have fiber backhaul and power, the deployment should be very cheap: $150-300/home passed over the four years. The investment can be recovered in months. As far as I know, BT will not need to increase capex for this deployment. The capex/sales ratio should be stable. Neither BT's CFO nor any analyst reported a planned increase.
Too many in the British press reported BT's press release (below) as though this would be a large new investment. Back of the envelope, BT's capital spending is running 13% of sales, +- 1% and often less than depreciation. Many peers have higher investment ratios. France Telecom is investing 14.6% There's room to increase investment if OFCOM insists.
Many companies prefer to give increased earnings to shareholders rather than investing it. That's why policy talk of "increasing incentives" is hogwash. Any profit/price increase can be pictured as "increasing incentives." Results are what counts. Any proposed "incentive" needs to prove it really will go to investment. BT has been allowed multiple price increases as an "incentive." The money is being used to increase dividends, 13% this year.
For millions, "ultrafast broadband" will be ultraslow.
Here's how BT puts things.
BT CEO's vision for Britain’s digital future
From Superfast to Ultrafast speeds, reaching 10m premises by end of 2020
Gavin Patterson went beyond his January statement on ultrafast broadband, to say BT’s new services of 300-500Mbps would reach 10m homes and smaller businesses by the end of 2020, and the majority of premises within a decade. A 1Gbps service will be provided for those that want even faster speeds. The connections on offer would be a combination of Fibre-tothe-Premises technology, as well as new G.fast technology, which uses existing Fibre-to-the-Cabinet technology.”
BT’s vision for Ultrafast Broadband has G.fast at its heart, building on our existing investment in NGA across the UK. This will be delivered though a combination of enabling existing locations and the creation of new G.fast locations. ? This will initially provide hundreds of megabits, rising up to 500Mbps to most of the UK within ten years. We are aggressively pursuing further technology improvements on G.fast, in both rate vs reach and number of ports served. ? By challenging ourselves as an industry (vendors and operators) we will be able to meet the access challenge in a cost effective and timely manner. We will create a mutually beneficial industry success story, delivering: ? Great customer service ? Significant enhancements to our markets ? FTTP will play a key role in a mixed-technology ultrafast network offering speeds up to 1Gbps.
BT to invest billions more on Fibre, 4G and customer service
Press Release • May 05, 2016 07:02 BST
Ambition for ultrafast broadband to pass 12m premises by 2020
- Ambition to pass 2m of those homes and businesses with FTTP
- 4G and superfast broadband coverage to both pass 95 per cent
- New initiatives across the company to improve customer service
BT today announced a further wave of investment to help the UK remain the leading digital nation in the G20. Its Openreach and EE businesses will between them spend around six billion pounds in capital expenditure over the next three years in the first phase of a plan to extend superfast broadband and 4G coverage beyond 95 per cent of the country by 2020.
Ultrafast broadband will be deployed to a minimum of ten million homes and businesses in the same period, subject to regulatory support, with an ambition to reach twelve million. There will be an increased focus on Fibre to the Premises (FTTP) technology within this plan with the aim being to reach two million premises with the technology, mainly in new housing developments, high streets and business parks.
Customer service will be another area of focus with the company revealing a series of new initiatives to better meet the evolving needs of its customers.
BT Group Chief Executive Gavin Patterson said: “The UK is a digital leader today and it is vital that it remains one in the future. That is why we are announcing a further six billion pounds of investment in our UK networks, subject to regulatory certainty.
“Networks require money and a lot of it. Virgin and BT have both pledged to invest and we will now see if others follow our lead. Infrastructure competition is good for the UK and so is the current Openreach model whereby others can piggyback on our investment should they want to.
“G.fast is an important technology that will enable us to deploy ultrafast broadband at pace and to as many homes as possible. Customers want their broadband to be affordable as well as fast and we will be able to do that using G.fast. FTTP will also play a bigger role going forward and I believe it is particularly well suited to those businesses who may need speeds of up to 1Gbps. My ambition is to roll it out to two million premises and our trials give me confidence we will.
“Customer expectations are increasing all the time and we need to work hard to meet those new demands. That is why contact centre work is being returned to the UK and why Openreach is aiming to halve the number of missed appointments within a year. Customers want higher standards of service and we are determined to provide them with just that.”
The internet has become increasingly central to people’s lives and BT today said it would respond with further investment in customer service across the company. A range of new initiatives were unveiled today with BT Consumer set to reduce the standard time to fix line faults by 24 hours as well as pledging to handle 90 per cent of its customers’ calls in the UK by March 2017. These new commitments follow the recent announcement that EE will handle 100 per cent of its customers’ calls in the UK by the end of this year.
Openreach also gave new service commitments with CEO Clive Selley telling his communication provider customers it will deliver ‘better service, broader coverage and faster speeds’. The business will hire 1,000 new engineers this year and provide further multi skill training for engineers so there is more flexibility in the work they can do for customers.
Openreach is also aiming to halve missed appointments to two and a half per cent within a year with an ambition to reduce them even further after that. A case management service team is also being established to step in and resolve problems for customers who have experienced two or more missed or unsuccessful appointments. The provision of dedicated business lines known as Ethernet will also increase by 20 per cent year on year.
The UK is the leading digital economy in the G20 with the highest superfast broadband coverage and take up in the EU ‘big five’. More than ninety per cent of UK premises can access superfast broadband across all fixed networks and that is set to rise to 95 per cent by the end of 2017. Meanwhile, more than 15 million people are using 4G via the EE network, the highest number for any operator in Europe.
BT’s next wave of investment will help Openreach take UK superfast broadband coverage beyond 95 per cent and the business also stands ready to address slow speeds in the final few per cent of the country should there be regulatory support for its plans. Long Reach VDSL has been identified as a potential solution and Openreach is set to run technical trials in the coming months.
EE meanwhile has said that it will extend its geographic 4G footprint from around 60 per cent today to 95 per cent by 2020. These parallel plans will ensure the UK is one of the best served countries in the world when it comes to superfast fixed and mobile services.
Ultrafast broadband will be a major area of focus for Openreach which today said it has an ambition to reach twelve million premises with ultrafast services by 2020, two million more than previously announced. The business has the largest FTTP network in the UK and it has been conducting further trials of this technology to prove it can reduce the cost of deployment, improve the customer experience and make it quicker to install. The trials are going well and the business believes it may be able to pass two million premises with this technology by 2020 helping to take overall ultrafast availability to twelve million.
FTTP is likely to be deployed to hundreds of thousands of SMEs in high streets and business parks - should there be demand - providing them with a service that offers speeds of up to 1Gbps without the need for a dedicated business grade line. The updated service will be developed by Openreach in the coming months taking the views of its communication provider customers into account.
FTTP will also be deployed to consumers in new property developments with Openreach announcing it would deploy the service for free at sites where there are more than 100 homes. It may also play a role in serving apartment blocks and some rural areas where it may provide the most appropriate solution.
Whilst some consumers will receive their ultrafast broadband via FTTP, most will receive it via G.fast, a technology which transforms the speeds customers can receive over a mix of fibre and copper. Customers taking part in the trials are currently receiving speeds of up to 300Mbps and these will reach up to 500Mbps in the next few years as the technology is deployed. Laboratory tests of XG-FAST, a future variant, have also shown that speeds of more than 5Gbps are possible over short copper lines demonstrating that copper has a role to play for many years yet.
By share of GDP