news UK wholesale telco BT Openreach has substantially increased the prices it is charging customers for extending fibre broadband from local neighbourhood ‘nodes’ all the way to premises, in a move which calls into question the Coalition Federal Government’s plan to use the service in its Coalition Broadband Network plan.
In June 2012, Openreach (the wholesale division of BT) revealed plans to modify its 80Mbps national fibre to the node rollout so that customers would be able to choose to have fibre fully extended to their premises, delivering a large speed upgrade to 330Mbps in the process. According to OpenReach’s price list at the time, costs for the fibre extension service were to include a £500 (AU$937) initial connection fee and ‘annual rental’ cost of £465 (AU$872), plus a specific charge ranging from £200 (AU$375) up to £3,500 (AU$6,562), depending on the distance premises are from local nodes.
However, on Wednesday this week, as first reported in Australia by ZDNet, the telco substantially increased the prices on the service. After 1 May this year, according to Openreach’s new price list, the £500 (AU$937) initial connection fee will increase to £750 (AU$1,406), and the annual rental cost of £465 (AU$872) will increase to £1,188 (AU$2,227).
In addition, the specific distance charge ranging from £200 (AU$375) up to £3,500 (AU$6,562), depending on the distance premises are from local nodes, will increase to £350 (AU$656) to £6,125 (AU$11,480). This last cost refers to premises where customers are up to 2km from their local node. 96 percent of premises are within 2km of their local node, according to Openreach. Customers whose premises are further away will need to pay more, although the telco has not stipulated how much.
In its April 2013 broadband policy, which focused on a national Fibre to the Node rollout for its broadband network project, the Coalition stated that it was planning to offer Australians the choice to upgrade their connection to fibre to the premises as under Labor’s FTTP-based NBN policy. At that stage, the Coalition believed it would be possible to offer this kind of service on a similar basis as it is offered in the UK.
In a FAQ article published on his site in late April, then-Shadow Communications Minister Malcolm Turnbull wrote: “While we anticipate that for the vast majority of consumers in the areas serviced by FTTN the speeds offered will be more than adequate, there is the technical possibility to run fibre to one or more customers in an area served by a node … Fibre on demand is the most practical way of ensuring that a network like the NBN is rolled out as quickly as possible to all users, without imposing unnecessary costs on everyone using that network.”
Based on this premise, the nation’s number two telco Optus revealed in June last year that it was considering launching plans which would allow Australians to individually pay to have the Coalition’s fibre to the node NBN infrastructure extended all the way to the premises.
It is not currently clear to what extent NBN Co would be able to offer FTTP on demand services to much of its new planned network architecture, due to the fact that it is now planning to service up to a third of Australians through the re-use of the HFC cable networks operated by Telstra and Optus.
However, Openreach’s new plan structure significantly calls the Coalition’s overall FTTP on demand plans into doubt in any case, as the costs appear prohibitively expensive for many Australians.
According to UK website ISPreview, Openreach modified its costs as it received more data about what the real-world expense of connecting FTTP on demand was turning out to be. The site reports:
“Openreach claims that its original prices for FoD were based on various modelled assumptions and on a small volume of completed orders, which they’ve had to keep constantly under review. Unfortunately this revealed that the “cost of deployment is higher than we originally expected“, which means they faced a choice between either withdrawing the service completely (i.e. losing too much money while fulfilling FoD orders) or raising their prices.”
Labor had severely criticised the Coalition over the FTTP on demand plan in the leadup to the September election. At that time, based on Openreach’s prices, it appeared that a substantial part of Labor’s criticism was invalid. However, based on Openreach’s new prices, it appears that much of Labor’s criticism was right.
In July 2013, Labor politicians around Australia were claiming that the Coalition’s rival National Broadband Network policy required Australians to pay $5,000 or be left with current broadband speeds on the existing copper network. While Labor’s characterisation of FTTN services as being “left on the old, slow copper network” is misleading, the costs which Labor had attributed to FTTP on demand now appear to be significantly more accurate, based on Openreach’s new price list.
Opinion/analysis to follow early next week.