BT hikes FTTP on demand prices


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.


  1. ~$6.5k. Makes the ‘up to 7 grand’ statements sound a little less crazy, huh.

    I guess the good news, is that it doesn’t appear that FOD is actually an option being actively discussed as part of any ‘mixed technology’ solution. Can’t complain about pricing for a user-pays service option that potentially won’t exist, right?

  2. And that is the problem of not “doing it right, doing it with fibre” in the first place

    • Okay, so with a little logic, the price jump can only be the result of:

      a) BT grabbing cash as fast as it can
      b) price hikes in the installation of the last mile

      Now obviously, an end to end solution would be less prone to price hikes as it’s all pre-planned rather than on demand, but if the problem is if the situation is b), it doesn’t really bode well for the cost estimates of any 100% replacement network, rather than wiring to a central node and using existing copper.

      Of course, we’re completely forgetting to factor in differences in the countries, eg. English labour costs vs Aus, complexity (England is riddled with houses/streets etc well past a century old which might make replacement more expensive), density (which should work in favour of BT in terms of lower costs) etc, but what the hell, let’s just say it’s equal for arguments sake.

      Not that I’m in favour of the LNP “solution”, but if anything, the BT price hike seems to indicate that end to end replacement may be more expensive than initially planned, and that FTTN might be a more affordable solution rather than going the whole hog.

      Or, ya know, an incumbent telco is screwing people over for more money. Because that never happens…

      X D

      • I don’t think it shows that FTTN is more viable at all. I think it’s probably far more likely that the costs of rolling out a single fibre from the node are very high. You don’t get the benefits of scale that rolling out a whole suburb would get you – teams of people with specific jobs would get far more done than a single ad hoc install for the same billed time.

        • +100
          Precisely what I and many others have been arguing. A ridiculously expensive process with council permits/processes and modifications and refurbishment as needed all for one scungy service.
          Fiscal/economic incompetence of the highest order, no connection whatsoever with the real world

  3. If the telcos can make a profit, they will make a profit, and FttN creates a captive market across the entire country. Why would they lower prices when they didnt need to, when its a foregone conclusion we’re going to need to upgrade at some point?

    All they need to do is set a price, and wait for people to grudgingly pay. Then blame the Government of the Day. Its the Liberals fault for not doing blah blah blah. It’s Labor’s fault for not subsidising blah blah blah.

    The downside to a competition based development is that when there are only a couple of players (in this case, at the wholesale level), there is no interest in competition. Witness the duoploy of Woolies and Coles and how comfortable they were for a long long time.

  4. Wow, all those calls back six months ago, claiming Gillard and Conroy were obfuscating the truth with their $5000 FoD comments. Its the annual network charge that is the real killer. No private residents are going to fork over that kind of cash.

  5. Also keep in mind these are wholesale costs, so it’s probably at least +20% for VAT and then the cost of actually providing the internet connection on top of that. And a 3 year contract. Even at the old prices it was ridiculous.

  6. That rental cost is obscene, unless they subsidize the original install they are just charging like a wounded bull.

  7. Trying to turn DSLAMs into FSAMs was never a good idea. They’re just too different an architecture for it to be a cheap and easy upgrade.

  8. Add to this Switkowski’s “no promises” regarding speed and it’s entirely plausible that the “old slow copper network” claim will also turn out to be true. RIMs and ISAMs were his life at Telstra and this’ll be more of the same but with a V.

    • Agreed.

      If the current ADSL (up to) 24Mbps is the “the old, slow copper network”, how is the new FTTN (up to) 25Mbps not also “the old, slow copper network”.

      I think so far the Labor complaints are being shown to be far more prescient than our host.

  9. Has anyone noticed how we are not England? so BT’s pricing structure has nothing to do with us.

    • Well the price hike tends to indicate to me that it wasn’t profitable/profitable enough so I am sure that it is indeed very applicable to us.

  10. Wasn’t it obvious from the start all this was going to unravel when it got closer to people actually doing something? The only surprise for me is how many of and how quickly the promises have evaporated.

    How much more will it take for the whole thing to die until LCP returns to opposition. In the meantime we can move on and follow other debates.

    • 11,000 dollars + 2000 dollars per year (minimum 3 year contract) – all Ex Tax, ex retail margin – is cheap?

      You think it was going to cost NBNCo 13,000 dollars per premises to run Fibre to each house in Australia?

      My gad.

  11. I have constantly been dismayed by the medias reporting of BT’s FoD service. They always seem to focus on the install cost when it’s actually the annual fee that is the killer – don’t think that NBNCo will give away a FoD for free either. It wouldn’t surprise me in the slightest if we were paying $1000/year+ to maintain a fibre on demand service just like BT.

  12. $2k per year rental, on top of $6k install… if I paid that much for installation, then they should be paying me rent to sell me their service on my fibre.
    Already looked at trenching options for my 2km,15 premise, dead end street, because NBN was already unlikely, and CBN cabinets extremely unlikely.

    Looks like the $1k I invested in 1km wireless link to a working adsl point will continue to pay dividends for another decade at least. I’d invest further in fibre, but not tuppence for CBN, the cabinet distances for that imply no improvement over the 3-7mbps I currently get.

  13. “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.”

    I’m taking it as a given now that if you live in a HFC area that you will *never* see FTTP, let alone be given an option to pay for FoD. Simon Hackett has pretty much confirmed this with his continual spruiking of DOCSIS 3.1, despite the fact that there is some evidence that the HFC cable will reach a high maintenance phase within a decade and that it should be replaced by 2020 because of this.

  14. It’s cheaper to relocate lock stock and barrel to the United States for USD$69 a month gigabit connection (Chattanooga) and still have change left over from one way flight ticket and residential lease setup costs!!!

    • lol. google fibre is a joke…
      ps kudos, at least you realised it is only available in few suburbs.

      • Chattanooga EPB isn’t Google Fiber idiot. Come back when you know what you are talking about.

        • opss my bad, I had google fibre in my mind, but Chattanooga EPB is not going to “fly” in most of the cities as most councils and residents will have a fit with overhead cables.

          • Not to mention any that considered that option would be snowed under with lawsuits from the Telco’s and many states now have laws making it extremely difficult as a result of pressure from aforementioned Telco’s

  15. I got a little nostalgic and went back through the Politifact statements in regards to the NBN. It really is a shame that our political/media system doesn’t value long term perspectives ie you can’t argue a position of principle against current evidence. In this case the pricing of BT’s fibre on demand was used as the current evidence and long term risks to its accuracy were overlooked because they are difficult to quantify. As such you got the following:

    Which a year later is now looking odds on to be completely true based on our new understanding.

    From a position of principle however you would say that in managing any project you want to remove complexity to control risk (unless you are absolutely and comprehensively on top of the involved risks) . The current bag of monkeys we have for a government don’t get this point generally and Malcolm in particular has gone from being a golden boy to being either stubbornly arrogant, incompetent, corrupt, dishonest or a “Multi-Mix” of those adjectives.

    Do they ever revise these things?

    • RBH: “I got a little nostalgic and went back through the Politifact statements in regards to the NBN.”

      Malcolm and tOnY got plenty of political mileage out of the $5000 per fibre connection but:
      “You know, it is to say, so much worse, very much worse, you know, than (gollum, gollum) we, you know, ever imagined it could be. (gollum, gollum). <= it's a bit hard to read, but I had to have some fun.

    • I’ve done the numbers myself, based on the expected speeds for VDSL; and under the previous price arrangements (IE the cheap ones) UK FoD was actually going to cost on average $5000.

      It was a lot of backflipping, ignoring of taxes, ignoring of retail margins, ignoring additional monthly costs to turn the UK FoD prices into less than 5000 base price (AUD).

    • Oh that’s brilliant RBH. A well calculated guess that is now even close to the mark than before.

      Can anyone remember the estimated cost for FTTP installations? I’m vaguely recalling <$3000, perhaps $2,700 per premises?

  16. Look, I am prepared to pay to get FTTP, but I don’t get this price hire for connection cost. That is completely insane. In my case I rent and there is a good chance that I will move in the next year and will have to pay the cost again to get connected which I will do. But to pay that much per month just for the connection starts to make it unaffordable. Also I feel sorry for the poor person who moves into my place after I leave and just wants basic phone DSL service. All of a sudden they are force to pay $185 a month because of something I wanted. What are they going to do in that case, connect them back to the copper network?

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