UK: How bad is superfast broadband uptake?

bealtine

http://www.pcpro.co.uk/blogs/2011/11/11/how-bad-is-superfast-broadband-uptake/

We’ve been waiting for years for true “superfast” fibre-optic broadband, but now it’s here it seems few people actually want it. At least, that’s the impression given by Ofcom chief Ed Richards’ comments earlier this week, when he said superfast (24Mbits/sec+) broadband uptake was “still low” and largely confined to families with teenage children.

How low is “low”? We asked BT for its latest fibre figures. More than six million premises now have access to BT’s fibre lines, but only 300,000 customers have actually signed up for the service. That’s a less than impressive sounding conversion rate of 5%.

It’s even less impressive when you consider that BT Infinity fibre costs no more than the company’s most expensive ADSL package, and that the company admits to “really going for it” in terms of marketing fibre to customers. People are being offered an effectively free speed upgrade and many seemingly don’t want it.

Why can’t Britain’s two biggest broadband providers tempt more people to upgrade to the superfast speeds?

In BT’s defence, its conversion rate is much higher than this time last year, when the company had signed up only 38,000 out of three million fibre-enabled households, a success ratio of only 1.5%. And its chief rival is doing no better. Virgin Media’s Q3 financial report reveals that eight million homes now have access to its 100Mbits/sec service, but only 187,000 of its customers are on 50Mbits/sec or 100Mbits/sec lines – a conversion ratio of only 2.3%.

Reasons for refusing fibre

So what’s going wrong? Why can’t Britain’s two biggest broadband providers tempt more people to upgrade to the superfast speeds?

There could certainly be an element of once bitten twice shy. For years, broadband providers have over-egged their advertised broadband speeds with the largely fictional “up to” speeds. According to Ofcom’s latest fixed-line research, the UK’s actual average broadband speed is 6.8Mbits/sec, but the average advertised speed is 15Mbits/sec. The broadband providers have only themselves – and the ever-pliant Advertising Standards Authority – to blame if nobody now believes their speed claims.

Price is clearly a major factor, too. Virgin’s 100Mbits/sec service costs £35 a month (when taken with a Virgin phone line), but its cheapest 10Mbits/sec package costs only £13.50 – almost a third of the price. And while BT does indeed match the price of its top-end ADSL and fibre packages, you can get BT’s up to 20Mbits/sec ADSL for as little as £13 (plus line rental), compared to the minimum £28 per month outlay for fibre. When the whole country’s looking after the pennies, people need a pretty good reason to upgrade.

And what is that reason? Remember that, to date, fibre has largely been rolled out in inner-city areas, places that already had fairly decent ADSL speeds. For the average consumer (who is far less demanding of their broadband than the average PC Pro reader), there are few apps or services that would run a great deal more smoothly on a 40/50/100Mbits/sec line than they would on a 10 or 20Mbits/sec ADSL connection. Unless you’re downloading multiple HD video streams – as you might in Ed Richards’ stereotypical teenage family – there is currently no compelling reason for the man in the street to upgrade.

The people who would surely jump at the chance of a fibre speeds are those in rural areas, smaller towns or on the edge of exchanges, for whom the jump from only 1 or 2Mbits/sec – or even slower – to 40Mbits/sec and beyond would be truly life changing. A point that was reportedly made by senior telco execs at a recent conference in Denmark. But, of course, they’re harder and more expensive to reach.

But with BT admitting its business case was based on 20% of broadband customers making the jump to fibre at this week’s Westminster eForum – four times its current conversion ratio – you can’t help but wonder whether it may regret taking the soft option first.

clohamon

bealtine wrote: »

http://www.pcpro.co.uk/blogs/2011/11/11/how-bad-is-superfast-broadband-uptake/


The people who would surely jump at the chance of a fibre speeds are those in rural areas, smaller towns or on the edge of exchanges, for whom the jump from only 1 or 2Mbits/sec – or even slower – to 40Mbits/sec and beyond would be truly life changing. A point that was reportedly made by senior telco execs at a recent conference in Denmark. But, of course, they’re harder and more expensive to reach.

But with BT admitting its business case was based on 20% of broadband customers making the jump to fibre at this week’s Westminster eForum – four times its current conversion ratio – you can’t help but wonder whether it may regret taking the soft option first.

Yes, but sadly eircom's FTTX trials didn't include a typical rural community, so speculation that rural take-up would be higher or even high enough to make a business case is still just that - speculation.

watty

The costs of Rural fibre are overstated as the telcos only want to do the better margin areas.

Even fibre backahaul coax is feasible for some villages. But why on earth would UPC even consider it until their Urban & Suburban rollout is complete and the market reaches saturation. Even then "profitable" is often redrawn to look loss making to justify taking no risk if the profit margin is small and the forecast cost and takeup uncertainty is high.

Since the cost tapping the trunk cable to go up a lane and cost of modems is much lower for Cable than fibre it could be argued that FTTC with then trunk DOCSIS coax (up to 50km is feasible per run at 100Mbps per user) is far better bet for Rural than FTTC and xDSL to the rural premises (1km max per line for maybe 15Mbps). A single cheap rural trunk coax with some cheap line powered repeaters can manage about 3.4Gbps downstream (if no TV) and about 34 to 136Mbps upstream (depending on repeater locations and cable length). At 20:1 contention upstream and 10:1 contention down stream (about x2 to x5 better than Comreg's permitted contention) that's a virtual 600Mbps to 2720Mbps upstream, or more than 60 Users on 100Mbps down /10Mbps up packages with space for full cable TV line up too! With suitable engineering of repeaters the upstream contention can be reduced to 5:1 and you could have 60 users with 5:1 upstream and downstream contention, or 250 users approximately on one coax with about 20:1 contention at over 20km cable length.

Anyone can use DOCSIS on Cable or Fixed wireless. UPC has no control, exclusivity or monopoly. The equipment is commodity and inexpensive and easier to install to home than fibre.

Urban should be FTTH.
Suburban should be FTTC or FTTH depending on location and what the user is prepared to pay.
Rural should be FTTC with "last mile" (1km to 50km) being xDSL, Coax (DOCSIS) or Fixed Wireless (DOCSIS on multiple channels or Fixed Wimax for few customers on one channel).

All FTTC should be copper pair xDSL (1km max) or Coax (any distance up to 20km) or Fixed Wireless (1km to 50km).

Even Rural customers should be able to pay extra for fibre. It's cheaper to run Fibre than ESB.

bealtine

I feel another issue is that currently in the UK the cost of FTTH is far too high.
"costs no more than the company’s most expensive ADSL package"

"you can get BT’s up to 20Mbits/sec ADSL for as little as £13 (plus line rental), compared to the minimum £28 per month outlay for fibre"

These prices are pretty good but the FTTH price is still a little high if you want widespread take-up.


To take this to the Irish context We build motorways and do not expect an economic return on that investment, the benefit is in the boost to the general economy and the services they can deliver over the motorway network. We should be thinking of FTTH in the same context imho. Once upon a time (in a land far far away) we built out rural electrification as an economic spur to the country (nowadays we have economic fundamentalism as the ideology de jour), this worked quite well and did bring economic benefits to all and we invented "machines" to take advantage of the new technology of that time.
I feel the same will happen for fibre and a future we never even dreamed of is in store.

watty

Also Urban costs tend to be underestimated as it's attractive and Rural costs tend to be over-estimated as it something no-one wants to do.

If there was a USO, then you can be sure that they would manage Rural cheaper than they claim it costs today.

Even the Black Valley now has ESB

Rural electrification would continue up to the ’80s, the last big connection was in the Black Valley, County Kerry in 1976.

Some islands are powered by small diesel stations, while the last additions to the national grid were Innisturbot and Innisturk, off the Galway coast, in 2002.

http://www.carlow-nationalist.ie/tabId/392/itemId/8295/Tinryland-man-brings-light-to-rural-Ireland.aspx

http://www.esbelectricmail.com/_archives/em_archive/archives/index8cbb.html?id=110&cat=1

http://historical-debates.oireachtas.ie/D/0290/D.0290.197604280014.html

Broadband is almost as important as Electricity. It's easier and cheaper to run fibre than ESB to remote locations.

The more rural situations are a small proportion of Urban and Suburban. Should they really be paying the full cost of install.

Of course some people can get connected...
http://historical-debates.oireachtas.ie/D/0300/D.0300.197710190021.html

clohamon

That's great stuff about CJ's phone in the Blaskets.

watty wrote: »

Also Urban costs tend to be underestimated as it's attractive and Rural costs tend to be over-estimated as it something no-one wants to do.

Are you saying that they already know its fundamentally unprofitable and that they are deliberately skewing research to reinforce that view? Or are you saying that they just don't want to do it, for some reason other than profit, and are skewing the research for that reason?

watty

I'm talking about a more subtle issue when you are working somewhere and doing things that involve estimates. It's an unconscious thing in many cases. You want to make the report/plan etc clear and simple. You'll take less risk on estimates (more pessimistic) on things you perceive as low margin. You'll be more optimistic and take more risks on estimates and guesses about "the sure thing".

I'm convinced that research on implemented plans would show my theory of estimations for plans to be significant. I'm not saying anyone does this deliberately, though of course there can be obvious motives to increase the "contrast" between the highly profitable and the barely profitable given that any company has finite investment and roll out resources.

Capt'n Midnight

watty wrote: »

Even the Black Valley now has ESB

while the last additions to the national grid were Innisturbot and Innisturk, off the Galway coast, in 2002.

On TG4 during the week another island was hooked up. Up round Mayo somewhere IIRC