Towards a full-fibre Britain: the view from inside Openreach

FTTP roll-out progresses, but copper still an issue

A year into McTighe’s tenure, Openreach performed a major strategic pivot when it announced the launch of Fibre First, a programme that promises to fundamentally transform the way it thinks about broadband and critically, makes the current gold standard technology – full-fibre, also known as fibre-to-the-premises or FTTP – its delivery mechanism of choice wherever possible.

Another year on, McTighe is pleased with how things are going. “We’ve Tupe-ed over all of our people, we’ve met all of the commitments that BT made to Ofcom and the government. In the past year, we’ve built more fibre to the home than we built in our previous life [and] we have the ambition to go way beyond that,” he says.

“The underlying message is that we’re committed to be the national provider, to building at pace and at scale, and to working with stakeholders to put together a business case that will enable us to go way beyond where we are today.”

But the broadband market is a broad church, with multiple providers, experts, stakeholders, organisations and special interest bodies all vying to be heard. Sitting at the heart of it, Openreach must take account and react to all of these views, which can be conflicting, ambitious, unambitious, supportive, critical, and downright hostile, often all on the same day.

The government, for example, has made much of its ambition to enable the UK’s digital economy for many years, and sees broadband access as a key driver of this future. In 2018, chancellor Philip Hammond caused a stir when he pledged that full-fibre would be available to 15 million homes by 2025, with a national full-fibre network in place by 2033.

McTighe is straightforward in his assessment of whether or not the government’s target of 2033 is achievable, noting that the target is itself somewhat ambiguous – even necessarily so – saying that it could be done “given the right conditions”, but noting it would still be a very ambitious project.

There is also clearly still a lot of work being done on the legacy copper network. Much of this relates to Gfast, which enables full-fibre equivalent speeds over copper lines, something Openreach has been pushing for some time, but standard VDSL fibre-to-the-cabinet (FTTC) services using copper to bridge the last mile into users’ homes is still being widely deployed, albeit more quietly than a few years ago.

McTighe produces the somewhat surprising statistic that around 50% of new-build homes erected in the UK in 2018 were hooked up to the internet using copper lines – in spite of efforts by multiple stakeholders to make full-fibre the default choice for new homes.

Nevertheless, it is still fair to say that Openreach’s progress on fibre has been quite remarkable. It is passing around 13,000 properties with a full-fibre service every week, it is adding new locations to the network build at a fairly consistent rate, and it is also opening 12 training centres to upskill more than 6,000 new engineers.

“Look at the recruiting we’ve done,” says McTighe. “We’ve recruited 3,500 people; half of them went on fibre. We’ve announced we’re going to recruit another 3,000, and that’s bringing employment to all parts of the country.”

He points out that since Openreach announced it was creating 3,000 new jobs just a few weeks ago, it has had 30,000 applicants for them.

“That is our commitment. We are a multi-year, long-term infrastructure building company – we have to be, and we have to lay those foundations now, around people, training, supply chain, logistics, to be able to ramp up to the volumes that the nation needs and that we want to build.”

With the fibre network build likely to be running until well into the 2030s and beyond, McTighe sees Openreach’s recruitment campaign as a long-term investment in technology skills that will guarantee lifelong job security for some, an increasing rarity in the world of the gig economy.

“I go out in the field all the time and the positivity I see coming from the workforce is terrific. We’re very proud of the engagement we’re getting from the workforce at large at the moment,” he says.

“The apprentices we are hiring are a cross section of ages, and they are all extremely interested in what we’re doing, why we’re doing it and so on. There is this sense of purpose that is great for people like me to see. There’s a clear mission, we know what we’re trying to do.”

Elephant in the room

Of course, since 23 June 2016, one cannot discuss any multi-year vision without assessing the impact of Brexit upon it. The full-fibre roll-out is no exception.

However, with less than two weeks until the UK’s scheduled exit from the European Union (EU) at the time of writing, and clarity seemingly further away than ever, businesses such as Openreach remain almost completely unable to assess the likely impact of Brexit on their operations.

Openreach is exposed to two key problems from Brexit. The first is access to skills and labour following the end of freedom of movement between the UK and the EU, the other concerns its ability to easily and quickly import the network equipment it needs.

In terms of access to labour, McTighe says that much of the concern from Openreach’s point of view is in its supply chain, not with its in-house broadband engineers.

“We have a quite deep and extensive relationship with a number of civil engineering companies where they do the digging if we need to lay conduit or whatever, so that’s primarily where that concern came from,” he says.

At the beginning of February 2019, BT’s outgoing CEO Gavin Patterson revealed the firm is holding extra stocks of critical networking equipment to draw down in the event of a no-deal Brexit. McTighe confirms that Openreach has also set aside a stockpile so that the roll-out can continue as planned.

“That’s not a comment on Brexit in the sense of how it goes in the long-term, that’s a comment on whether or not there are any delays in terms of imports and stuff like that,” he says.

“We don’t want to be disadvantaged, so we have a six-week contingency that we’ve built in. It’s a balance between the economic cost of doing that and what a reasonable timeframe is.”

Network access and competition

Rival network builders and CSPs, especially mobile operators, have been clamouring for Openreach to make it easier for them to get wholesale access to parts of its network, notably around dark fibre access (DFA) and duct and pole access (DPA).

However, just over 18 months ago, Openreach successfully appealed against conditions laid down in Ofcom’s 2016 Business Market Connectivity Review that mandated it must give others access to its dark fibre.

It subsequently abandoned plans to release a DFA product, and it doesn’t look like this is going to change anytime soon.

“I don’t believe in dark fibre. It reduces us to a construction company. I’m totally up for duct and pole access as long as there’s fair recovery on it, but other people should build their own networks,” says McTighe. “I am happy to sell live, lit circuits, but dark fibre would totally undermine the Openreach business model if it was to be a pervasive product.”

“I don’t believe in dark fibre. It reduces us to a construction company. I’m totally up for duct and pole access as long as there’s fair recovery on it, but other people should build their own networks”

Mike McTighe, Openreach

McTighe’s objection to the use of DFA hinges partly on Openreach’s inability to assure it as a product, to demonstrate whether or not it is working, or to know what it is even being used for. He reckons the OSA Filter Connect product, which uses so-called “grey” fibre to enable CSPs to connect their own active equipment to lit fibre, is a far better proposition because Openreach can guarantee service levels, monitor and manage it. It also respects the integrity of the organisation’s business model, he says.

On DPA, McTighe is more open to discussions, although he still raises questions over service assurance. “I was around when the first cable networks were built and a lot of them were rubbish, leading to real issues both in the street and in customer homes,” he says.

“We have to make sure that what gets done with DPA is of the right quality because it’s a horizontal platform that everybody will have a right to use. If you put a connector box up a pole, I have to make sure it’s properly fitted and safe. That’s a challenge when I’ve got five million poles.”

Openreach will publish a reference offer on DPA on 1 April 2019 and CSPs have already been briefed on its contents.

Overall, McTighe takes a relaxed attitude to competition in the broadband market, saying it has achieved notable outcomes. “It’d be crass of me to say I don’t believe in infrastructure-based competition because I advocated it while I was on the board of Ofcom and I’ve been advocating it for a long time. We are fully signed-up and committed to it.”

While he dismisses CSP concerns about overbuilding full-fibre networks in economically attractive parts of the UK, saying that this has always been a natural and inevitable consequence how the market works, McTighe believes that in terms of this “competitive part” of the country, the network build is moving in the right direction thanks to the work being done not just by Openreach, but the likes of CityFibre and Hyperoptic.

“We need to raise the dialogue and the intensity around the last third,” he adds. “It’s not right that a third of the country, as happened with superfast, is left out. We need to learn from that and, alongside the government and the regulator, figure out how we as an industry make sure we take everybody on this journey to full-fibre with us.”

The next 12 months

Looking ahead, McTighe has three broad priorities for the next 12 months. First, to continue to build and scale out the full-fibre network at predicted (or lower) cost, with a focus on enhancing the overall user experience.

Second, Openreach will conduct more work with Ofcom and the government on key enablers for the full-fibre build, such as the extension of relief on cumulo rates – the taxes on commercial properties defined as Openreach’s duct and pole assets and exchanges – to more appropriately reflect the multi-decade nature of the network build.

“We want to get to a point where we’re confident and comfortable and understand the parameters in which we’re being asked to operate, so that we can produce businesses cases to continue to scale the network,” he says.

Finally, he says, Openreach will endeavour to work more closely with its CSP customers, including BT, to increase consumer awareness and take-up of full-fibre.

“We don’t make a penny until a consumer is connected to a service, so that’s why we have to work with our customers. Take-up is important to us and it is also a key factor in our business cases,” says McTighe.

“If take-up is strong, then we get a better recovery rate on our investment. We have to execute and deliver in collaboration with the retailers of the services.”

Both Openreach and competitive network builders such as CityFibre have previously discussed the need for more collaboration within the broadband market to meet the government’s full-fibre targets.

Clearly, only time will tell how open to this Openreach’s CSP customers will prove to be, but it should also be clear to them that Openreach is trying to change course, so the ball is, to some extent, in their court.