Confident BT Group calls on Openreach to build full-fibre faster
Openreach will ramp up the pace of its full-fibre network build over the next six years, with ambitious targets to bring ultrafast broadband within reach of 15 million homes by the middle of the 2020s
Openreach’s full-fibre broadband network targets have been increased, in line with earlier expectations, from three million to four million homes passed by 2021, and 10 million to 15 million by 2025.
BT’s chief executive, Philip Jansen, revealed the revised targets – which leaked on 8 May – during his first quarterly results announcement since taking over from Gavin Patterson at the beginning of February 2019.
“Our aim is to deliver the best converged network and be the leader in fixed ultrafast and mobile 5G networks. We are increasingly confident in the environment for investment in the UK,” said Jansen, a former chief executive of financial services firm Worldpay, who was tapped to lead BT in October 2018.
“We have already announced the first 16 UK cities for 5G investment. Today we are announcing an increased target to pass four million premises with ultrafast FTTP technology by 2020/21, up from three million, and an ambition to pass 15 million premises by the mid-2020s, up from 10 million, if the conditions are right, especially the regulatory and policy enablers.
“We need to invest to improve our customer propositions and competitiveness. We need to invest to stay ahead in our fixed, mobile and core networks, and we need to invest to overhaul our business to ensure that we are using the latest systems and technology to improve our efficiency and become more agile,” he added.
Dispelling fears among BT’s investors that an expansion of the full-fibre build would see their returns cut, Jansen held the Group’s full-year dividend unchanged at 15.4p per share.
Full-fibre, also known as fibre-to-the-premises or FTTP, is considered the gold standard of broadband delivery technologies, capable of delivering consumer services with speeds exceeding well over 300Mbps and, in many cases, 1Gbps.
Seen as a key enabler for the digital economy, particularly after Brexit, the past 12 months has seen a massive increase in the pace of deployment of full-fibre, with a number of other network builders as well as Openreach actively building out networks.
Vote of confidence
Clive Selley, Openreach’s CEO, welcomed a “huge vote of confidence” in the organisation.
“I’m delighted that our engineers are rising to the task, and that we’ve been backed by our shareholder [BT] to go even further,” he said.
In the past year, the size of Openreach’s full-fibre footprint has doubled, with more cable being laid than in the previous seven years put together, and over a million homes now able to access an ultrafast service on a full-fibre connection.
Selley said that if government ambitions around full-fibre were to be met, Openreach would almost inevitably end up doing a lot of the heavy lifting, so the focus now will be on building and enhancing the business case to make it commercially viable to upgrade the majority of UK premises to full-fibre.
“If we’re to build to 15 million premises and beyond, we do still need the certainty of a regulatory framework which encourages investment in the long-term. And we need action to address the cumulo tax on fibre infrastructure, along with a mass of red-tape and barriers which hamper our efforts to upgrade apartment blocks and new developments,” said Selley.
Openreach is in fact already working alongside Ofcom and the government on elements of the future regulatory framework for broadband, particularly on cumulo rate relief – the taxes on commercial property defined as Openreach’s ducts, poles and exchanges, to more fairly reflect the lengthy nature of the full-fibre build.
In a recent exclusive interview with Computer Weekly, Openreach’s chairman Mike McTighe said: “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.”
Openreach will also be doing more to reach out to its communications service provider (CSP) customers – which includes BT – to address concerns around take-up, because although the full-fibre network is expanding rapidly, many people, for a variety of reasons, are not switching to it. This potentially endangers the case for investment, and has led many to question whether or not the UK even needs mass deployment 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,” said McTighe.
Crucial strategic decision?
Ernest Doku, telecoms expert at broadband comparison service uSwitch.com, described the decision to increase the pace and ambition of Openreach’s fibre investment programme as more than just an astute business move.
“It’s likely to prove a crucial strategic decision as the telecoms giant fights to retain its pre-eminent position in the market,” he said. “While Openreach enjoys a huge legacy advantage with its unmatched, nationwide network, it is facing the prospect of much stiffer competition when it comes to the emerging world of full-fibre.
“A string of ambitious and well-funded new entrants are busy building their own fibre infrastructure, and building their future business plans around it. Openreach’s response has been to accelerate the pace of its own full-fibre installation, and it’s now connecting fibre for the first time to 20,000 homes and businesses a week.
“From a consumer point of view, this fight to rollout full fibre networks could be good news if it leads to more people getting access to full-fibre sooner, and at the right price,” he said.
Revenues down but profits up
Meanwhile, BT reported full-year revenues of £23.43bn, down 1% on 2018, while pre-tax profit rose 2% to £2.67bn.
Its Consumer business, which includes mobile operator EE, was the only unit that saw revenue growth, up 3% to £10.70bn, while Enterprise, Global Services and Openreach saw their full-year sales shrink by 5%, 6% and 4% respectively. This picture was broadly repeated in the fourth-quarter numbers.
Global Services, which despite BT’s protestations is still widely seen as something of an albatross about the Group’s neck, saw its net promoter scores increase 39 points compared to the 2016-17 baseline, thanks to efforts to enhance customer experience in account management, quoting, and service delivery performance.
Read more about ultrafast broadband
- Research from telecoms regulator Ofcom suggests efforts to encourage consumers to switch to faster broadband services are paying off.
- More than half of homes in the UK can now receive a broadband service capable of delivering speeds of more than 300Mbps, Ofcom claims.
- Health secretary Matt Hancock recently announced plans to give every NHS organisation and community care service access to full-fibre broadband services.
