BT Preps FTTC Trial
BT Group plc (NYSE: BT; London: BTA) is planning to deploy fiber-to-the-curb (FTTC) and VDSL technology platforms in a pilot program involving about 15,000 customers to see if there's any interest in the types of services that technology combination can offer
That's according to Steve Robertson, the CEO of Openreach , BT's access network business.
And if the trial is a flop, then the carrier's plans to invest in what it calls "next generation access" (NGA) technologies could be revised or even scrapped, notes Robertson, who is in charge of building and managing a network that sells wholesale services to about 200 ISPs, including sister business unit BT Retail. (See BT Unveils $3B FTTx Plan.)
In an interview with Light Reading at Openreach's London offices, Robertson also said the carrier is concentrating on boosting the capabilities of its broadband services by maximizing the potential of installed ADSL platforms and investing in the connections between local exchanges and BT's core IP network. "Better backhaul will be rolled out soon," says Robertson.
The interview was set up following Light Reading's coverage of BT's high-profile next-generation access strategy announcement in July, when the carrier unveiled plans to invest £1.5 billion ($2.65 billion) in new broadband infrastructure. (See BT's FTTH Conceit.)
The press release made some grand claims. "BT today announced plans to roll out fibre-based, super-fast broadband to as many as 10 million homes by 2012. The £1.5 billion [US$2.65 billion] programme will deliver a range of services with top speeds of up to 100 Mb/s with the potential for speeds of more than 1,000 Mb/s in the future," it read. (See BT Invests in FTTH.)
That announcement generated many column inches of positive coverage for BT, with reports in the popular U.K. press talking up the investment -– for example, see this Daily Mail story; the Guardian's coverage; this Daily Telegraph article; the BBC's story; and this New Scientist report.
The reality, though, is that 10 percent or fewer of homes hooked up to the NGA by 2013 will have FTTH connections, while the remainder will be connected using FTTC/VDSL and ADSL2+, which might struggle to live up to anyone's interpretation of what "super-fast broadband" entails.
Yet Robertson says BT's announcement was a "statement of intent only, not a promise... the business case must stack up. It must be sustainable in the context of the U.K. market," and that can only be achieved if BT can "create a wholesale product that is economically viable."
So the news release was something of an overstatement? Robertson doesn't subscribe to that view, but says that BT needed to "make a serious statement of intent to attract attention."
Well, it certainly worked.
But now the real work begins, as Robertson is responsible for following up that statement of intent with actions. And for the amiable Scot, that means walking the walk, not just talking the talk. "It's not about grandiose claims -- it's about what we can achieve in the next 18 months," says Robertson.
So with July's grandiose claims set aside, what's going to happen now?
BT's next move
Robertson is most intent on stressing that the NGA investment depends on the development of a sustainable business model, for Openreach and its ISP customers. "If they [ISPs] can't create great products," that are used by paying customers, "then it won't fly, and it won't be viable," says Roberston.
But the BT man is confident that it will fly. "We'll only get the investment [from the BT board] if we can show we can create a sustainable business model for BT and the [ISPs]... I am confident we can go on this journey, but we need a degree of humility about the challenges that face us," states Robertson.
And there's only one way to find out if that business model can be created, and that's to try it out. So Openreach is engaging with its wholesale customers to develop a roadmap and some technical, service, and business parameters, and sort out a suitable pilot scheme that will help to answer a lot of questions.
"We won't know what people are prepared to pay for until we start doing something. No one knows the answers now. We want to go out and do something, and as we do it we'll learn more about the market," says Robertson.
What he does know, though, is that the economics of the service he offers to his ISP customers will be affected by three technical issues: transmission speeds -- the bandwidth that can be delivered to end users; compression technologies -- "we can do more now than we could a year ago, and it's not standing still"; and storage – "just think about how the cost of storage is coming down."
The transmission speeds are what everyone focuses on, notes Robertson. And with reason: FTTH using GPON technology, a combination that just might be tapped to connect about 4 percent of U.K. homes during the next five years, can, in theory, deliver up to 100 Mbit/s, while FTTC/VDSL can, at best, provide 40 Mbit/s at its maximum. That's a big difference, but Robertson contends that none of his customers can come up with any reasons to need more than 40 Mbit/s at the moment.
That seems strange, as 40 Mbit/s would not be an average speed: A more realistic standard throughput of 15 Mbit/s via a VDSL2 connection would soon be eaten up with a few high definition IPTV channels and some peer-to-peer downloading activity, and that's before a few hi-def VOIP lines and any online gaming might come along to siphon off guaranteed bandwidth.
BT's FTTH baby step
So can Openreach and its ISP customers learn anything from its initial foray into consumer fiber-to-the-home (FTTH) services at Ebbsfleet in southeast England? (See BT Goes With Huawei for FTTH .)
"That's just a baby step," says the Scot. "if you want speed to market and penetration, then FTTC and VDSL has a lot going for it, and some time next year we will have a significant pilot at a local exchange with about 15,000 customers so we can get some experience. We'll create a generic Ethernet access product and that will enable our customers to create their own services to run on top. We'll take a fiber from the exchange to a new [street] cabinet with VDSL. And then we need to discuss with the ISPs about a minimum assured speed."
But all the time it's the commercial model that Robertson comes back to. "That's vital for us and the CEOs of our customers. The commercial aspect is very important. If we get wrong-footed on the commercial side, it could all grind to a halt," he says.
And what about the option for ISPs to install their own VDSL equipment in street cabinets if they don't want to rely on Openreach? That has to be explored because there has certainly been an appetite for rivals to unbundle BT's copper lines and install their own DSLAMs in BT's local exchanges, as more than 5 million lines are now unbundled in the U.K.
Robertson says that option is available, but that "there's no enthusiasm for this, and if we offer the right product at the right price then they wouldn't need to do that. If we can't offer a decent product then they'll be more likely to want to do it... I'd be really disappointed if we couldn't offer a service that would meet our customers' needs."
That's as may be, but reports from Openreach's customers suggest that there's some disgruntlement about the pricing and service guarantee commitments that Openreach has made at the greenfield Ebbsfleet FTTH site.
Robertson didn't want to comment on such suggestions, saying only that "we need to look beyond Ebbsfleet." Might that include a so-called "brownfield" FTTH pilot, where existing copper line connections are replaced with fiber connections? "I'm not ruling that out," says the BT man.
As for the potential to connect 1 million homes with FTTH/GPON, Robertson says only that the final number will be determined by a number of factors, including the health of the housing market and the cooperation of local authorities. "We never said it's going to be a particular mix" of FTTH and FTTC/VDSL, he claims, though that doesn't explain why BT managed to come up with a 1 million number for potential FTTH homes.
Ultimately, though, "it will all be dictated by economic realities."
As for the question of meeting customers' expectations, Robertson says the "whole NGA service set will have guarantees and assurances with SLAs [service level agreements], there's no question about that."
So what might the minimum guaranteed speeds be in the NGA service set? "We've no idea yet what our customers will want, and we don't know yet what can feasibly be delivered. We will be having a lot of meetings to discuss these things," says Robertson.
And what of the influence of regulator Ofcom ? BT stated in July that its plans were dependent on the right regulatory environment. Robertson says Ofcom "could make this very easy or very difficult, but every indication is that they'll make it easy. Ofcom has been very helpful."
All of which still leaves the U.K.'s broadband future somewhat in limbo, but Robertson is keen to stress that the current barrage of words will soon be followed by action. "I feel a burning urgency to get on with this."
And if Robertson's good to his word, it won't be long before we find out whether the grandiose claims of BT's press release can become more than just a statement of intent.
— Ray Le Maistre, International News Editor, Light Reading