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BT Unveils $3B FTTx Plan

After years of deflecting questions about building a nationwide fiber access network, BT Group plc (NYSE: BT; London: BTA) has today announced a planned £1.5 billion (US$3 billion) investment in new fixed broadband infrastructure, including fiber-to-the-premises (FTTP). (See BT Invests in FTTH.)

But despite the large capex figure and apparent broadband breakthrough for the U.K. -- a fiber-access-poor residential market compared with many of its European peers -- the news is deemed somewhat disappointing by at least one industry analyst, who describes BT's strategy as "cautious."

BT's plan: the details
The British incumbent plans to invest £1.5 billion by the end of March 2013 to take what BT calls "super-fast broadband" to as many as 10 million U.K. homes (about 40 percent of the total) in urban and rural areas, though the actual commitment and deployment are dependent on agreements being reached with U.K. regulator Ofcom (of which more later). The operator says the move will deliver downlink connections of up to 100 Mbit/s to support services such as multiple HD TV streams and HD gaming and videoconferencing. BT says uplink speeds will be "substantial."

Most of the rollout will be fiber-to-the-curb (FTTC), with the final connection to the home being a VDSL2 service over copper that can deliver up to 40 Mbit/s. FTTP will be rolled out mostly in new-build, greenfield areas, such as the housing development in Southeast England, where BT is installing fiber access technology, and in the Olympic Village that's being built outside London for the 2012 Olympic Games. (See BT Goes With Huawei for FTTH .)

A BT spokesman says the likely technology choice for FTTP will be GPON -- much in the news at present -- though the carrier "is not ruling out point-to-point fiber access." (See PON-derous! and ECI Touts GPON Advance.)

The deployments will be spread around the U.K., with the rollout plans being influenced by the level of support BT gets from local and regional authorities.

The other 60 percent of the U.K.'s homes will get ADSL2+ services from BT, which provides downlink speeds of up to 24 Mbit/s.

The carrier says no technology tender documents have been issued yet: "It's too early for that," says a spokesman.

The planned £1.5 billion investment includes £1 billion ($2 billion) of new capital expenditure, and £500 million ($1 billion) of funds already earmarked for fiber deployments -- BT provides fiber access to enterprise customers, with 120,000 businesses already connected.

The operator expects to spend £100 million ($200 million) incremental capex in the current financial year (to the end of March 2009) and the next fiscal year (to March 2010), taking the operator's total planned capex budgets for those years to £3.2 billion and £3.1 billion ($6.4 billion and $6.2 billion), respectively. The remaining £800 million ($1.6 billion) of incremental capex will be spent during the following three financial years.

To support the additional investment, BT is suspending its current buyback program from the end of July: The carrier says it will have returned more than £1.8 billion ($3.6 billion) of the planned £2.5 billion ($5 billion) buyback target to investors by that time. BT is, though, retaining its dividend scheme, and expects dividends to grow during the current financial year.

News of the buyback suspension and planned capex splurge knocked 8.4 pence, about 4 percent, off BT's share price today, sending it down to 193.6 pence on the London Stock Exchange .

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bollocks187 12/5/2012 | 3:36:31 PM
re: BT Unveils $3B FTTx Plan is this the bt 22nd century plan
digits 12/5/2012 | 3:36:36 PM
re: BT Unveils $3B FTTx Plan Interesting point on the green issue...

I think the unbundling aspect, and impact on current deployed assets, is the big issue -- like other incumbents I'm sure BT sees this move as a way to regain total control of the broadband market, and now it has announced this 'bold' plan, the pressure is on the UK government and Ofcom to 'support' it with measures that will release BT's promised capex.
jayja 12/5/2012 | 3:36:38 PM
re: BT Unveils $3B FTTx Plan While I don't disagree with the previous post about BT's financial prudence, this announcement seems like it will dig them a hole with respect to all their recent environmental chest pounding.

http://www.btplc.com/News/Arti....

Can one reduce emissions by 80% when putting remotely powered DSLAM's around the country?

Also, can they unbundle these new networks enough to satisfy OFCOM if they use GPON technology?
Mr Finance 12/5/2012 | 3:36:39 PM
re: BT Unveils $3B FTTx Plan Smart move from BT, minimising spend while boosting capacity only enough to offer a decent IPTV service only to the homes that can afford to pay for it (city centers) or areas where triple play competition with NTL means the incremental investment is justified by BT's full revenues rather than just incremental "premium data + IPTV" spending. No coincidence Virgin's national digital cable coverage also happens to be ~40-50%

Why oh why do all these FTTH pundits (cf your heavy reading plug) equate better service with "carriers should invest". I totally fail to see what is going to drive more than just the most niche of consumers to pay so much more for a 100Mbps data connection vs a 24Mbps that the huge incremental investment has a positive return. BT investors don't realise what a jem of a rational carrier they have vs. some of these uber aggressive european FTTH fanboys.

The FTTH for greenfield is by the way a non-announcement. Any carrier deploying copper for greenfields today would be nuts.
digits 12/5/2012 | 3:36:40 PM
re: BT Unveils $3B FTTx Plan BT reckons it'll take fiber all the way into 1 million homes as part of this project (if it gets its way with Ofcom).

See
BT's Fiber Diet Fallout
http://www.lightreading.com/bl...

and for more on this topic:
BT's Fiber Diet Fallout, Pt II
http://www.lightreading.com/bl...

Ray
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