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Tuesday, July 15, 2008

BT's Fibre announcement - initial thoughts on impact on mobile

BT has this morning announced a £1.5bn ($3bn) planned rollout of fibre in the UK, principally in urban areas. It is targetting "as many as 10m homes" by 2012 (out of a total of about 25m households, so 40%). The plan is for a mix of fibre running to street-side cabinets (FTTC), plus some fibre-to-the-premise for new-build homes and I'd imagine also some businesses or apartment blocks (FTTP).

There's going to be a lot of discussion about the general proposition and some of the regulatory impact elsewhere, so I thought I'd focus & have a few initial thoughts on the possible impact on the UK mobile industry.

  • Fibre announcements like this put the claims of a narrowing gap between fixed vs. mobile broadband into context. The figures in BT's announcement suggest a range of initial speeds from40Mbit/s for FTTC and 100Mbit/s for FTTP, with roadmaps to 60Mbit/s and 1000Mbit/s respectively. Unlike the "headline" numbers for HSPA and LTE, these are not "shared" capacity or the theoretical speed achieved by a sole user in a cell sitting next to the base station.
  • Related to this point, BT also talks about upgrading its other ADSL customers to ADSL2+. In reference to the current discussion about real vs. advertised speeds, it says that the "majority of customers should enjoy speeds of 10Mbit/s or above".
  • Coupled with moves by competitors in local loop unbundling, and the UK cable operators, this suggests to me that real-world sustainable average broadband speeds for fixed services should remain 2-5x that of mobile broadband. Yes, there will be specific locations & services where it's occasionally possible to get 10MBit/s+ via a dongle with HSPA or WiMAX or early LTE rollouts, but they'll be offset by other areas of weaker signal strength, congestion from density of users, & limited backhaul capacity.
  • On the topic of backhaul, although BT doesn't mention it, presumably they'll be putting fibre to (or near) almost every cell site in the country in the expectation of continued growth in demand for wholesale capacity (or outright dark fibre rental).
  • Depending on what happens in the UK's delayed 2.6GHz auction, it seems reasonable to assume that any future BT deployment of WiMAX will also be supported by fibre.
  • The statement this morning has some interesting comments about the regulatory changes that BT would hope to see from Ofcom. Although much of its comment initially seems to be aimed at getting the cable & other fixed NGN networks opened up for wholesale, the line "BT’s firm belief is that all next generation networks in the UK should be open as this approach will boost competition and consumers and businesses will benefit." suggests to me that it has its sights set on mandatory wireless wholesale / MVNO access too. It will be extremely interesting to see if this ends up going in the direction of structural separation (NetCo vs ServiceCo) for mobile operators.
  • ... on the other hand, if open mobile networks are mandated in the UK, will it make sense for some/all of the MNOs to club together and build a big shared network, rather than competing overlapping ones? That has some interesting implications for spectrum policy too
  • FTTH & ADSL2+ should make it possible to run LTE femtos at decent speeds in (some) UK households. Should be interesting to see whether this catalyses a view that UK deployments of LTE could be based initially around a large in-home radio build out.
One last thought - I was at a debate last week during which it was suggested that the appropriate number for a UK-wide FTTH deployment would be about 10x this level of investment - the figure of £15bn was thrown around. To me, this compromise looks like a fairly prudent risk-management approach on BT's part given the current economic situation. Sufficiently aggressive to catalyse some regulatory change - and maintain clear water between fixed & mobile broadband - but not large enough to act as a boat anchor on the company as the UK economic falters.

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