Long-term certainty and flexibility

Matt Dexter, head of client partnerships, Openreach, discusses why the price is right for copper migration.

The build rate for our full fibre network is now white hot. Just over two years ago it took us it took us 15 months to build full fibre to one million premises. Now we’re doing it in six months!

Our engineers are reaching more than 43k premises every week and in June we said we’d be building to another 551 locations across UK towns and cities. We’ve already reached 5 million premises with fibre-to-the-premises (FTTP) broadband and overall are now building in more than 2,400 exchange locations covering towns, cities, boroughs, villages and hamlets.

And we aim to build even faster – peaking at four million premises a year as we zero in on our target of 25 million homes by December 2026. This is unchartered territory as no-one, at least in the UK, has ever attempted to build this quickly.

At the same time the migration from copper to all-IP is gathering pace but it’s still lagging behind if we’re to upgrade some 14 million lines, including our ageing traditional landline service, to digital in five years’ time. And there’s not much point having a brand new ultrafast future proof broadband network if nobody’s using it.

To be frank, we’ve still a mountain to climb with a need to convert around 250k lines every month to hit the 2025 switch off deadline, but staying at the current pace means we’ll only get there in 2048!

We’re doing all we can to push the industry in the right direction – announcing 297 exchange areas covering a massive 2.9m premises, where we plan to move to stop-selling legacy analogue products and services.

We’re also adapting our existing copper network to cope with IP based voice traffic. This helps to start the transition even before FTTP networks have become fully available, with a number of products including SoGEA (single order generic ethernet access) and its Gfast equivalent SoGfast.

Migration progress

Since launching our All IP portfolio our order volumes have accelerated rapidly and we receive 1000’s of new orders a week, and we’re making progress on migration with close to two million customers now on IP – a large number of those on FTTP and SoGEA.

But we know there are also commercial challenges: some of our communication provider (CP) customers have told us there’s no business case to invest in IP. WLR and SoGEA currently have similar rental charges, while IP voice brings additional costs on top, meaning the CP has had a commercial incentive to delay migration from legacy copper services until as late as possible.

So we’ve been busy talking to our partners about finding a solution that offers simple and competitive pricing which gives them the long-term certainty and flexibility they need, and last month we launched a new special pricing offer to help drive full fibre adoption.

Simply put, in return for a CP agreeing that a minimum proportion of the new provide broadband and voice orders it decides to place with Openreach will be for FTTP (where available), Openreach will supply the FTTP at a connection and rental discount to its standard prices.

The new pricing, which will be open to CPs from between 1st October 2021 and 30th March 2022, follows a simple set of principles: commitment, pricing certainty, simplicity, and competitive prices.

Of course, there will be detractors who will claim these prices won’t enable them to compete, will allow us to make too much profit, and that full fibre will become a premium product that is outside the affordable price bracket for most people.

The reality is that we’ve launched an offer that makes FTTP at most £1.70 more expensive per month than using fibre-to-the-cabinet (FTTC) with a copper line under our existing volume commitment pricing deals. In some circumstances the difference is less than a pound. This is arguably not something that will make it unaffordable for the end-user while providing access to a vastly superior product.

Turbo charging migration

With FTTP, CPs have an opportunity to monetise higher speeds too, by segmenting the market. Consequently, we’ve seen a number of CPs make the choice of selling FTTC and FTTP to date at the same price on the lower speeds, with the cost difference being more than compensated by profits on the higher speeds.

Things are already moving in the right direction. In the last quarter, we have had FTTP sales from more than two dozen communication providers ordering directly from Openreach. This number reaches more than 800 when you count all the retailers that order Openreach FTTP indirectly, through one or more wholesalers.

We believe this price deal will help turbo charge the migration process and make full fibre a must have for every home and business, and it means more people could start benefitting from our most revolutionary and reliable broadband sooner.

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