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Lowering the price of FTTP does not address the real cost that’s stifling growth of high speed networks


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In January Openreach, the infrastructure delivery arm of BT, announced that it will slash the cost of FTTP wholesale fees by 37%. This means that Openreach customers will be charged £38 per month (rather than £60) to utilise the super fast fibre network and deliver it to people’s homes and offices from June 2013. This new lower price will also apply to Openreach’s new FTTP on Demand service.

While we at Redcentric welcome any reduction in the cost of FTTP, I do wonder whether it will help to encourage increased adoption of FTTP services as BT hopes.

In a report in October last year, the UK was criticised by the FTTH Council for having the lowest penetration of FTTP in Europe, with only 0.05% of households connected. And while reducing the cost of wholesale fees is great, the interconnect cost with BT Wholesale to aggregate traffic from Super Fast Broadband into an ISP’s network remains high and it’s this traffic cost we believe is stifling the affordability of faster access. For example, currently the cost of internet bandwidth is less than a tenth of the cost of getting that same traffic from BT Wholesale into an ISP network. It seems somewhat backward to reduce the cost of one element of network delivery without reviewing the entire network.

With BT Wholesale advising that their next generation national network is operating under capacity, we would like to see a revision of this interconnect bandwidth alongside the access costs of Openreach. Otherwise the price reductions only really benefit LLU providers (those that take connections directly from BT Openreach as Redcentric does in certain geographic areas).

It’s a catch-22 situation for ISPs. Lower prices for the consumer may drive increased volumes of traffic, but this will see increased interconnect cost through BT Wholesale that wipes out any savings made from the reduction in FTTP wholesale fees offered by Openreach.

Until the costs are reduced for interconnect with BT Wholesale, alongside access reduction from BT Openreach, the UK will continue to be behind others in Europe.



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