Following the broadband money

Britain’s NGA broadband bill – £6.2bn?

with 44 comments

Tucked away in the appendix to Point Topic’s reassessment of the cost of providing 100% next generation broadband access to Europe is the cost to do it for the UK: £6.186bn (€7.304bn).

This is made from €1,157m for urban areas, €1,297m for semi-rural areas, and €4,850m for rural areas.Image

This is a far cry from the £29bn estimated by rival consultancy Analysys Mason for the Broadband Stakeholders Group, which became government and industry dogma for the cost of ‘fibre-ing up the country’.

Point Topic’s think-piece estimates €60,000 is the total capex cost (including long-distance backhaul for example) of providing universal 30Mbps downloads via VDSL for a single street cabinet that covers a European urban area of radius 700 metres, approximately 1.6km2 in area. The cabinet is assumed to serve all homes in the area up to 600, ie €100 per home. Less than 100% take-up and other inefficiencies probably push this to €150 per home passed, it says. This rises to €900 in semi-rural areas.

The rural areas need a different approach, it says. Point Topic suggests a subsidy of €2,000 per home will do the trick and attract private investment. B4RN, the private FTTH network, expects to connect homes for an average of £1,400.

The analyst further suggests the UK has the smallest rural “challenge”, with just 4.6% of rural homes facing above average or high funding needs.

Point Topic puts the cost to provide every home in the EU with access to a broadband service that offers 30Mbps downloads at €80bn, less than half the usual estimates of €180bn to €270bn.

True, this is not the ‘future-proofed’ fibre to the home (FTTH) B4RN solution, but uses existing copper in the local loop. One suspects that using E-band (>60MHz ‘WiGig’) wireless links instead of copper could also play a role, despite the need for greater beam accuracy and signal attenuation in rain.


Written by Br0kenTeleph0n3

2013/05/28 at 22:36

44 Responses

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  1. The think-piece estimates paragraph seems to ignore the facts that there are many lines in excess of 700 metres from the FTTC and that BT’s recent standards are either ECI 128 or ECI 256 cabinets often with insufficient cabling to cover every consumer connected to the original street cabinet.

    Merrow Drover

    2013/05/28 at 22:46

    • Point Topic, as far as I can tell, is using a very broad and simplistic brush to paint a picture of the investment needed to provide 30Mbps broadband service averaged across the whole of Europe. There will be local differences, some of them huge. I suspect its intention is more to generate more searching questions about the actual cost of NGA roll-outs. What it suggests is that BT’s roll-out (based on 24Mbps) is looking potentially very expensive, especially if, as you indicate, it may have to return to streets to add new cabinets to meet demand. It would be interesting to see the detail of Point Topic’s estimate of 60,000 per cabinet and compare it to Mike Kiely’s here .


      2013/05/28 at 23:05

      • Is it expensive? A figure of around £5bn for a national FTTC network has often been touted before and that’s roughly what we appear to be heading for, which is way cheaper than the £20bn-£30bn for FTTH/P that other reports have referenced. So £6.2bn isn’t too wild but does suggest that we might need some more public funding (shortfall) to plug that last 8-5% of the UK.

        Of course I’m not comparing the pros and cons of a particular technology choice here as FTTH has many.. many advantages over FTTC in the long-term. Just looking purely at the cost.


        Mark (ISPreview)

        2013/05/29 at 06:14

      • The interesting point is what is ‘long term’? Do we take BT’s claimed time to break-even on its FTTC service of 10 to 12 years as long term? Or the actual life span of the assets, bearing in mind that most of the copper has already been written down to zero or close to, and the new fibre is probably good for 40 years.
        With networking increasingly software-upgradable, the economic picture is very amorphous right now, but the overall cost trend is definitely down. Which is why Point Topic’s projected cost for a UK FTTC roll-out, which suggests no change from 2008, is slightly surprising.


        2013/05/29 at 13:11

      • Hi
        Any reason why you chose not to post my comment? It would have cleared up a lot of confusion for other readers.
        Also not PT’s cost estimate has gone up from ours in 2008 – which I agree is odd.

        Matt Yardley, Partner, Analysys Mason
        +44 7766 058 242 | +44 845 600 5244

        Matt Yardley

        2013/05/29 at 13:14

      • I too recall an estimate of the same order way back for FTTC?

        However, I have long believed that the national ‘spend’ on the BDUK scheme would have been far better directed at the provision of a truly ‘open access’ fibre network across the UK, leaving the significant number of talented and capable ‘other’ companies to ‘finish off’ the job, be it by wireless, 4G, FTTC or FTTX and utilising the significant amount of interest and effort available in the country.

        Definitely not the ‘headline-grabbing’ policy for HMG (although with PR spin-skill it could have been) but surely a better political epitaph than the one currently being carved?

        Ian – “it may have to return to streets to add new cabinets to meet demand.” – yes, who will ‘pay’ for that?

        mike phillips

        2013/05/29 at 07:43

  2. It seems very confusing. Our remote rural project to connect 1000 homes FTTH with minimum 100Mbps will cost £1.5 million and that’s in the last 5%. Must be my maths?

    • I suspect Point Topic is being cautious. The rural distances in France, Germany, Spain etc, are generally longer than in UK, so the cost of FTTH should be lower here than there. But I agree that 2000 euros subsidy for a VDSL-connected house looks generous. It looks like small communities in the private sector can negotiate a better price than civil servants with billions to spend. That’s what I find hard to understand.


      2013/05/29 at 12:57

    • @amanda does that include all costs of connecting homes, or just passing the homes? Does it also include the costs of getting fibre to the village, or just within the village?


      2013/05/29 at 12:59

      • Our project area is about 400 square kilometres, very low population density. We have found a great deal of support and help from suppliers, including free demos, training and advice.

        @steve That’s the total cost of passing homes and connecting those who sign up pre launch (about 700 of the 1000). The cost of getting fibre to the network is included.

      • Amanda – what would be the cost without the work of community volunteers? I assume costs quoted above by PT etc. are for commercial companies doing the work.


        2013/05/29 at 21:03

  3. The £29bn from analysts mason was for full FTTH but the above numbers are for VDSL. The VDSL numbers from analysts mason were more life £5bn, but this also varies with take-up and other factors ass well


    2013/05/29 at 05:55

    • This point was made in the story.


      2013/05/29 at 12:59

      • I can’t see any mention of the £5bn or the fact that £29bn is FTTH in the story…


        2013/05/29 at 13:02

  4. If you are going to quote Analysys Mason then please use the correct figure. The like-for-like comparison with PT’s £6.2bn figure is our estimate of £5bn and NOT £29bn. PT do not provide a national FTTP figure which is what the £29bn represents. It is also worth noting our estimate was made in 2008 before any NGA rollout had taken place yet still seems to be ball-park correct when compared with actual rollout experience. It would be interesting to hear why PT think it will cost more than £5bn. Regards. Matt Yardley, Partner, Analysys Mason

    Matt Yardley

    2013/05/29 at 08:03

    • Point taken Matt. I did make it in the story too. If Point Topic is correct, then Analysys Mason was low by around 20% five years ago. What effect do you think Moore’s Law and increased competition from the Chinese equipment vendors have had in the past five years? What would your estimate for an FTTC roll-out be today?


      2013/05/29 at 13:17

      • This from Matt Yardley:
        “If equipment costs fell by 20% then we think the total FTTC cost would fall by only 4%, so the Chinese vendor impact might be smaller than expected.
        “As for updated estimates – we don’t see any major reasons to change our original estimates. If PT or other commentators think costs are higher it might be worth asking them what is driving costs up not down.”
        Well, Point Topic? Any suggestions? Or anyone else?


        2013/05/29 at 14:08

  5. @Mike Yoir proposal as to the way the spend should have gone was what I thought Jeremy Hunt proposed in the first place, although it is doubtful if he knew what he was proposing – It seems to have been killed off once BDUK limited the game to “gap-funding”.

    David Cooper

    2013/05/29 at 10:24

    • Ah yes – the short-lived ‘village pump’ concept. I guess J had not bothered to talk to BT first for ‘approval’ before launching the idea………………………

      mike phillips

      2013/05/29 at 10:41

      • I suspect the ‘village pump’ concept – ‘Communities would then take responsibility for extending the network to individual homes’ – was found to be very difficult to implement. eg Selling Council.


        2013/05/29 at 13:44

      • There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.
        – Niccolo Machiavelli


        2013/05/29 at 14:11

      • But given there was nothing beyond the 3 words in terms of design or specification it’s no surprise it did not go anywhere, particularly as something to roll out across the whole of the UK in both urban and rural areas in a reasonable time.


        2013/05/29 at 15:02

  6. “But given there was nothing beyond the 3 words in terms of design or specification it’s no surprise it did not go anywhere, particularly as something to roll out across the whole of the UK in both urban and rural areas in a reasonable time.” – chicken and egg? Did it fade because it was
    a) Too difficult?
    b) Strangled at birth?
    c) Simply ‘yuck-speak’ uttered by a politician without knowledge?

    ‘Communities’ seem to be deemed suitable to bid for the RCBF money and I’m sure nearly all of them will be taking professional help to proceed. I genuinely think that, with a decent, openly-accessible fibre network with no ‘sloping playing field’, there would have been enough professional and competent companies around to take it forward. Was the mistake at Selling not partly to do with WM?

    mike phillips

    2013/05/29 at 16:29

    • What would a ‘openly-accessible fibre network’ look like, given that a length of fibre has 2 ends that have to connect to something and be paid for (installation and ongoing maintenance) and how would it differ to renting backhaul that eg. B4RN and others do?


      2013/05/29 at 16:42

      • Have you forgotten Ofcom’s Active LIne Access proposal? We did go through that in some depth a while ago.


        2013/05/29 at 18:48

      • What is happening with ALA and is it the ‘openly-accessible fibre network’ that mike talks about?


        2013/05/29 at 21:00

      • As you know, ALA is an Ethernet product. As you also know BT is having a lot of problems getting Ethernet in and working. Perhaps fixing that is the priority. After all, why would an altnet want to connect to something that’s either not there or doesn’t work?


        2013/05/29 at 21:15

      • Is it not the new ordering system that is the problem? BT Ethernet circuits have been and are being installed all over the UK.

        I asked if ALA was available. Perhaps someone in the industry would explain.

        ps – what did you really mean by ‘priority’?!


        2013/05/29 at 21:22

      • The new ordering was withdrawn. The OTA’s Ethernet graphs for installations and repairs point to the bottom right hand corner. That doesn’t mean that BT isn’t putting in Ethernet circuits; only that it is putting in fewer, and is below target. ALA is a standard. Any operator can use it if they feel like it.


        2013/05/29 at 22:11

      • We are not discussing availability of Ethernet, I was asking if ALA went some way to being a ‘openly-accessible fibre network’ which sounds completely different. So why did you bring it up and then add Ethernet ordering to divert the discussion completely off topic?


        2013/05/30 at 06:38

      • From Ofcom: “Ethernet Active Line Access (ALA) is our current vision for the set of requirements for one of the competitive options in Next Generation Access. It is designed to enable the provision of innovative services to customers through a wholesale bitstream product that is as close as possible to access at the physical layer of the network. It is most likely to be attractive to Communications Providers (CPs) where it might not be possible or practical to require shared passive access to infrastructure. As far as possible, Ethernet ALA should offer CPs a similar scope for innovation and control as they would have with direct access to the passive infrastructure. Therefore, the functionality of products based on Ethernet ALA requirements should be as close as possible to the functionality of the underlying infrastructure, i.e. at the lowest possible OSI[* (-2-)*] layer.” You raised the Ethernet ordering issue here, not me.


        2013/05/30 at 08:18

      • “What would a ‘openly-accessible fibre network’ look like”.. – some time ago now, but when I was last looking, BT would only allow ‘domestics’ to be connected to their leased fibre or, I believe ducting, by another supplier, presumably in order to protect their dedicated line market. That would be a start, as it is a major block to any usage. If that is no longer the case, good.

        I am in the dark on ‘ALA’ as all I can see are ‘proposals’ – has there been any progress or are we still stuck there?

        mike phillips

        2013/05/30 at 07:35

      • Your quote re ordering – ‘ As you also know BT is having a lot of problems getting Ethernet in and working’


        2013/05/30 at 09:15

      • That was me at 21.15; it does not mention BT’s failed ordering system.
        You replied at 21:22:
        “Is it not the new ordering system that is the problem?”
        Can we drop this childish tit for tat now?


        2013/05/30 at 20:01

      • I agree, but we must not divert off topic to other issues and make guesses. Worse is soundbites without explanation of the real meaning.

        Meanwhile… Nobody, not even the government explained how a Digital Village Pump would work and a ‘openly-accessible fibre network’ sounds good, but Mike what, in detail, is it?

        If it is of interest Devon & Somerset plan 36 head ends and 1500 cabinets for £93M. ~£60k/cab and covering 360k premises. The split between BT/County/BDUK/ERDF varies with all the projects.


        2013/05/30 at 20:24

      • The Digital Village Pump concept was explained in some detail at the 2010 Rheged conference organised by Conservative MP Rory Stewart. The videos are available on the web. Stewart later wrote about it for the Guardian. Bill Murphy spoke at Rheged too. Philip Virgo, currently running the Conservative Technology Forum blogged about it.
        Regarding the Devon and Somerset roll-out, a couple of questions: what’s in the cabinets that makes them twice the price of the Northern Ireland cabinets? Where exactly are those 360k premises? How many of those 360k homes will BT be able to service immediately? What percentage will get >30Mbps downloads consistently? What percentage will be able to get 100Mbps downloads without further money being spent? What’s BT’s contribution to the £93m? £41m? Call that matched funding?


        2013/05/30 at 21:46

      • No detail on DVPs like network design, funding, how defined etc.

        Re D&S – suggest you contact them, and the other schemes, directly for answers to your questions.


        2013/05/31 at 19:52

      • So, you don’t know or at best it’s partial. All you have is not fit for a substantive discussion, just PR..


        2013/05/31 at 19:59

    • Spot on Mike. Somerset’s continual use of Selling as the reason not to try community solutions is getting rather tired.

      To my mind NYnet is an example of the good use of public funds and has moved the connection points nearer to the small communities thus reducing backhaul costs for local initiatives. Plenty of successful community projects here This approach encourages provider competition and helps with the economic development by providing businesses better and cheaper connectivity than they had previously.

      By comparison, Selling was a small one-off scheme funded by Kent County Council and despite desperate tactics by BT to sell Broadband Extension Technology (2 Mbps) as the solution an alternative was chosen. The failure could and should have been predicted, but that is no reason to condemn a different approach that seemed at this Government’s beginning to be flavour of the month. I wonder why they changed their mind?

      David Cooper

      2013/05/29 at 22:27

      • Noted! NYnet is a millions miles away from Selling in terms of scale, management, success etc.

        The latest Annual Accounts submitted to Companies House for the year up to 31/03/2012 reported ‘cash at bank’ of £17,650, ‘liabilities’ worth £2,853,978, ‘net worth’ of £-2,947,892 and ‘assets’ worth £2,877,721.


        2013/05/30 at 07:04

  7. I would envisage a reasonable PIA rate from the ‘owner’ (which did not cause annoyance in the ranks) with full and free access by ISPs to purchase bandwidth ? (I know not where B4RN gets its wiggly-photons from – Merrow?)

    mike phillips

    2013/05/29 at 17:21

  8. a late contribution here. the 60 GHz band (not MHz) is only any use for very short range links, it is a band that suffers the worst effects of rain/moisture. it is a crap spot in the spectrum. 75 GHz, a higher frequency is better for example.

    I can’t imagine it competing with PtP fibre links in cost or performance.

    there is this well established thing called fixed wireless though 🙂 .. but lets not introduce that pipe dream into the equation, it would mess up the figures.


    Bill Lewis

    2013/05/29 at 21:58

  9. […] Tucked away in the appendix to Point Topic's reassessment of the cost of providing 100% next generation broadband access to Europe is the cost to do it for the UK: £6.186bn (€7.304bn).This is made …  […]

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