Analysis: BT's fibre plans go national

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The news that BT is willing to ignore the credit crunch and invest some £1.5 billion - including £1 billion of new money - in a national fibre-optic broadband service should be a boost to businesses and consumers alike.

As many as 10 million homes, according to the company, will be connected to a “next generation” broadband service by 2012, nicely in time for the London Olympic games.

But the Olympic Village will be one of the few places in the UK that will gain a direct connection to the new network, at least initially. BT has said that investment in fibre to the premises (FTTP), with speeds of up to 100mbps, will be “focused primarily on new build sites such as Ebbsfleet and the Olympic Village”.

Other locations will be connected via a mixed technology, generally known as Fibre to the Cabinet (FTTC) or fibre to the kerb. In these cases, the connections from the street cabinets to premises will still be over copper, although BT still expects to deliver speeds of 40mbps, and potentially, up to 60mbps.

BT has also said that the deployment will not just be to major cities, and the company plans to work with local authorities and the Government on its roll-out plans. Regional development agencies and local business groups are also expected to play a part in shaping the new network, although again BT has yet to clarify how this might be done.

Passing businesses by?

“BT has said that this move will help home workers and small businesses, although the roll out is not predicated on this,” said Clare McCarthy, principal analyst at Ovum, the industry analyst.

“They have committed to fibre for new-build business parks and public sector buildings such as schools and hospitals, but they have given no more detail. We have also asked BT whether they are looking to the regional development agencies for help with funding, or simply a demonstration of demand,” she said.

Fears that businesses could find themselves bypassed by the new network are well founded. Although discussion of a broadband divide focuses on rural areas, business districts in suburban areas and smaller downs can also suffer from bandwidth blackspots. Virgin Media, for example, still cannot offer connections in a large number of business districts because the original cable networks were planned to deliver pay TV, not Internet access, and so focus on residential streets.

Edge-of-town business and retail parks can also be too far from the telephone exchange to support high-speed DSL, let alone ADSL2. Some multiple retailers are still run branch-based ERP systems over ISDN, either because broadband is not available, or is not reliable enough.

A further issue arises where competitors to BT have yet to install their “unbundled” equipment in town centre telephone exchanges, leaving SMEs dependent on services offered either by BT directly, or by an internet service provider re-selling BT Wholesale services. This leads to higher prices for business users.

Some industry observers are also concerned that BT’s new network could deter rival ISPs from investing,, or investing further, in local loop unbundling. BT has said it will offer its fibre services on a wholesale basis, but it is not yet clear how this will affect internet providers using their own equipment, rather than reselling BT ADSL.

“The question now is what happens to investments from alternative providers in DSL services in the local loop,” said Pete Nuthall, analyst for European telecoms at research firm Forrester. “There is little incentive [for them] to continue their expansion plans. They might want to look at saving money by using wholesale services from BT.”

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