Fibre a necessity for BT, says analyst

thinkbroadband response

On one hand, to suggest that the current local loop has just ten years of life left seems radical, but consider how much things have changed in the last 10 years, it looks like a very reasonable statement to make. If BT delays next generation access (NGA) investment then we may see cities going their own way on fibre roll-outs, with firms like H2O providing much of the infrastructure, particularly in areas of high population density. The problem with most roll-outs is that they stick to purely commercial priorities. Love or hate BT, it has at least bid for and participated in a number of projects that addressed issues like the digital divide. We are starting to see a resurgence of community led broadband projects with talk of people rolling out their own fibre, and it could be said that wireless programmes back in 2002 to 2004 formed part of the pressure on BT to enlarge its original ADSL footprint. One reason the £1.5 billion project that BT has dropped onto the table, is as cheap as £150 per home (Point Topic calculated the £150 figure, down from £800 of previous estimates), is that FTTH (Fibre to the Home) is envisaged for areas like Ebbsfleet, the Olympic Village and other new build sites. Existing premises would be served by running fibre to the nearest street cabinet (FTTC) which significantly reduces the amount of copper cable making speeds of up to 50Mbps or more easily possible. With some 85,000 street cabinets around the UK, the work to get fibre to these will be less than full fibre to the home. The danger of a cabinet based approach however is that this may only have a limited life span. Virgin Media is already trialling 50Mbps FTTC services, so one would expect services in ten to fifteen years would be significantly more than that. Remember that eight years ago, most users were on 56Kbps (0.056Mbps) dial-up connections and today we're seeing speeds up to 8 Mbps in many places with a few lucky ones getting 20-50Mbps speeds. It is therefore not difficult to imagine speeds in excess of 100Mbps being needed if the applications that demand the bandwidth take off. At the end of the day BT is stuck with largely having to satisfy investors that the return on any investment will be reasonable and not too long in happening. In the past countries have spent money on large public projects during times of recession with the longer term in view. Perhaps a UK fibre roll-out should be approached from the public benefit viewpoint rather than whether it will return investors a handsome dividend alone, in which case it would require additional support from government. Sebastien Lahtinen Co-founder, thinkbroadband.com

Posted by: Sebastien Lahtinen 08 Aug 2008