Cheaper Fibre Broadband Could Be Reality Thanks To Openreach
Cheaper fibre broadband could be on the cards if Openreach can push through deals with TalkTalk and Vodafone. However, Virgin Media could have an ace up their sleeve. Virgin has successfully stalled out previous attempts by Openreach to make its fast fibre infrastructure more attractive by branding them as anti-competitive. Remains to be seen whether potential savings do eventually trickle down to UK fast fibre broadband households.
What is Openreach offering TalkTalk and Vodafone?
BT Openreach is offering discounts to encourage UK broadband providers to adopt and extend their Fibre To The Premises (FTTP) connections and offers to their customers. Currently, this type of connection is linked to the most expensive fast fibre broadband offers across the telecoms industry in the UK.
The main UK ISPs are interested in having access to faster broadband connections so they can offer a wider range of speeds to their customers. Companies like Sky, TalkTalk and Vodafone mainly offer middle of the road broadband speeds. The top tier fibre broadband deals they can offer are either expensive or geographically very limited to specific areas in the UK.
The reason for this is that setting up and maintaining a full fibre connection right into the home hasn't been cheap or easy to establish for a long time. Most broadband connections in the UK will have fibre running all the way up to the neighbourhood telecoms cabinet but then from there you get copper phone or coaxial cable line.
This impacts the broadband speed that ends up reaching most UK households. It's like high speed rail, essentially. It's all well and good to have high speed rail between big cities but if transport slows down significantly between the big station and your home, then that negates the benefits of the high speed rail part.
The same idea applies to broadband, for all the speed that fibre internet provides, if your last few miles of cable are something other than fibre then you have a bottleneck and big drop off in speed for the end user.
Why is Virgin Media jealous?
Meanwhile on the other side of these potential fibre broadband infrastructure discounts, you have Virgin Media who heavily invested in an upgraded version of what is known as FTTC. Fibre To The Cabinet means that fibre runs all the way to the local telecoms cabinet but no further. What Virgin Media Broadband does is connect the final stretch to the home with coaxial cable instead of the bog-standard copper phone line.
While this provides faster connections than the traditional last-mile phone line connection, it's still not quite as fast as a pure fibre broadband connection. Virgin Media really has gone it alone with the cable option and is afraid that other companies might gain an edge if they get discounts for pure fibre broadband across the UK.
Meanwhile Openreach, which represents the internet infrastructure arm of BT, is keen to ink partnerships with household-name broadband providers to further extend its network reach throughout the UK. Especially since it's under scrutiny from the government to be the main driver for faster internet adoption by providing the infrastructure to meet the promises made by the prime minister during the last election.
Another faction in this competition are the smaller specialised providers, such as Hyperoptic that are installing their own fast fibre network collectively called "Alt Net" which they see as the future of broadband in Britain.
Benefits for UK FTTP broadband customers?
The benefits of Openreach discounting its rates within the industry may not become immediately apparent but should lead to fast fibre internet being available in more parts of the UK beyond the limited urban areas and rural pilot tests that have been catered for, up until now.
In terms of customer pricing, a noticeable drop in fast fibre broadband pricing shouldn't be immediately anticipated. Instead what will probably happen is that availability for fast fibre broadband will expand as broadband companies test the British public's appetite for ultrafast gigabit internet.
For fast broadband prices to drop in a measurable way, two things need to happen. The first is that technology needs to catch up across the board to fully benefit from fast broadband. This way customers can see the need and benefit of higher connection speeds. If customers do not upgrade devices to be able to connect to the faster WiFi standards being transmitted by gigabit routers, then the speed bottleneck is just being moved down the line instead of removed.
The second thing that is needed for UK fast broadband prices to lower appreciably is broader uptake of fibre as it becomes available in rural and underserved areas. Sufficient demand will bring more providers to a specific area and they will compete more aggressive for customers if they are all essentially offering similar speeds.