BT Says No Need for Fiber to the Home

The Register published and article reporting a panel presentation where BT said that there is no need for fiber to the home. That its plans for a 40 Mbps VDSL deployment provides enough bandwidth and that the economic case for fiber to the home is weak.

This approach is understandable but it will put BT at a significant disadvantage to its cable competitors as they deploy DOCSIS 3.0 technologies. BT's real challenge is to figure out how to make the business case for fiber to the home work out before it is so far behind the technology curve that it will lose significant market share. Customer retention is a powerful economic argument.

UK Ofcom Publishes Fiber Strategy

Ofcom, the UK telecom regulator, has published a report Delivering Super-Fast Broadband in the UK that outlines its policies for fiber deployment. Ofcom stated that it will:

• allow wholesale pricing flexibility to enable returns appropriate to the considerable risks of building new networks, but constrained by the market in the interests of customers
• ensure that any regulatory pricing allows investors the opportunity to earn a rate of return that genuinely reflects the cost of deployment and the associated level of risk
• minimise unnecessary inefficiencies in network design and build as a result of regulatory policies, while continuing to protect the consumer interest
• support the use of new, more flexible wholesale services by BT to offer super-fast services to other service providers and consumers at competitive prices
• safeguard the opportunity for further competition based on physical infrastructure, by facilitating fair opportunities for companies to synchronise their investments with BT’s deployments, should reasonable demand arise, and encouraging network design that takes future potential competition into account.

Ofcom will work with BT to resolve its concerns about generating a return from its intended investment in fiber to the home. It will be interesting to see how it maintains a balance through this process.

BT Introduces Integrated Wireline/Wireless Data Service

BT introduced broadband packages for small businesses that include mobile broadband as part of a wireline/wireless offering. It provides a service that includes wireline broadband along with BT Openzone Wi-Fi hotspots and mobile networks (GPRS/3G/HSDPA/HSUPA). It now offers three usage plans:

BT Business Total Broadband Options	Broadband Option 1	Broadband Option 2	Broadband Option 3
Price Per Month (on a 24 month term)	£15	£26.99	£40.50
Fixed line Download Limit	10GB	Unlimited†	Unlimited†
BT Business Mobile Broadband	Unlimited† usage available for £17.50 per month	One Mobile Broadband USB stick per contract – 1GB usage 2,000 BT Openzone minutes	One Mobile Broadband USB stick per contract – 1GB usage 2,000 BT Openzone minutes
Wireless Router	£79 or £59 online exc. VAT	Included	Included
Security	Anti Virus and Anti Spam	Anti Virus and Anti Spam	Internet Security Pack for 5 PCs
Support	24/7 UK-based Freefone Support	24/7 UK-based Freefone Support	24/7 UK-based Freefone Support IT Support Manager - allows our IT experts to help fix problems remotely, no need to call out an engineer

This is one of the first examples of what I expect will be a very important trend. I believe that similar integrated services will be offered to consumers and will become an important competitive advantage for Telcos over their cable competitors. However, this approach to offering services will have a significant effect on the organization of the Telcos as well as the structure of the industry itself. I will write more about this later.

BT's 21CN to Switch VoIP Strategy

BT is switching its VoIP strategy to emphasize VoIP over broadband rather than using VoIP to replace PSTN services. It said that it is doing this to respond to customer demand.

Putting its emphasis on VoIP over broadband brings BT into line with the strategies of other major operators such as France Telecom and NTT in Japan. It makes more sense to focus on the growing broadband segment rather than the shrinking PSTN market. There will be plenty of time to replace POTS with VoIP later.

BT Working Toward 2010 VDSL Rollout

BT has announced that it will operate two VDSL trials of about 15,000 customers each starting in the summer of 2009. It plans to provide up to 40 Mbps as part of this service. BT expects to announce plans for the initial market VDSL deployment in early 2010.

It looks like BT is taking a very orderly process that will lead to a commercial VDSL roll out starting some time in 2010. BT will be experiencing serious bandwidth pressures from the demand for HD content well before this. I would not be surprised to see it accelerate this schedule due to significant competitive pressure. In the long run it will have to adopt a FTTH strategy.