Virgin Media O2 has reportedly began talks to raise cash from external investors to fund a further rollout of its own full fibre broadband, targeting its Fibre to the Premises (FTTP) technology to 7mln homes additonal homes, with it currently only serving 1mln homes.
Openreach, BT’s wholly owned and independent arm has already been installing Ultrafast Full Fibre to premises across the UK, with 6mln sites having FTTP set up.
With the company set to announce its third quarter results this Thursday, investors will be eager to see if the rollout was negatively impacted by Covid at all, just how expensive it really is and whether there is a demand for the product.
What is it?
BT Openreach’s Ultrafast Full Fibre network works on FTTP technology. This is where fibre optic cables are connected directly between the hub and premises, without the need for an exchange in between.
This differs from the previous methods of broadband installation, which require some copper wires somewhere in the infrastructure, as well as an exchange in between the hub and the end premises.
Why is it important?
An FTTP connection is often much more reliable than Fibre to the Cabinet (FTTC), thanks to the wires being connected to directly to your home.
This also means you are not having to share with neighbours, as well as being less susceptible to weather issues which is more likely to occur when an exchange is involved in the system.
The biggest benefit would arguably be the much faster speed levels. FTTP packages are often three times faster than FTTC, according to broadbandcompared, an online comparison service.
Essentially, FTTP will allow for much faster internet connection, something which homes have needed with flexible working becoming much more common.
Who else is building it?
Virgin Media O2 look set to continue their own rollout soon with the company reportedly seeking to raise investment to fund the project, looking to add an additional 6mln premises to the 1mln currently installed. It is also hoping to update its existing network of 14mln premises by 2028.
Sky also offers full fibre broadband, as well as an ultra-fast full fibre broadband, for an additional cost.
Several other broadband companies, like talktalk and Amvia, also offer a FTTP service to certain premises.
How much is being spent?
Current estimates suggest that the full rollout should be completed by 2026, with each premise installation so far costing somewhere between £250 and £350, and 25mln total premises targeted.
Is there going to be a demand?
According to Danni Hewson, a financial analyst at AJ Bell, demand for BT Openreach’s ultrafast broadband shouldn’t be an issue.
“From Apple to Zoom businesses are falling over themselves to give us more of what we don’t know we are going to ‘need’. More and more devices in our home need “hooking up” and no one expects we’ve come anywhere close to ‘peak tech’,” Hewson added.
The real question is where BT goes after this. Historically in telecoms and broadband there is always a better and faster product just around the corner, which might be “even more expensive than this one has been,” said Hewson.
That expense is fine if consumers are happy to foot the bill, which Hewson expects, stating “ultrafast doesn’t even need to be ultra-cheap, it just needs to be ultra-reliable which is why BT is most definitely onto a winner.”