Much of the UK’s copper telecoms network was laid more than 100 years ago, when the telephone was still a novelty and the internet was well beyond the imagination of even the most visionary of sci-fi writers. Fast-forward a century and the throughput demands on this vintage system are tremendous. No wonder it’s creaking under the strain.
The installation of a nationwide network that’s fit for purpose has been painfully slow and piecemeal. But, in March, industry watchdog Ofcom created the conditions that should bring full-fibre broadband to the whole of the country. In publishing the outcome of its review of the wholesale fixed-telecoms market, it has established regulations that provide the business case for long-term investment.
One key decision by Ofcom is that it won’t cap the prices that network operators can charge customers for faster fibre products for at least 10 years. This has been a huge fillip for fibre builders, especially Openreach, the BT division that dominates fixed-line broadband in the UK. Safe in the knowledge that it will see a return on its investment, the company has set about connecting more than 20 million homes at a cost of about £25bn.
To level the playing field, Ofcom has also given Openreach’s fibre rivals easier access to its underground ducts and telegraph poles, making it significantly easier and cheaper for them to build their own networks.
Matthew Howett is the founder and principal analyst of Assembly Research, a consultancy specialising in regulatory matters affecting the digital economy. He says that Ofcom’s pronouncement is “a boost to those laying fibre. They can just get on with it, because they know the rules aren’t going to change.”
But there are fears that the new regulations could cause a rush to dig up streets to get cables into the ground. And, while cities are likely to be well served with ultra-fast connections, will rural areas continue to be neglected?
Openreach has already done a lot of work to run fibre cabling from telephone exchanges to cabinets on the street, a set-up known as fibre-to-the-cabinet broadband. From here, millions of homes and offices are still connected by the old copper system, which has been the limiting factor on the rate at which data can be transferred. Replacing this cabling will make up the bulk of the upgrade work, as the UK moves to fibre-to-the-premises (FTTP) broadband and the promise of standard download speeds of 1Gbit per second.
Openreach’s main fibre-laying rival is Virgin Media, whose network is largely based on old Cable & Wireless infrastructure. It has committed to upgrading this and granting 15 million homes ultra-fast broadband by the end of 2021.
Then there are about 50 other players, mostly backed by venture capital and private equity. The largest of these, CityFibre, is bankrolled by Goldman Sachs. It’s aiming to reach 8 million premises in more than 100 towns and cities.
The race to lay fibre will mean a lot of excavation (digging up roads accounts for about 70% of the cost of building new infrastructure). Howett acknowledges that a period of upheaval seems unavoidable, but he adds: “It’s getting to the point where you have to ask: ‘How many fibre networks do we need in the ground?’”
Genuine competition may be the sign of a healthy industry, yet Howett questions whether consumers will benefit from it when so many businesses want to dig up the country’s roads. Conscious of this risk, the government is insisting that they use Openreach’s existing infrastructure wherever possible.
It’s a frenzy at the moment in this market, because everyone is trying to reach out as fast as possible in a land grab,” says Paul Stobart, CEO of ISP Zen Internet.
But it isn’t only towns and cities, with all their broadband-hungry businesses, that are in these companies’ sights. “If you can find a good rural market and you’re the only player, that is a big advantage,” he says. It makes others less inclined to follow, “because they know the spoils are going to be divided”.
A dual approach to the fibre roll-out
In many rural areas, the ‘final drop’ of broadband into the user’s premises can be achieved by overhead cabling, but strict UK planning laws, especially in cities, mean that most fibre connections will need to be buried.
In countries such as South Korea, Japan and China, where FTTP connectivity has been extensive for years, huge coils of wire hanging from telegraph poles and sagging across roads are a common sight.
“People in the UK aren’t going to accept that,” Stobart says. “So we have to go through this much slower, more expensive process of digging up the roads to hide the cabling.”
To help limit the number of roadworks, the government is thinking about giving broadband providers access to hundreds of thousands of miles of underground utility ducts. It has already set aside £4m for projects trialling the use of water pipes as conduits for fibre.
And then there’s 5G. Historically, fixed-line connections have offered more capacity and speed than wireless networks, which have always been cheaper to install. Stobart believes it’s important to see the two technologies as working together.
“There is going to be a convergence,” he says, envisaging a typical set-up featuring a fixed FTTP link to a 5G hub inside the premises, that will deliver an enhanced signal throughout the building. “They’re complementary technologies. I don’t see one winning over the other.”
Howett agrees. For some people, especially in rural areas, this dual approach needs “to be considered part of the mix and a way of meeting the government’s targets for getting everyone on to gigabit-capable broadband”, he says.
The latest generation of low-Earth-orbit satellites provides another possible solution. They offer the potential for high-speed connectivity, although their usage costs, at least in the short term, could prove prohibitive.
Back on terra firma, Howett expects that a high proportion of UK premises will have access to full-fibre broadband within five years. Ultimately, he says, the upgrade is all about future-proofing, because the only limitation with a network of this nature is the speed of light. Other hardware will be responsible for the next advances in communication speed and efficiency.
“It’s going to be all about what you plug in at the other end – that’s where the technology will evolve,” he says.