Broadband: Could We Really Afford FTTH?

Yesterday, the culture secretary Jeremy Hunt defended the government’s broadband proposals, saying that pushing fibre to streetside cabinets would get faster broadband to more people.

But there are those who disagree; those who think the end-game is fibre to every house and business, and fibre to the cabinet (FTTC) is a distraction on the way. It’s no surprise that the Fibre to the Home (FTTH) Europe Council takes this view. Its communications director, Nadia Babaali rang us to explain why she thinks Jeremy Hunt is short-sighted.

“We do not agree with Jeremy Hunt’s view,” she said. “FTTC is just an upgrade of the existing copper networks – and those copper networks are reaching their limits.”

She’s not the first person to say this: the House of Lords Communication Committee criticised the government last month for supporting FTTC instead of pushing to get fibres terminated at homes and businesses. While fibre can provide throughput in Gibabits, FTTC may deliver lower speeds because the connection  has to go along the copper phone line from the cabinet to the house or office.

Hunt says FTTC is all we can afford, and FTTH would simply be too expensive and take too long to deliver. “If the state were to build a fibre to the home network now, it would potentially cost more than £25bn,” he said. “It would also take the best part of a decade to achieve.”

Getting fibre to the cabinet is a stepping stone, said Hunt, and will allow BT to offer speeds up to 80Mbps depending on the copper loop. And  BT is testing the idea of offering fibre to the premises on demand: upgrading the copper loop to the individual homes or offices where the customer is prepared to pay.

So what is wrong with FTTC as a first step to better fibre? “FTTC is s a short term investment,” repeated Babaali. “You are investing in a network that is already obsolete. Taking a long term view of the investment would make it completely future proof. Why invest public money in short term fixes, where will the money come from when the network needs to be upgraded again?”

In fact, a major part of the FTTC investment is getting the fibre to the cabinet, which is a genuine upgrade of the network. However, Babaalui believes the investment within the cabinet itself would be wasted.

“In FTTC, most of the investment is put in the cabinet,” she said. “In the cabinet you have some electronics that will not be reused [if the fibre is extended to the home].”

The idea sounds questionable – surely the fibre installation to the cabinet, which involves digging a fibre for miles, would be greater than opto-electronic converters in the cabinet? We pressed Babaali, but she stuck to her guns, without explaining in any more detail.

She also argued that the management overheads in FTTC would be higher: “For the operator, operational expenditure (opex) is lower with FTTH.”

Users with FTTH are likely to spend 46 percent more on services per month, she also said, which isn’t a great argument for it, given that FTTH costs five times as much to install as FTTC.

But her biggest argument was not speed or revenue. Quality of service is better with fibre, and phrases like “up to 80 Mbps” used by Jeremy Hunt betray the uncertainty of the FTTC service, said Babaali. In contrast, FTTH services often deliver a dependable service which can be symmetric (with high upload speeds) and which doesn’t need phrases like “up to”.

In fact, FTTH services are often faster than their providers promise, she said, as fibre operators quote lower speeds since the actual speed on offer would seem unbelievable to the consumer.

But is quality of  service really that big an issue? “Speed is nice, but people who have a little bit more speed, don’t really use the Internet differently,” she said. Unleashing fibre will create a lot of new services.

She suggested two services which might rake in enough money to justify FTTH. Both raised all sorts of questions.

The first was e-health. “When you talk about money, think about the money spent taking elderly people to nursing homes. You could have them monitored in their own houses. You could maintain people at home who would otherwise use a hospital bed.”

That’s singularly unconvincing, since the real cost of maintaining older people in their home is the physical care which has to be done through actual visits, not broadband. Still, Babaali assured me there are examples of fibre-to-the-housebound in the US and Sweden.

The other was the Smart Grid. “We have been talking to a lot of utility companies,” she said. “They want to install smart meters.”

But the smart meters only need a tiny amount of data, and the utility companies are putting them in on a shoestring, against the wishes of unwilling customers, who will have to foot the bill. Besides, smart grid installations all use wireless networks, as far as we are aware.

The FTTH expert denied wireless is good enough for the “real time” and “high quality” needs of the utilities, and suggested that the customers want it so badly, they’d put it in for themselves. “The price of putting fibre to the end user, is not the fibre. The price is the digging,” said Babaali. “In some communities people are ready to dig their own gardens, to get fibre. You would be surprised how many people would participate.”

We have our doubts about that.

Babaali did agree that the UK’s  BDUK was “clearly” not enough to deploy fibre to the home to all of the UK population, but insisted that there could be some way to spend it differently.

“Remember when the first mobile data systems were put in place and didn’t work?” she said. “When proper networks were in place – that was when people started using them. I understand the argument of step-by-step, but we don’t agree with it.”

Fair enough, but the FTTH Europe Council’s own figures suggest that FTTH across Europe would cost around €192 billion. We are still waiting for an idea where that money would come from.

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