Comment : Fibre a necessity not a choice for BT

The voices calling for a next-generation access (NGA) strategy for Britain have been getting louder over the past 12 months. 

Now, with BT’s conditional offer to cover 40% of UK households with an upgraded fibre network by 2012, there is at least a firm proposal on the table.

City and analyst reaction to the announcement has been predictable, both sceptical about BT’s return on its investment, and damning about its modest objectives.  Point Topic has offers a different view.

“I believe investment in NGA is essential for BT, and it should generate a good return for decades to come.  On the other hand, if BT doesn’t renew its local loop infrastructure its existing copper network will be worth only scrap value within 10 years,” says Tim Johnson, Chief Analyst at Point Topic.

The focus on consumer broadband as the driver for NGA is understandable but misleading.  An upgraded network will provide much wider benefits and revenues than just better broadband services.

“Fibre in the local loop combined with BT’s 21CN [twenty-first century network] project allows BT to provide a complete IP [internet protocol]-based telecoms environment to the end user.  Customers should get more flexibility for less cost and dreams like seamless fixed-mobile convergence will become reality,” says Johnson.

Cost v Return – is it a good investment?

BT’s proposal to cover 40% of the homes in the UK for £1.5bn works out at £150 per household.  Past estimates have ranged up to £20bn to provide fibre coverage for all the 25 million households in the UK, or around £800 per household.  A much lower cost to cover the whole country now looks likely.