New fibre focus for the UK bearing fruit

 

Whilst the UK is lagging behind its peers in terms of fibre deployment, it has recently changed strategy and decision-makers started to take ambitious steps to modernise the UK’s networks. The focus of DCMS and the regulator OFCOM is now very clear and aimed at “Building a Full-Fibre Future” to be achieved via a competitive market.

 

What we observe is that investment decisions are determined by a certain number of factors, amongst them a long-term and high-level political commitment. The direction is now very clear that full fibre is the objective giving a positive signal and regulatory certainty to the investors. 

 

In addition to this, regulatory measures are also taken by OFCOM to support this objective (such as access to ducts and poles) to make deployment easier and less costly. These are essential measures as they create a competitive environment for investments fostering deployment by all types of operators, traditional and new.

 

This change in strategy seems to start bearing fruits as this year, the United Kingdom entered for the first time the FTTH Council Europe’s FTTH/B Market Panorama (ranking of countries per household penetration) reaching a penetration rate of 1.3% and a take-up rate of 13.1% as of September 2017, with FTTH/B subscriptions growing by 83% compared to September 2017.

 

 

Fibre is the foundation of fixed and wireless gigabit networks as well as the key enabler of all new innovative digital technologies and services. It is also the prerequisite for Europe’s global digital competitiveness and sustainability, the possibilities are therefore quite unlimited!

 

For all these new services to develop, we would also need to work on take-up. In countries where end-users are familiar with the benefits of fibre such as Sweden, take-up is generally very high. However we are witnessing “fake fibre” advertising practices in several Member States and in particular in the UK where “fibre” or “fibre speeds” are used in advertisements for copper-based broadband, when the advertised product is not genuinely based on a full fibre connection. The issue is that a consumer thinking they already have full fibre will never switch to a FTTH connection. This could have a negative impact on fibre take-up undermining both the innovation potential created by the deployment of high-capacity digital infrastructure and the business case of fibre itself. This is the reason why European guidelines on the use of the word fibre in advertisement are needed.

 

 

I previously mentioned fibre advertising which in my view will become an increasingly hot topic, also considering that some countries such as France and Italy have already acted upon it.

 

Another topic is the transition from the legacy copper networks to a full fibre network, which will be a very important element of the journey towards a fully connected Gigabit society. This transition will need to be very carefully managed by the governments and the industry as a whole, as it will have an influence not only on the business case of fibre but also on fibre take-up. Copper switchover processes need to be pro-competitive and recognise the wide range of stakeholder interests at stake.

 

Moreover, end-users are more and more aware of the impact of our consumption on the environment and we are convinced that there is an opportunity not to be missed when the positive impact of fibre on the environment compared to copper products is considered. Our study on a European benchmark on copper switch-off revealed that copper switch-off can result in 40 to 60% energy savings due to the lower power consumption of fibre. This transition offers a lot of new possibilities but we would need a European dialogue to make sure that the Member States’ approaches are well coordinated.

 

Another topic which is currently buzzing and will continue to be is 5G. Small cell densification will be mandatory for 5G to fully deliver its potential and this process will rely on more fibre densification as it requires fibre to reach every cell site. We have calculated in our study on the cost of convergence that the extra investment to make a full fibre network 5G ready is in the range of 0.4% to 7.2%, therefore we consider that deploying a dense fibre network will be a good starting point and a huge asset in the race to 5G leadership. 

 

Finally a last prediction which brings us beyond the next 12 months is the FTTH/B market forecasts for 2020  and 2025 in which the UK shows a consistent growth in terms of homes passed, subscriptions and household penetration (subscribers divided by the number of premises in a country). Our prediction is that the UK will go from zero to hero in terms of the number of homes passed and subscriptions by 2025.