The fibre is a very small part of the asset - the majority of the cost will be in people time and therefore if a customer wants it they pay for it - or they wait until a point where BT choose to do it off their own bat.

Telephone lines are covered by USO - but even then if there are costs above about £3000 then the customer pays the excess costs.

Edited by ian72 (Thu 15-Mar-18 09:08:51)

Hi

The fibre is a very small part of the asset - the majority of the cost will be in people time and therefore if a customer wants it they pay for it - or they wait until a point where BT choose to do it off their own bat.

Whilst the cost of the actual material fibre itself might be cheap, the asset isn't just the material, its made up of all the costs associated with installing it and is essentially its potential value to the company in terms of profit. So a £20K install, if that is covering all or most of OpenReach's costs, then on their balance sheet they have gained an asset worth around £20K or even more, without investing anything. That represents an investment by the customer, they should get shares. Remember that the fibre installed doesn't belong to the person/company who paid for it, and OpenReach are free to resell it to other customers, profiting even more. They even have the cheek to dangle the carrot of a £700.00 discount per each other customer we get to sign up, getting us to do all the sales work for them as well!

Just as well its only 20 orders a month, as if it was a lot more than that people would be raising serious questions over the whole scheme.

Regards

Phil

I thought I'd join in and get a quote. and like many others, it is "in excess of £39,000".

What I can't get my head around, is that an Openreach engineer is on around £27k a year.

I live on a long straight road, and the fibre would apparently pass 9 properties. So it's either left, or right. The properties are right next to one another, thus the longest distance this can be is 200m (in a straight line, left as it happens is the longest).

Surely a single engineer could run this fibre, given a year to do it, so how on earth do they justify the price?

EDIT: There are properties on both sides of the street, so the distance may in fact be much shorter.
I must be missing something, but come one...

Edited by AndyPandy (Thu 15-Mar-18 10:37:56)

PhilipD

The actual cost of the fibre is a very small proportion of the £1000s Openreach charge for FTTPoD. Its the cost of getting that fibre into the ground or onto poles (ie labour cost) which makes up the largest % of overall costs. Replacing overhead poles, installing new ducts, clearing ducts etc are all very expensive and time consuming tasks. Often Openreach will use contractors for Civil works who themselves charge a small fortune.

Yes Openreach own the fibre once you've paid for it, however they are also responsible for maintaining it and to repair any breaks during its lifetime - which they don't charge the end user for. Perhaps if they passed ownership of fibre to the end user, then its only fair to also pass the responsibility/costs of maintaining it to the end user? How many FoD customers would be happy with such an arrangement? I certainly wouldn't...

Edited by deleted (Thu 15-Mar-18 11:13:05)

Hi

The actual cost of the fibre is a very small proportion of the £1000s Openreach charge for FTTPoD. Its the cost of getting that fibre into the ground or onto poles (ie labour cost) which makes up the largest % of overall costs. Replacing overhead poles, installing new ducts, clearing ducts etc are all very expensive and time consuming tasks. Often Openreach will use contractors for Civil Works who themselves charge a small fortune.

Yet OpenReach maintain all the telephone cables and exchanges, install ADSL/FTTP/VDSL/G.Fast and all the backhaul required without charging a single customer "in excess of £39,000" for any of those connections and are still making very healthy profits.

My point is it seems very expensive, if those costs were true for everything OpenReach installs then we'd be conversing by telegram still.

Yes I understand the economies of scale that applies to the vast majority of the network that may not completely apply to a single one off order for fibre on demand, however some of it still does, i.e. they have systems in place and people with the knowledge and skills, deals with contractors and suppliers etc, not to mention that fibre is much further out than it ever used to be, and once installed its passing other properties they could sell a connection to, not to mention it's upgrading the network they would only be having to do at some point.

Essentially OpenReach are still profiting from someone else's investment into flooding the UK with telephone cable some 80 odd years ago and connecting up virtually every property, and are very reluctant to invest again in renewing it all, and that's what we get for OpenReach being a private company.

FTPoD is priced high as they don't want to do it, they've been forced to offer something, but within the charge is a very high admin cost for the fact we can demand it, with no contribution from OpenReach to the cost even though they get to keep it wholly as their own asset.

Regards

Phil

In reply to a post by PhilipD:

Essentially OpenReach are still profiting from someone else's investment into flooding the UK with telephone cable some 80 odd years ago and connecting up virtually every property, and are very reluctant to invest again in renewing it all, and that's what we get for OpenReach being a private company.

You think it would get done if it were renationalised?

How much cable/infrastructure installed 80 years ago do you think it still there? I suspect it is a bit like Trigger's broom.

In the end either a customer waits for BT to rollout a service or they pay to get the service early. BT profits aren't massive on FTTP and so absorbing high engineering costs for somewhere that they may not otherwise install for 10 years is not a good business model. And has already been said it is no different to the way other utilities work - you want a utility to your house you pay for the installation and the costs can be very high even where infrastructure is not that far away.

That's a good point. For leased lines, you typically get quoted an install charge early on which is (I believe) based on distance to the closest POP, then ECCs are for any unforeseen works - just had a 10 GB Virgin leased line quoted at £40k install before any survey at all.

FTTPoD is different - the so called install charge quoted by Openreach really covers the circuit activation and the entire install cost can only be given accurately from paid survey.

Mumba's case is interesting. That order was under the old 'fixed price install based on distance band' model, and although Openreach has the 'right' to charge further ECCs under that scheme, Cerberus advised me that they never came across a situation where they did so - or even mentioned anything about ECCs.

I suspect that someone forgot to mention that clause to the OR Surveyors and they just thought they were on fixed porice install regardless.

Longest distance? So only 200m from your aggregation node?

Once you add employees NI contribution, pension elements, cost of training, cost of vehicles, planners, etc etc the costs even when you don't include any fibre elements start to rack up.

I predict that if people continue the 'I thought I'd join in and get a quote' that you may find retailers taking a deposit upfront, or Openreach just stopping quoting.

Hi

I have no idea if it would or wouldn't, but at least the profits could be re-invested.

We could swing the question around, do you think we'd all have telephone wires to our houses as soon or as consistently as we do if it wasn't for the existence of General Post Office?

With private companies the only way of ensuring everyone gets some sort of connection regardless of the profitability has needed legislation in the form of a USO. Private companies left to their own devices where profit is their only driver is not in the best interests of any sort of national infrastructure, that's why legislation exists and OpenReach is now broken away from BT. Is this overall a better option than full nationalisation, I don't know, but we had no problems getting a telephone line under the GPO I seem to recall, which was a brand new line. In comparison in 2016, to reconnect a house we moved into to a telephone line that was already at the property, was a month wait for a job that took no more than 5 minutes! Even then they missed the original appointment!

Regards

Phil