A bit of business sense will say that is completely not true.

If they had been separated in the first place, perhaps Openreach would have spent the £1.7b on FTTP rather than BT Sport.

Separated when?

You know the government would not let BT install FTTP until a few years ago.

Calculate how much FTTP £1.7B would provide.

Openreach did not spend money on BT Sport. It's not part of their P&L account. It's just complete nonsense.

The expenditure is by BTR and forms part of that business divisions P&L account. It stands and falls on its own merits. It BTR did not spend that money then it would not have been spent by OR who will only invest where there's a return. Why don't people understand this simple aspect of business. Businesses invest where they will get a return. They will not simply spend money on one area simply because they haven't spent it in another. It still has to get a return.

In which case it would around 2 million premises still being rolled out to, rather than the 3.8 to 4 million that have had VDSL2 made available under BDUK project so far and more to come from the £1.7 billion.

FTTP is the same amount of work and more, the standing of the VDSL2 cab is pretty quick, as anyone who has seen one installed, the slow stuff is ducting and blowing fibre to the 23,000+ cabinets in the BDUK roll-out so far, now imagine having to do that fibre blowing and then extending to 200,000 fibre manifolds and then onto the subsequent 2 million premises and getting the new fibre tubing across roads and drives and gardens.

In reply to a post by MrSaffron:

FTTP is the same amount of work and more, the standing of the VDSL2 cab is pretty quick, as anyone who has seen one installed, the slow stuff is ducting and blowing fibre to the 23,000+ cabinets in the BDUK roll-out so far, now imagine having to do that fibre blowing and then extending to 200,000 fibre manifolds and then onto the subsequent 2 million premises and getting the new fibre tubing across roads and drives and gardens.

Isn't this simply delaying the inevitable, though? G.FAST, if it happens, will require much of this work to occur anyway - and it adds enormous complexity itself by using expensive equipment to overcome a few additional metres of fibre (which is not necessarily hard to install in all cases). Then you have a pile of already obsolete VDSL kit to deal with.

Meanwhile the places that were given FTTP are ready to go and able to get a better service than G.FAST will ever provide. Maybe put in some XGPON kit to keep up with things.

Edited by deleted (Sat 23-Jan-16 18:22:16)

Don't you think that telco engineers can consider these issues? There's now a lot of experience in installing FTTP and the work involved. They are still exploring g.fast costs at the moment, but that will become clearer over time.

In any event, investors will not put up capital where there is little prospect of a return. Even g.fast (if it proves expensive) will present a difficult business case should rollout costs be high. Just as important is the speed. Investments like this need to start earning revenue as soon as possible, and takeup might be a question. As the evidence seems to be that, given the choice, a very large number of people will go for the cheaper option at the expense of speed then a return could be an issue. After all, a lot of people seem to prefer to stay with exchange-based ADSL over faster FTTC installations to save a few pound a month. How many would be prepared to pay more for FTTP or g.fast to cover the extra costs for the capital expenditure. I suspect that g.fast is being prepared as a response to VM and it will be justified on the basis of retaining OR market share, and not increased revenue. The considerably higher costs of FTTP will be another thing altogether.

In reply to a post by TheEulerID:

Openreach did not spend money on BT Sport. It's not part of their P&L account. It's just complete nonsense.

BT Group PLC is what investors invest in, not the individual groups within it. BT Group aims to maximise revenue over their business as a whole. If this means investing profits from one division into another (e.g. using Openreach profits for sorting rights acquisition) in order to maximise long-term profits across BT Group as a whole they will do so. In fact, they would be failing their investors if they didn't.

Quite, so if a business case can be made to invest in both BT Sport and the network they will do both. That will be true even if they have to borrow money as, if the business case is sound, then finance will be forthcoming. So it's not one vs the other. It's not do we spend this money on BT Sport of do we spend it on the network it's "does that investment give a return and can I convince investors".

As far as shareholders go, if the large institutional ones thought that BT wasn't able to make a good business case, then they'd look to oust the relevant board members. If the company just started spending money just because there was spare cash flow they would soon put pressure on to return it to the shareholders. It doesn't matter if it's for network infrastucture or sports rights.

This is not one or the other, it's do either (or both) make commercial sense. It's not like the decision a householder has to make about spending limited capital on one thing or another. These are investments to give a return, and if a credible case can be made to those who will finance it, it will happen. It's only when investors cease to believe they will get a return that this finance will dry up.

Of course, having a certain amount of free cash flow helps in gaining credibility and not having to over-stretch the balance sheet, but that's a marginal issue. It's the business case that counts, and that is when budgets are set.

nb. there's a physical and resource limit to BT's ability to install NGAs. I'm absolutely sure, that if they could have waved a magic wand such that all the commercial FTTC installation could be done in a few weeks then the money would have been spent in one go, not over several years, as finance would have been forthcoming.

I can tell you from experience at both our locations, 8 out of 10 Openreach engineers are total morons without a clue. They openly tell you they dont care as no one else does and that they don't want to run around for non BT customers. Before anyone disputes that, I have heard that direct from couldn't care less engineers. That is what needs to change, with a change of ownership probably the only thing that will bring that about.