Broadband group outlines fibre rollout costs

A nationwide rollout of next-generation broadband is more likely to involve fibre to the cabinet than fibre being installed all the way to homes and small businesses, a report from the Broadband Stakeholder Group has suggested.

Monday's report, The costs of deploying fibre-based next-generation broadband infrastructure, was part-funded by the Department for Business, Enterprise & Regulatory Reform (BERR) and is the third report covering the issue released by the Broadband Stakeholder Group (BSG) this year. According to the report, a fibre rollout could cost anywhere between £5.1bn and £28.8bn, depending on the technology used.

The lower figure represents the likely cost of rolling out fibre to the street cabinet (FTTC), as that solution reuses the existing copper connection between the cabinet and homes or small businesses. The higher figure represents the cost of running fibre directly to users' premises, or fibre to the home (FTTH). For that reason, BSG chairman Kip Meek suggested in the report that FTTC is "likely to be the predominant technology deployed in most areas".

"This does not mean that FTTH should be ruled out, but it is likely that FTTH deployments will be more localised, in new-build locations and other areas where it is possible to significantly reduce the civil-infrastructure costs involved," Meek said in the report.

"The report suggests that these high civil costs could be significantly reduced by the reuse of existing telecommunications ducts; the sharing of alternative infrastructure owned by other utilities, such as water companies; and the use of overhead fibre distribution in some areas," Meek said.

Even a nationwide rollout of FTTC would cost "three or four times more than the telecoms sector has spent in deploying the current generation of broadband services", the report states. The report also addresses the question of whether an FTTC rollout would make it less likely, in terms of investment, that a subsequent FTTH rollout could follow. Here, the problem appears to not be cost — around half the initial FTTC investment could be reused — but rather the regulatory difficulties that might arise if multiple operators have put equipment in the cabinet.

Another difficulty is likely to be that of coverage. Because the fixed costs of deployment would vastly outweigh the variable costs, the level of take-up in an area would have a big effect on the cost per home connected, thus favouring high-density, urban areas for a cost-effective rollout. The report claimed that the market would, therefore, be able to cover around two-thirds of the UK population, while finding it difficult to justify the relative costs for the rest.

The solution to that coverage problem, the report suggested, may lie in rural areas using alternative, non-fixed-line broadband technologies.

The BSG has long been actively pushing for a fibre rollout to take place. In April 2007, the industry group warned that a nationwide deployment was necessary if the UK was to avoid falling behind the rest of the world's broadband investments.

In July, BT announced it intended to roll out fibre connectivity to 10 million UK homes by 2012, using a combination of FTTH in new-build developments and FTTC elsewhere.