Searching for the £100k VDSL2 Cabinet
And £Million(s) investment per exchange.
As per Openreach statement on rural Next Generation
Access costs on Strike Up Broadband
BBC Radio 4 – Dec 13th/16th 2012.
Mike Kiely
The Bit Commons
mkiely@thebitcomms.com
Date 27/03/2013
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Scope, Purpose and Intent
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Seeking to provide communities and Local Authority NGA roll out managers details on the incremental
costs of an FTTC rollout from publicly sourced data, costs derived from first principles and contributions
from NGA suppliers .
Encourage more openness and transparency on FTTC costs so UK public investment of c£1.4bn for rural
areas can bring NGA services deep into the last 10% of premises.
Seek peer review and encourage others to develop independently sourced costs, and contribute detail to
assist state aid auditors.
Put a body of evidence in a public space which can be added too and developed by those benchmarking
costs and auditing state aid payments.
The Numbers are not by their nature definitive, and exclude exceptional build costs for power, re-arranging
copper and new duct. They are a guide only and are set out so they can be used and improved.
This presentation is not saying there are not unique instances where £100k would be spent on a
Cabinet/path, but they look to be the exception rather than the norm. Evidence may emerge to prove this
assertion incorrect, at which time I will be happy to correct.
Above all this is part of on-going plea for transparency in costs, so those with a passion for connectivity,
can lobby for Government policy changes supporting additional investment in fibre transition activity. To
lobby effectively, the rural programme must visibly deliver value for money. This is less than clear from the
publicly available data as of March 2013 .
It is appreciated that BT will have wholesale obligations to Fujitsu on the BDUK Framework so has some
need to be cautious on these matters.
Mike Kiely, Founder, The Bit Commons, March 2013.
mkiely@thebitcommons.com
Date 27/03/2013
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Incremental Costs Versus
Models based on Forward Looking Economic Costs
This analysis sticks to incremental costs for;
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Simplicity
State aid is dependent on calculations based on incremental capital.
BT offer of ‘up to £1bn’ to match the rural investment for the final third does not appear to
be a contractual offer. If it was you could minus c£125 (£1bn/8m premises) per premise
past in a forward looking economic cost model to calculate the additional aid needed. This
analysis while confidential could be viewed in the same manner US communities can
engage with the Connect America Cost Model – (CQBAT for the Broadband element),
managed by the FCC, where the contribution of the access companies is part of the aid
calculation.
In the UK the contractual announcements the question must be asked to who is gap
funding whom? Without BT’s contractual commitment to invest it looks like BT is gap
funding the government.
If it is the Governments model being gap funded, then there is no particular reason for it
not to be published and open to public scrutiny and value for money assessments.
Date 27/03/2013
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The components under Review
source: BT presentation – no copyright.
Date 27/03/2013
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GEA - FTTC architecture
-Source BT presentation – no copyright
VDSL2
DSLAM
Hand-Over Node
End User Premises
PCP
NTE 5
& SSFP
CP1
HO
Head End
GEA Data Port
VDSL2
modem
CPn
Direct fibre
Multiple GigE links
Baseband Voice &
Legacy Services
240Vac
Existing Copper E-side Network from
DLE
D-Side Copper
GEA Product
Voice and Legacy services supplied from the exchange.
Broadband product provided as GEA over FTTCab
Date 27/03/2013
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Network Engineering Journey (NEJ)
- a key enabler for NGA Plan & Build
Benefit examples:
• Planning efficiency
• Strategic and Detailed
• Planning process benefits
• Better Quality FTTC & FTTP network
plans
• Engineering support e.g.
reduced time for Line Loss
calculations
• Reduced network costs
• Better cost estimates and
reduced recording costs
Added : BT has a slick process and efficient
Supply chain.
Commercial roll out – 18 months ahead
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Improved support to targeted
marketing
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Trouble-To-Resolve (T2R) benefit
enablers
Source BT Slide –no copyright marking
Comfortably under the £2.5bn budget. Date 27/03/2013
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Cabinet arrival
Huawei Smart AxM56xx
ECI Hi-FOCuS 5
Date 27/03/2013
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The Plynth
Quotes ranging from £400 - £1200
Diary of FTTC installation – points to combined three hours work
The cabinet was installed in 1 hour 9 minutes using Polybase
Polylid has now been approved by Openreach for use on its network and is
currently being installed nationally on the NGA, (Next Generation Access),
programme – providing faster broadband across the UK.
Date 27/03/2013
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The Cabinet
Xx48 Port cards - 1 port per connected customer
(Ikanos or Broadcom (?)chip sets - VDSL)
MSAN –electronics and 1Gbps (could be 10Gbps)
connectivity back to handover point.
IDC-Blocks to terminate copper.
Fibre Termination
Battery
Power Supply
Chassis with GPS locator
In gathering data from VDSL suppliers and small
operators,
Calix/Zhone/Keymile/ECI/Huawei/Zylex
Low volume estimate £12k-£16k
High Volume estimate <£8k based on
compilation of quotes for 600 units.
Nation provider could negotiate <£6k
Date 27/03/2013
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Power
• Biggest variable, cost £300 (EON) to £3,000k but typically
seeing £800.
• Exceptions at £25k cab be managed on that basis.
Date 27/03/2013
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The Handover Point
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c12-14 in county of 100 exchanges.
Up to c25Km from cabinets
In typical rural rollout estimated 45 cabinets glassing through native exchange
through to handover point.
Racking for fibre distribution to/from Metro nodes and to/from VDSL2 Street
Cabinets.
Layer 2 Ethernet Switches for layer 2 capability to VDSL cabs and routing back to
Metro node.
Optical Line termination (OLT) and WDM capability assumed to be at Metro node.
Date 27/03/2013
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Handover Point – common costs
Status: for peer review
• Derived from EAD pricing /SLU pricing.
SLU Costs in Rural areas average over c30 contractual quotes.
Slu Providers
using BT
Estimated
Wholesale
incremental BT
prices for single Layer 2 costs to
Layer 2 HO support 45 cabs
service
Estimated BT
incremental cost per
VDSL Cabinet for
illustrative purposes
Handover Costs
Capital (L2 , OLT ,routing and racking)
£7,732
£20,876
£463.92
Connection Set UP
£1,586.00
£4,282
£95.16
Enabling connectivity to Metro Node,
includes some ECCs.
£2,500.00
£6,750
£150.00
£11,818
£31,909
£709
Sub Total
• Assistance needed in reconciling to the £million(s) costs per exchange.
Date 27/03/2013
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Handover Point to VDSL Cabinet quantities
BT 21CN Exists
BT Metro
Node
In most cases fibre exists
Avge 2.3Km/1.2km
Significant numbers exist
From commercial roll out.
In many cases
fibre path exists
Glassing Through
Local exchanges.
HO Point
Exchange
VDSL x9
Up to c20km
fibre path
Exchange x4
Avge 2.3/1.2Km
VDSL
Cabs x9
Date 27/03/2013
10 Hopa + 450
cabinets
780km Fibre paths
Ratios average out so
estimates are possible
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Openreach fibre network (Wales)
source: BT Wales slide deck – no copyright marking.
Date 27/03/2013
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Connectivity to VDSL Cabinet/PCP
HOP
Exchange
Derived using SLU costs
Handover to VDSL Cabinet/PCP
Other checks
VDSL
PCP
SLU Provider
Est. for BT Incremental
Connectivity provision
£1,950.00
£585.00
Extra construction charges
£3,277.00
£983.10
PCP to Cab - connections
£3,120.00
£936.00
Sub total
£8,347.00
£2,504.10
• BT NI reported about £4k worth of labour for each cab installed,
this included all planning and sales time. (120k hours applied cost to 1100 cabinets)
• Cable/fibre and laying in existing duct has been reported at £1.20m at £1,500 per
cabinet installed. This includes BT ‘up to’ investment.
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These estimates would include an allowance for duct repair, but not new duct.
PCP re-shelling included where needed but not copper re-arrangement for new PCP
No aluminium replacement costs included.
Date 27/03/2013
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What should the benchmark subsidy be for single Cabinet Fibre path?
Subject to Peer Review.
SLU Costs in Rural Areas anomyised over c50 contractual quotes.
Slu Providers
Estimated
using BT
Estimated BT incremental
incremental BT
Wholesale prices
cost per VDSL Cabinet for
Layer 2 costs to
for single Layer 2
illustrative purposes
support 45 cabs
HO service
Handover Costs
Capital (L2 and racking)
£7,732
£20,876
£463.92
Connection Set UP
£1,586.00
£4,282
£95.16
Enabling connectivity to Metro Node,
includes some ECCs.
£2,500.00
£6,750
£150.00
£11,818
SLU Provider
£1,950.00
£3,277.00
£3,120.00
£8,347.00
£31,909
£709
Est. for BT Incremental
£585.00
£983.10
£936.00
£2,504.10
Sub Total
Handover to VDSL Cabinet/PCP
Connectivity provision
Extra construction charges
PCP to Cab - connections
Sub total
Cabinet
Planning
Plynth
Power
£350.00
£1,200.00
£1,000.00
£350.00
£400.00
£1,000.00
DSLAM/Chassis/battery
£12,000.00
£5,320.00
Total cost for SLU Operator
£34,715.00
Estimated Incremental Cost per cabinet
and path for BT
BT Management fee
Total cost
BT investment per home connected
Y1+Y2
£10,283.18
20%
£100.00
Example subsidy payable to BT per path
and Cabinet install
Subsidy paid if 100 customers attached to PCP
Subsidy paid if 200 customers attached to PCP
Date 27/03/2013
£2,056.64
£12,339.82
£2,000.00
£10,339.82
£103.40
£51.70
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Conclusion for peer review!
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For reaching 90%-95% it is difficult to reconcile the idea of a £100k VDSL
path/cab with itemised incremental costs. Excluding exceptional costs point to
< £15k of incremental costs which includes a contribution to establishing
Handover Point costs, and completing duct repairs and linking to PCP cabinets.
Most rural exchanges will be glassed through on route to handover point,
little marginal costs, although very small exchanges will need access lines rearranged for VDSL install.
Where substantial costs emerge then comparison with Fixed Wireless access
would be conducted on a case by case example.
If verified, then this should leave LA substantial headroom to begin FTTP
transition work, helping to reduce the long term costs of the access network.
End.
Date 27/03/2013
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