Broadband is a question of economics and risk, says BT’s Bill Murphy

Bill Murphy, managing director of next-generation access at BT, speaks about BDUK and BT’s involvement in rural broadband

Fielding complaints is just part of a day’s work for the thick-skinned Bill Murphy, managing director of next-generation access at BT, and a key figure in the national commercial broadband rollout, as well as its taxpayer-funded BDUK contracts in rural areas.

Although Murphy has never officially revealed his Twitter presence, his online identity is more or less an open secret among broadband campaigners and he could never be described as unwilling to put himself in the line of fire. Indeed, he seems to spend time every day issuing progress reports and dealing with complaints, of which there are many.

BT misrepresented its costs. BT strong-armed its competitors out of the way. BT stole public money. BT’s solution lacks the ambition Britain needs.

These are just a small selection of the more frequent accusations, and it says something about the level of anger that surrounds broadband in this country that many of them come from increasingly seasoned, organised and knowledgeable campaigners, not just from people preoccupied with the when and how of getting superfast broadband into their homes.

In short, there are still a great many fundamental unanswered questions, and although the ins and outs of life at a big corporate such as BT discourage candour, Murphy does profess to understand where the complaints are coming from.

“Inevitably, the people who comment are the ones who have the problem,” he tells Computer Weekly in a rarely-granted interview. “Although I did get one at Christmas who didn’t. Someone in Cambridgeshire wrote to me and wanted to thank me for what we’d done for him.

“But the fact of the matter is that it’s far easier to complain, and that’s fair. Broadband affects everybody, every business, every individual, so it’s really understandable. When we were at 50% build in Cornwall, we had 100 complaints and when we were at 95% we still had 100 complaints. That last 5% are even more vociferous because they see their neighbours getting it. BDUK drives emotion.”

Read more about BDUK

Fibre or copper?

Many of the arguments over BDUK – the government agency funding rural broadband roll-out – have centred on BT’s decision to stick with fibre-to-the-cabinet (FTTC) rather than opting to deploy a fibre-to-the-premises (FTTP) solution.

FTTC means that for the last stretch into the customer property, the network will still be comprised of copper lines, which means that as distance from the cabinet increases, quality and speed of connection will decrease.

BT’s reasoning for this is that it would prefer to reach the maximum number of people in a shorter time, and for less money, through FTTC than FTTP.

Murphy believes FTTC has other advantages over FTTP – which is also available from BT in some circumstances – in that where people can get it, few people actually buy it. The vast majority take the 40Mbps or the up-to 80Mbps product from BT, he claims. On FTTP, speeds can approach 300Mbps at the moment, but even where that is delivered, it is rarely used, he says.

“This market has been driven by choice and low prices and, compared to Europe, the UK demonstrates very well that there is great choice of ISPs. One of the advantages of copper is that it allows you to create that environment,” says Murphy.

“The other thing is that when we started this out, we had up to 40Mbps. Now we’ve gone up to 80Mbps and we’re trialling vectoring, so you’re talking about 100Mbps, and as G.fast evolves, all of a sudden you start to see very interesting speed dynamics over copper. Copper has a lot of life left in it.”

Murphy puts forward the idea that when it comes down to it, those engaged with the BDUK debate want and, quite rightly, demand speed but are out of step with the average man on the street's cabinet.

“This is actually a much more complicated debate about why people buy things and what they are prepared to pay,” he says. “I was in a village meeting where some people were demanding FTTP and I said, okay, are you prepared to pay £50 or £60 a month? No? 

Coming in and spending hundreds of thousands or millions to put FTTP into an environment where people aren’t using it? I just don’t see it

Bill Murphy, BT

“The average income there was £15,000 a year, so I said okay, would you pay £2 or £5? Yeah, they said, that’s better, much better. Well, that is what’s available today.

“Coming in and spending hundreds of thousands or millions to put FTTP into an environment where people aren’t using it? I just don’t see it.”

But can one not then argue that FTTP, even if not used at full capacity today, would be future-proofed for more advanced file formats and services yet to be invented? Sure, says Murphy, if you wanted BDUK to cost £25bn, that is, because if BT is to do that with state aid, then it must do it for everyone.

“We have to balance everything off as far as what you can afford, what you can make a business case for, what you can deliver and what people are prepared to pay for,” he says.

An acceptable risk

At the core of Murphy’s argument is the idea that BT took on an acceptable and balanced level of risk with BDUK, and could not really have done any more than that. The risk, he notes, also drove a lot of its competitors away during the bidding phase for the contracts.

While it would have been great to take a more ambitious approach, perhaps even bringing fibre right into everyone’s living room, the level of operational risk involved would not have passed that test.

“With FTTC, we believe we can deliver good services quickly, and deeply, across the country, utilising that technology and delivering value for money,” he says. “Nobody was going to write us a £20bn cheque to do FTTP.”

Murphy cites the example of the Yorkshire Digital Region project, a pre-BDUK scheme to bring superfast broadband to homes and businesses across Yorkshire, which collapsed in 2013 when spending spun out of control.

The Digital Region project had all the right ambitions, says Murphy, but failed because the local authorities took on the risk, and none of the operational, financial and take-up risk fell to BT.

“In BDUK we’ve assumed that risk, and once we hit our targets and start exceeding them, then money starts flowing back into the local authorities to start covering more areas that didn’t get covered,” he says.

Once we start getting people connected, there is a gain-share mechanism in the contract so that money starts going back into the pot for reinvestment

Bill Murphy, BT

“These contracts are evergreen. What I mean by that is because of gain-share – claw-back in other words – once we start getting people connected, there is a gain-share mechanism in the contract so that money starts going back into the pot for reinvestment, back to the local authority to reinvest in the network.

“And the thing is, there might be other options in the future. There might be another European funding round coming.”

Broadband for everyone

Murphy is clear in his ambition to bring universal access to all, but that said he does not agree with the increasingly popular idea, voiced by the likes of US President Barack Obama, that broadband should be seen as a universal human right.

There is no question, says Murphy, that society flourished thanks to a universal service obligation for telecommunications, but he doubts whether the same can be applied to broadband.

“Electricity doesn’t actually go to everyone, neither does gas, and some homes still don’t have running water,” he says. “I think this is one of those things where, ultimately, we have bigger challenges with fundamental rights.”

Eventually, of course, the problem of reaching the final 5%, and then the problem of reaching the final 1%, will bubble to the surface. With this in mind, and given the scale of the challenge BT faces in getting to the remotest of the remote, how does Murphy anticipate dealing with that, and what part do local rural altnets and technical solutions such as satellite have to play?

“One could argue that with satellite broadband, 100% of the UK is already covered,” he says. “I could also show you a lot of people saying that satellite is crap and they don’t want to use it.”

But that is not to say that BT will put all its eggs in that basket. “We’re not zealots against FTTP,” says Murphy, and in some cases that will be the only answer, he admits. Fibre-to-the-remote-node (FTTRN) tech is also being trialled, and the economics there are starting to look good.

Whatever we do, if we’re taking subsidies, we have to deliver something that works and is value for money for the public sector

Bill Murphy, BT

“Down in Somerset, we did wireless to the cabinet where we were able to shoot a microwave connection to, in effect, the top of a pole, then went down to a cabinet, then out to a community, negating the need for fibre between the exchange and that cabinet,” he says.

“We’re looking at a whole mix of things to get out further efficiently and effectively, because whatever we do, if we’re taking subsidies, we have to deliver something that works and is value for money for the public sector.”

The never-ending story

BDUK will eventually wind down, but with Chancellor George Osborne using his final, tech-friendly Budget to announce plans to go beyond 24Mbps “superfast” to 100Mbps “ultrafast”, you can rest assured that the upgrade will continue many years beyond the lifetime of the BDUK contracts.

“The idea of finishing is absurd,” says Murphy. “There’s always more going in, more money, new housing estates, pushing to as many premises as possible.

“Back in 2002, we pushed DSL – you can argue we did that rightly or wrongly – but we pushed it far. In the same way, the network will evolve over the coming years and we will continue to invest. We are on it, as they say.”

Will the investment be G.fast? Will 5G and mobile play more of a role? Who will be the future challengers? These questions cannot be answered yet, but we do know BT will be a major actor.

What is certain, however, is that the flak will continue to fly, and in its unique role as incumbent operator, BT has a duty to acknowledge and welcome that, and hold its own feet to the fire.

This was last published in April 2015

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