Broadband Access in the BT Fixed Network extract of BCS Essex presentation, 20 March 2007

Dr Elspeth MacFadyen, Programme Director BT Group CTO

What I’ll be talking about

• General context

• Access network factors affecting DSL performance

• DSL Max (“up to 8Mb/s”)

• ADSL2+

• Options for meeting future demand for bandwidth

• Next Generation Access

Broadband UK: affordable, available and attractive

• Top of G8, better than mains water• 99%+ commercially funded

• Infrastructure competition: LLU, cable and/or wireless in over 70% of the country

• Even wider set of technologies for broadcast applications (esp. TV)

• Hundreds of nationwide service providers with a number of wholesale providers

• E.g., IP TV, mobile over broadband, broadband on the move, IP telephony, hybrid platforms...

• Bundles and packages with wireless, landlines, software as a service

• 99.6% broadband availability, over 12 million subscribers

• One of the lowest prices in the world

• Service and commercial innovation

The access network – some numbers …

• Around 30,000 people – all BT’s field operations• 200,000 manholes• 2 million km optical fibre• 3.6 million customer visits per year• 10.5 million broadband connections • 14 million jobs a year• 30 million customer lines• 120 million km copper access• 300 million calls a day• Around £8 billion assets• More than £4 billion projected revenues

Business

Where is the last mile bandwidth an issue? What else drives customer experience?

Example applications requiring different transmission rates & Quality of Service

Internet AccessBest Effort (e-mail, online gambling etc)

On-line GamingPC, Console P2P

VoIP Communications(BE PC-PC, off-net PSTN quality)

Video-Communications(web-cab to TV, Video calls, Conference)

TV & VideoVoD download/streamed, SDTV, HDTV

Business applicationsSoftware as a service, IP- Centrex, VPN

High u/s BW demand(Highest for VC)

Gaming

QoS

Service level

Best Effort

Access (d/s) Bandwidth

100 kbps 1 Mbps 10 Mbps10 kbps

HDTV

Video-on- demandVoIP

Internet Access applications

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Lines and DSL performance

… a picture…

ExchangeCabinet

DP

Equivalent to 3.25 km 0.5mm

typical

420 m typical

25 m typical

Customer

DSL performance – physics and its implications• The performance of DSL on any given line in the access

network is a function of the signal to noise ratio at the end of that line:

– Signal is affected by the length, quality and dimensions of the copper cable, and by the ANFP (Access Network Frequency Plan)

– Noise can come from• network crosstalk (directly related to the “fill” level of the copper cables in use)• sources in the home or premises (including home wiring)• sources in the environment e.g. RFI

• Geographic coverage achieved at any given speed also depends on

– the topology of the access network– the statistical distribution of line lengths

• These factors are identical for anyone operating DSL on BT’s access network

• Service at 512kb/s offered nearly everywhere since Sept 2004 – but there remain some problem lines

Why line length is important

• Possible transmission rate decreases with increasing loop length• Effect is more dramatic at higher frequencies• Need to reserve and protect lowest frequencies for longest loops

possibletransmissionrate

loop length

DSL Max

DSL Max

Line Rates

IPstream Downstream Upstream

Max288 Kbps to8128 Kbps

64 Kbps to 448 Kbps

Max Premium288 Kbps to8128 Kbps

64 Kbps to 832 Kbps

Estimated DSL Max speed distribution

Based on line checker data and estimates only

Line rate Percentage of PSTN lines

0.5Mb 98%

1Mb 96%

2Mb 93%

3Mb 89%

4Mb 78%

5Mb 63%

6Mb 42%

>or =6.5Mb 25%

Network testing ADSL2+

Towards a market-led strategy

Ample bandwidth for the vast majority today• Bandwidth and price tend to dominate marketing messages – “simple” to

understand and compare, or is it?

• Typical customer uses much less than ‘last mile’ capacity

– Average bandwidth usage <30 kbit/s

– Peak individual throughput much more constrained by ‘internet’ and servers, peak time of day also by backhaul and core networks

– Some intensive use(r)s: streaming SDTV throughput >200 MB/hour, peer-to-peer file transfer an effectively ‘unlimited’ consumer

• Current evidence shows that small segments (<10%) would consider to pay premium for bandwidth (£5/month) for bandwidth

• However BT aware of growing public debate and is keen to engage with end customers, Ofcom, CPs and other stakeholders e.g. BSG, content industry

© British Telecommunications plc

There are ‘unconstrained consumption’ scenarios where bandwidth demand exceeds the current capabilities

Consumer - Couple with no children

Consumer - Family Corporate - Small Branch

Bandwidth RequirementsUpstream ~5 Mbit/s ~9 Mbit/s ~20 Mbit/sDownstream ~30 Mbit/s ~44 Mbit/s ~32 Mbit/s

Key DriversTake-up of new real time applications

• IP-HDTV – 4/3 concurrent sessions • Video Calling

• HD Video Conferencing

• IP-CCTV• Video Calling

Take-up of new computing architectures

• Adoption of thin client architectures

Unconstrained Consumption Scenario: Assumes that there are no constraints on bandwidth availability and bandwidth is available at no incremental cost to end-users

…but to date there is no identified mass market demand for a ‘paid for’ high speed service and alternative HDTV platforms are more cost-effective

HD: High Definition; IP-HDTV: Internet Protocol High Definition Television; IP-CCTV: Internet Protocol Closed-Circuit Television

Source: based on independent research carried out for BT by Analysys

© British Telecommunications plc

There are two main access fibre deployment options

ADSLCopper from the exchange to the premises

FTTC: Fibre to the Cabinet; FTTP: Fibre to the Premises; ADSL: Asymmetric Digital Subscriber Line

FibreCopperFTTC

The fibre connection goes to a powered cabinet in the street. The final connection to the premises is on copper

FTTPThe fibre connection goes all the way from the main network to the premises

Memo: Copper

© British Telecommunications plc

Summary of technology options

Notes:[1] Based on 25% cable fill. If cable fill increases then bandwidths decline[2] 2.4G sharable across 32 end users[3] 1.2G sharable across 32 end users

Mbit/s: Mega bit per second; ADSL: Asymmetric Digital Subscriber Line; ADSL2+: Offers higher downstream rate and upstream performance than ADSL and ADSL2; MSAN: Multi-Service Access Node; VDSL2: Very high speed Digital Subscriber Line 2, an enhancement to VDSL; FTTP: Fibre to the Premises

Bandwidth (Mbit/s)[1]

DownStream(Headline)

DownStream(Median)

UpStream(Headline)

Upstream(Median)

Timeline

ADSL 8 4-6 0.8 0.75 Today’s technology

ADSL2+ (MSAN) 18 6-10 0.9 0.75 21CN delivers this

ADSL2+ (Cabinet)

24 14-15 0.9 0.9 Future technology – may have use for reach extension

VDSL2 (Cabinet) c50 22-25 c24 9 Future technology - being considered by BT

FTTP/GPON c75 [2] N/A c37.5 [3] N/A Applicable to greenfield sites – end 2008

Next Generation Access

© British Telecommunications plc

What is happening elsewhere?Supportive Regulatory & Government Environment

Other Specific factors

Netherlands FTTC •Sun setting exchange based LLU

• High broadband retail share• Capital release from sale of

exchange buildings

France FTTP •Iliad - Cheap / free access to duct

• Low cost deployment due to focus on multi-dwelling units

• Limited or no existing infrastructure

USA FTTP/ FTTC

•Regulatory forbearance•Rural subsidy

• Step change in competitiveness vs. cable

• Long loop lengths

Germany FTTC •Regulatory holiday • Step change in competitiveness vs. single play cable

• High broadband retail share

Korea FTTB •National industrial policy • Low cost deployment - high housing density

• High payments for entertainment and social services

Japan FTTB •National industrial policy•Tax incentives, cheap finance

• Low cost deployment- high housing density and overhead deployment

• Capital investment in pre-provisioning

FTTC: Fibre to the Cabinet; FTTP: Fibre to the Premises; FTTB: Fibre to the Building; LLU: Local Loop Unbundling

© British Telecommunications plc

There is no economic case for replacing the copper access infrastructure with fibre solely on cost grounds

• Capex costs for greenfield sites are similar for fibre and copper…and fibre offers scope for much lower maintenance costs. So it makes economic sense to use fibre (FTTP) for large greenfield sites

• But maintenance cost savings are insufficient to justify BT replacing existing copper with fibre.

• High definition television may be a future driver for higher bandwidths but hybrid technologies (satellite, freeview) are much more economic for broadcast.

• No revenue model has yet emerged for recovering the costs of fibre through charging for HDTV services.

© British Telecommunications plc

BT position on NGA strategy

• BT wants to respond to real demand in a commercially and technically innovative way that enables effective downstream competition everywhere.

• From 2008 BT will provide networks based on fibre to the premises (FTTP) for selected major greenfield housing developments, and businesses in such locations.

• Where BT builds fibre access networks for its own use it will make available equivalent wholesale services. BT does not seek a regulatory “holiday”.

• Continued exploration of challenges and uncertainties – eg capex costs, demand, business models, applications, technology, public funding.

© British Telecommunications plc

Ebbsfleet Valley

“… a vibrant, cosmopolitan development in the heart of Kent Thameside”

• Developed by Land Securities

• Over 1,000 acres • the business core of up to 6

million sq ft will create around 25,000 new jobs over the coming 20 years

• 3 million sq ft of retail, leisure and community facilities

• 9,600 new homes and 440 acres of new parks and open spaces and lakes.

• …will begin at Springhead, a joint venture residential scheme with Countryside Properties of up to 600 new homes with supporting community facilities including a school, parks and place of worship

Tony Ealden, FTTP Ebbsfleet. Slide 2

Questions?