1. 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 Mike Kiely The Bit Commons
Date 27/03/2013

2. Scope, Purpose and Intent
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
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.
Date 27/03/2013

3. Incremental Costs Versus Models based on Forward Looking Economic Costs
This analysis sticks to incremental costs for;
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

4. The components under Review source: BT presentation – no copyright.
Date 27/03/2013

5. GEA - FTTC architecture -Source BT presentation – no copyright
VDSL2
DSLAM
Hand-Over Node
PCP
End User Premises
GEA Data Port
NTE 5
& SSFP
VDSL2
modem
CP1 HO
Head End
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

6. 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
Improved support to targeted marketing
Trouble-To-Resolve (T2R) benefit enablers
P&B Activities Release 2
Physically Plan Racks, Frames and cable connectivity
Publish planned network to logical inventory
Update physical inventory with as-built changes
P&B CTH, connectivity between CTH & L2S
VLAN
Creation of Management VLANs
Cease of management VLANs
Automate SVLAN creation
VLAN connectivity between CTH & L2S, CTH & DSLAM
Routing SVLAN over L2S and OLT
Reserve SVLAN range for T&D operation
Record Data SVLAN
EMS and NEs
Allocate NE to EMS
Commission L2S, OLT & DSLAM
Record power details at DSLAM
Generate DSLAM Identifier and Cabinet Id
Store DSLAM address location
Reconciliation
LAG
Build and Manage LAGs
LAG attributes
Automate LAG Configuration
Job Packs
Compile and Issue Job packs
Monitor job pack return
Produce Bill of materials
Benefit examples:
Strategic planning efficiency (eg from NGA network design automation)
Detailed planning efficiency (eg fewer hand-offs in process)
Better FTTC & FTTP network plans (eg from use of more accurate records)
Reduced recording costs (eg single recording system & automation)
Reduced network costs (eg increased Met from Stock)
Reduced time for Line Loss calculations (eg automation & more accurate record)
Improved sales due to targeted marketing (eg use of inventory intelligence)
Other enablers:
NGA programme management benefits (eg more accurate cost estimates)
Planning quality benefits (eg enforcement of NGA standards and policy)
Planning process benefits (eg more effective field, planning, and recording)
Centralised & structured evidence of investment (eg for RDAs and Ofcom)
Comprehensive and centralised record (eg asset valuation, record visibility)
Added : BT has a slick process and efficient
Supply chain.
Commercial roll out – 18 months ahead
Comfortably under the £2.5bn budget.
Source BT Slide –no copyright marking
Date 27/03/2013 6

7. Cabinet arrival Huawei Smart AxM56xx ECI Hi-FOCuS 5
Date 27/03/2013

8. 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

9. 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

10. 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

11. The Handover Point 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

12. 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 Wholesale prices for single Layer 2 HO service
Estimated incremental BT Layer 2 costs to support 45 cabs
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
Sub Total
£11,818
£31,909
£709
Assistance needed in reconciling to the £million(s) costs per exchange.
Date 27/03/2013

13. Handover Point to VDSL Cabinet quantities
BT Metro Node
BT 21CN Exists
In most cases fibre exists
Avge 2.3Km/1.2km
Significant numbers exist
From commercial roll out.
HO Point
Exchange
VDSL x9
In many cases
fibre path exists
Up to c20km fibre path
10 Hopa cabinets
780km Fibre paths
Ratios average out so estimates are possible
Exchange x4
Glassing Through
Local exchanges.
Avge 2.3/1.2Km
VDSL Cabs x9
Date 27/03/2013

14. Openreach fibre network (Wales) source: BT Wales slide deck – no copyright marking.
Date 27/03/2013

15. Connectivity to VDSL Cabinet/PCP
HOP
Exchange
VDSL
Derived using SLU costs
PCP
Handover to VDSL Cabinet/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
Other checks
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.
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

16. What should the benchmark subsidy be for single Cabinet Fibre path
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 using BT Wholesale prices for single Layer 2 HO service
Estimated incremental BT Layer 2 costs to support 45 cabs
Estimated BT incremental cost per VDSL Cabinet for illustrative purposes
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
Sub Total
£11,818
£31,909
£709
Handover to VDSL Cabinet/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
Cabinet
Planning
£350.00
Plynth
£1,200.00
£400.00
Power
£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
£10,283.18
BT Management fee
20%
£2,056.64
Total cost
£12,339.82
BT investment per home connected Y1+Y2
£100.00
£2,000.00
Example subsidy payable to BT per path and Cabinet install
£10,339.82
Subsidy paid if 100 customers attached to PCP
£103.40
Subsidy paid if 200 customers attached to PCP
£51.70
Date 27/03/2013

17. Conclusion for peer review!
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 re-arranged 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