Olivia Garfield: From early 2013 the UK’s competing service
providers will be able to supply on-demand fibre, using
Openreach, direct into end-users’ homes across the whole fibred
UK operators will be able to offer customers up to 330 megabits a second via fibre-to-the-home from spring 2013 — even though the CEO of Openreach, the infrastructure company behind the project, can’t see how any household can need more than 30 megabits.
Openreach is the arms-length subsidiary of BT that provides local-loop fibre and copper for all service providers in the UK. It’s now in the middle of a multi-billion-pound project to install fibre to the cabinets serving 90% of the UK’s 28 million homes by 2017, giving them 40 to 80 megabits, and well on target to cover two-thirds of them, at a cost of £2.5 billion, by the end of 2014.
“But I personally don’t believe that we will see any applications and devices that need that, certainly in the next few years,” says Olivia Garfield, the CEO leading what she believes is the world’s fastest broadband rollout.
“It’s an interesting dilemma [working out] why people need a speed,” she adds. “We can’t find a need that goes beyond 25-30 [megabits]. If you add up all the various devices, and we’ve been trying it in the labs, trying to create fake households with numerous people, you don’t get beyond that need.”
Those trials have involved BT engineers “literally throwing everything at it — streamed HD TV and so on — but it is a surreal experience to create that need”.
Even in South Korea and Hong Kong, often quoted as providing the world’s best broadband, surveys suggest that “the average family uses nine and 15 megabits” respectively, she adds.
Still, Garfield believes in future-proofing the UK project, so that the maximum available download speed via fibre-to-the-cabinet has already increased from 40 to 80 megabits. From early 2013 Openreach will enable service providers to offer fibre from the cabinet direct into end-users’ homes across the whole fibred area.
“Everyone who is in a fibre-to-the-cabinet enabled area will be able to choose fibre on demand, which is fibre to their individual home, and that launches in spring 2013,” she says. “Typically a lot of people are buying the 80 meg product, but that [move] will boost the speed to 330.”
But why, given what she has just said about those attempts to find uses beyond 25-30 megabits? “It’s about future-proofing, right?” says Garfield. “I can’t see what someone’s going to use that for, but that’s not saying there aren’t examples of small businesses that would use it. It’s true there are.”
And, she adds: “I also think that people have got to feel comfortable that we’re on the right path for success as a country, and knowing they have that choice to buy — any day they want — a speed of 330 makes people sleep better at night.”
Garfield has been leading Openreach through this rapid rollout of fibre since April 2011, when she took over from Steve Robertson, the executive who had been CEO since Openreach was created as a functionally separate part of the BT group in January 2006. Openreach’s task is to run the unbundled local loop, treating all service providers, including customer-facing parts of BT, equally.
Robertson — now CEO of Truphone — described the Openreach role to Global Telecoms Business in an interview in 2006. His first task was to provide “a level playing field” for his customers —not the end users but the operators. “As an industry we get wedded to jargon so we say we’re going to create equivalence of input systems,” Robertson told GTB. “What the heck does that mean? Everybody who buys products from Openreach does so in the same way.”
GTB 40 under 40 member
Garfield was no stranger to fibre when she moved to Openreach. She had been director of strategy and regulatory affairs in BT’s group management, overseeing its fibre broadband strategy. She was in that role in July 2009 when Global Telecoms Business named her as one of the first GTB 40 under 40. “Garfield is the ... owner of BT’s £1.5 billion fibre investment to roll out fibre-based, super-fast broadband to as many as 10 million homes in the UK by December 2012,” we said at the time.
But she’s much more ambitious than that today. Within 18 months of deciding to invest in fibre, the company decided to increase its target from those 10 million homes — about 35% of the UK’s households — to two-thirds.
And then the project speeded up again. “We originally said two-thirds by the end of 2015 and we brought that forward to two-thirds by the end of 2014. We’re shooting for the 17-18 million mark, which is what two-thirds is, and that will be by the end of 2014.” The £2.5 billion is the budget running up to 2014 to cover two-thirds, with the project continuing to 2017 for the targeted 90%, using extra funding that BT is bidding for.
Today, in the middle of 2012, “north of 11 million homes” can take a high-speed broadband service using fibre as far as the cabinet and then VDSL over copper from the cabinet to the customer’s home. That copper is “a national treasure”, says Garfield, who believes copper will exist alongside fibre for years to come.
“We’re building an overlay network which relies on the copper staying. For any medium and long-term planning we have at the moment the copper stays. That’s true if you look at other nations as well — the smart money seems to be on those who are going for a mixed economy network.”
In Belgium, Belgacom is doing “a fantastic job” with a similar strategy, she says. “Nations like that seem to be leading the way,” she adds, offering a little scepticism about countries that are going for an all-fibre network.
“The vast majority of international rollouts of fibre have started, stalled, been reset and then come back again,” she says. “KPN’s an example [in the Netherlands], Australia’s an example, France is an example. It’s very rare to have a rollout that has started with gusto and then gained speed with no pause.” That’s what the UK is doing, she smiles.
Leap of faith
It was, she admits, a big leap of faith, though a leap that has always had the support of the company. The board “has to approve that we’re not going to spend shedloads of money wildly. On an annual basis we lay out our plans and the board gives approval. I’ve never encountered an issue on investment funds — always the opposite. I’ve always had board support.”
Even though “it is a leap of faith to spend £2.5 billion on something that was unproven at the time, once we decided to do it, as a board there was very clear understanding that if you’re going to do it the only way to make it successful is to put all your energy and weight behind it.”
Crucial to this, “before we had any return at all on any investment, there was a belief point: if we can technically do it — and we’d proved very early that we can — then actually you’ve got to go scale, to make the economics work. In the last couple of years we’ve ramped up speed of rollout — as well as the overall speed for customers — and we’ve always had full board approval. Roll out fibre as far as you can. It won’t be held back by investment capex.”
Does that imply there wasn’t a fully worked out return-on-investment case before Openreach started? “It implies the truth, which was that we had a full investment case, but any investment case which is low double-digit years on something which is unproven but costs £2.5 billion is a leap of faith — that you have the people in the company to make that a success [and] that you’re not going to be late, because spending £2.5 billion, if that had been late, would have been an even bigger issue. So it is a leap of faith that you have the right skills — that is a big leap of faith for any board.”
We discuss the usage of the term “superfast broadband”. It’s an expression that UK governments — both this administration, elected in 2010, and its predecessor — have tended to use, ludicrously, to mean anything over two megabits a second.
Garfield diplomatically avoids criticising politicians. “We use ‘superfast broadband’ as being a very different speed,” she says, however. “We’ll use ‘superfast speeds’ as being 20 to 80 meg, but typically the higher end of that.”
But, she adds, “fibre broadband is still a game-changer”, even at lower speeds. To those a long way from the exchange, if they had previously been on first-generation broadband, “we know you’ll be eight to 10 times quicker” with FTTC. “So if you had eight meg, you’ll be getting 80. If you’ve been on 0.2, you’ll find two meg a game-changer. It does depend what you had at the start as to how excited you are with your speeds.”
The fourth utility
It’s a game-changer for all. “The general population of the UK is now perceiving broadband as the fourth utility”, and that means there is a developing programme beyond the current project to go beyond two-thirds of homes and even the plan that “together as an industry we deploy fibre to 90% of the UK”, says Garfield. “That’s still going to leave a very important final 10% who need that advantage — social and commercial.”
So the industry is looking at options to deliver broadband to those final few million homes. “We think it’s a melange of different things.” And Openreach is trying out a number of options.
On the Scottish island of Bute, the company is running a project using so-called “white spaces” — spare frequencies — in the television broadcast bands. Openreach won a GTB Innovation Award in June 2012 for another project, with France Telecom-Orange, to use LTE for broadband access in Cornwall, in the south-west of England. “And it could be satellite as well,” she adds.
One of the big challenges is trying to “make it simple for people to buy” one of these alternatives to fibre, so that “even though they’re not buying the same solution as lots of other people, they find it as easy to purchase”.
The selection of technology is important. “The honest answer is, fibre is super-reliable, very good value, and has the main communications providers on it, making it an amazing choice. It’s going to be tricky to justify that something like LTE or satellite is going to have the same advantages. But having said that, if you’ve had no broadband up to now, and now you’re getting good broadband service, that’s a revolution in digital terms from where you are now.”
The government is running a project called Broadband Delivery UK, for which it has allocated £530 million “to stimulate commercial investment to rollout high-speed broadband in rural communities”, according to the official website, along with £150 million for what the government calls “super-connected cities” to support ultrafast broadband, defined as “having a minimum download speed of at least 80 megabits a second” and another £150 million to support mobile coverage in poorly served areas.
BT has successfully bid for a number of rural BDUK projects, including one covering Wales, an area with what she describes as “an interesting topography” of mountains and valleys. The contract is to cover 96% of the population, but one of the places that won’t be covered, she’s fairly sure, is the café at the top of Snowdon, at 1,085 metres the highest mountain in Wales. “It’s not going to have fibre. It’s one of the exceptions in the Wales bid. It don’t know how it’s positioned for satellite repeaters. It would probably be too far for radio bursts.”
However, technology is moving on. “I do believe that there are technical means if there is the commercial will to get [broadband] to pretty much everywhere in the UK.” It will be “a blend of technologies”, including satellite, radio and LTE.
Maybe even fibre. “We used to believe there will be a stopping point” in how far fibre can reach — the physics of how far signals will travel, she notes, “but the technology gets better and better and better the entire time and we are finding new and exciting things. And that will end up becoming a commercial debate. It becomes a commercial question rather that technically could we do it. We’re increasingly confident of our technical ability,” she adds.
“Our main job has got to be to enable future technology. That’s what we see our job as being. We have to be the custodians of the national treasure, in the form of the copper network, and we have to be the forerunners of a future fibre network.”
A few CEOs pride themselves on the fact that they started in the industry up poles and down in holes in the ground as installation engineers. Garfield, a modern languages graduate from Cambridge who spent several years with Accenture before joining BT, has chosen to do that part of the job as CEO.
Global Telecoms Business was meeting her — in her office overlooking the hotel at St Pancras International station — on one of the few truly warm days of the wet summer of 2012.
“We’ve had the worst weather in 100 years in terms of the rain, and we’ve had to take the tricky decision to ask engineers to step forward and work weekends as well to help us out. They’ve been amazing and done that. But you should never ask people to do something you’re not prepared to do yourself.”
Hard hat and boots
So Garfield has been joining them, “I and the rest of my senior team”, with hard hat, boots and high-visibility jacket, during the week and at weekends. “I’m out a day a week,” she says. “Next week I’m spending two days in west Scotland. The week after that I’m out and about in north Yorkshire. I’m out tomorrow — Saturday — in south London. The last three Saturdays I’ve been in south Wales, west Yorkshire, and the Olympic Park [in east London].” Openreach technicians were responsible for installing many of the hugely complex systems that helped make London 2012 the most networked Olympics yet.
That’s probably given her insights to one of the other projects that is close to her heart. “Making every single engineering visit count is a big thing for our industry, because there are a whole lot of wasted, no-access appointments, when the customer didn’t realise they had to be there,” she says. “We turn up and we can’t get in. On all sides, trying to make every visit count is a big thing.”
And today’s systems are more susceptible to faults, she adds. “When you move from having a purely voice customer base to having a broadband customer base you end up with more faults. One of the main costs as an industry is the sheer number of faults we’re dealing with.”
As a result, “we’re running a programme across industry called R10k — it means taking 10,000 repairs every week out of industry. And that’s done,” she smiles. “We [have taken] 11,000 faults a week out of the overall area that we’re managing.”
The next stage is to increase the target to 15,000 fewer faults a week. “R15k — we’re not very creative with names round here. That helps all of industry, because we want to spend all the active engineering time that we have enabling customers on new services. And we want the original products to fault less. That’s the Holy Grail for the industry.”
Paul Reynolds, the former CEO of BT Wholesale who did much to create the Openreach concept, created what could be thought of as an Openreach mark 2 when he went to be CEO of Telecom New Zealand in 2007. Chorus was Telecom NZ’s local-loop division, with a similar relationship with competing service providers as Openreach has in the UK’s competitive market. And last year Reynolds finished a complete split, with Chorus becoming a totally independent company, with separate board and separate shareholders from Telecom NZ.
Does Garfield look at Chorus and wonder if that might be a model for Openreach? “All decisions are made against a backdrop of what has happened previously. We’re just in a very different space,” she says.
The UK discussed structural separation — what New Zealand and other countries, including Singapore, have now — but chose functional separation.
“Structural separation in all circumstances has come after you’ve had a trial of something less formal that hasn’t worked,” she says, “whereas in our case we in the UK went for functional separation as a nation. We said we were going to do something and we did it. Functional separation has worked really well. It’s created the most vibrant, competitive broadband market in the world. The reason to have separation is to have vibrant, competitive, consumer choice-oriented broadband market. We have all those things.” GTB
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