FTTH price sensitivity looking similar in Britain and California


But not at any price, luv.

Last month, British Telecom rolled out a fiber-to-the-home offering that relied on just over half of its users paying somewhere in the $1,000 to $2,300 range for installation, and the rest paying more. Now PC Pro, a UK-based newsletter, reports that BT is backing away from its previous goal of getting FTTH into 25% of its subscriber’s homes.

The report quotes a BT source as linking the pull back to success with its fiber-to-the-cabinet (FTTC) offerings, which are already touted as being in the 40 to 80 Mbps range and could soon go as high as 100 Mbps. It’s similar to the technology and speed targets AT&T has picked for its Uverse service, where copper lines connect homes to neighborhood fiber nodes, usually located in cabinets installed along the street.

A sub-25% market target is consistent with research done last year in Palo Alto, and that I used to model a similar user-financed FTTH feasibility analysis. At a monthly rate in BT’s range – $60 per month – 26% of homes would subscribe if the upfront cost were $1,000, but only 17% at $2,000 and not quite 7% at $3,000. BT isn’t revealing its new FTTH subscriber target, but walking BT’s pricing through Palo Alto’s price sensitivity numbers gives a ballpark take rate in the 10% range.

The key similarity between BT’s territory and Palo Alto – and, incidentally, Provo – is that Internet service in the 10 Mbps to 100 Mbps range is readily available, from BT itself and from AT&T and Comcast in California. Speed and price matter to consumers. Technology, not so much.

About Steve Blum

Steve Blum is president of Tellus Venture Associates, a management, planning and business development consultancy for municipal and community broadband initiatives. He is a 30-year industry veteran and an expert in developing new broadband infrastructure and services, including wireless, fiber optic and satellite systems. His career includes playing key roles in the launch and growth of DirecTv in the U.S., as well as other satellite broadcasting platforms around the world. For the past ten years, he has helped build municipal wireless and fiber optic broadband systems. His client list includes many California cities, such as San Leandro, Palo Alto, Oakland, Los Angeles, Lompoc and Folsom. He’s a member of the executive team for the Central Coast Broadband Consortium and has worked with other regional consortia in California. Steve is the author of seven books on the Internet and satellite broadcasting and is a frequent contributor to professional journals and industry events. He holds an A.B. in History from the University of California, Berkeley, an M.A. in East Asia Studies from the University of Washington, and an M.B.A. from the University of St. Thomas. He is a triathlete and multiple Ironman finisher, and is currently ranked in the top 100 of the Challenge Triathlon world rankings, out of more than 30,000 athletes.