Openreach needs to make full fibre broadband work
BT’s infrastructure company cannot retreat on its plans for a national digital network
Deep in the bowels of the Faraday Building, the main telephone exchange for the City of London since 1902, lead-lined cables carrying thousands of copper wires still protrude from walls. The red metal packed into them is extremely valuable but some are no longer working and the rest will soon be obsolete.
Their replacements are thin cables containing 864 glass fibres, each of which can be spliced into 32 strands. These run from equipment racks in exchanges such as Faraday, through BT’s underground ducts and up telephone poles before being connected directly into offices and homes. The last step will be to strip the copper from the network and sell it for more than £1bn.
The pace at which this has happened is a salutary contrast to BT’s historic reluctance to abandon copper and deploy full fibre broadband. The company is investing £15bn through its Openreach division to reach 25mn premises (about 80 per cent of the total) with full fibre by the end of this year.
“We’ve built faster than anyone could have envisaged,” says Katie Milligan, deputy chief executive of Openreach, as we toured the Faraday building and its nearby operations. It is not alone in suddenly turning the UK into Europe’s fastest growing full fibre broadband market: alternative network providers (altnets) such as CityFibre have invested billions more.
Openreach’s attempt to replace its historic advantage in copper with a new one in fibre is a remarkable operation. It involves blowing fibre optic cables along its ducts with air compressors and stringing fibre from poles to houses. The company has persuaded the government to limit the ability of flat freeholders to block cabling work for higher-speed services.
But no good deed goes unpunished and competition for territory among Openreach, Virgin Media 02 and the altnets has been intense and costly. “I cannot tell you how crazy a market it is out there,” says Karen Egan, head of telecoms at Enders Analysis. The altnets suffered £1.5bn net losses in 2024, while Openreach lost a net 828,000 customers in that year.
The rivalry was unleashed by the telecoms regulator Ofcom in 2021. It capped the wholesale price that Openreach could charge retail providers such as TalkTalk for services carried over copper for the final stretch from street cabinets, but let it charge more for full fibre connections. Altnets were encouraged to take on Openreach by using its ducts and poles.
This has been good for consumers: prices have been squeezed by cut-price offers, especially in areas with several network operators. But it has taken a toll on the altnets, with G.Network being sold to a distressed debt firm this month. Openreach now wants greater freedom to cut its wholesale prices in the most competitive areas but keep them higher in others.
Clive Selley, Openreach chief executive, has talked of scrapping its plans to extend full fibre to 30mn premises by 2030 if Ofcom fails to reform the rules. That sounds more like a lobbying position than a real threat since BT would then have failed to match its reach in copper. You cannot claim to be a national operator if you only get 80 per cent of the way there.
The UK has a related challenge. The saying goes that “if you build it, they will come” but not enough have. Only 38 per cent of homes and businesses that could now connect to full fibre through Openreach have done so, while the altnets achieved only 15 per cent take-up by the end of 2024, according to Enders.
This could be because consumers are confused. The broadband industry spent so long advertising fibre to the cabinet as “fibre broadband” that many people do not grasp the difference in speed and reliability between that and full fibre to premises. Even businesses that know can be reluctant to change because of old devices such as alarms that rely on copper.
The UK’s transition from copper to fibre is thus a balancing act. Openreach has to keep building while remaining exposed to competition from Virgin Media 02 and altnets. Customers need to switch to make the industry’s investment repay. That is not only a regulatory challenge but one of better marketing to more people.
Success should be possible: the UK has advanced a long way in five years and it now needs to finish the broadband job. Once a network of fibre optic cables is in place, it could remain for 50 years or more: some of the copper in the Faraday building dates back a century. One day, it will pay off.