Photographer: Steinar La Engeland

BT’s New, Faster Internet Is Already Too Slow for Its Rivals

  • Former phone monopoly touts fast copper as cheaper option
  • Rivals Vodafone, Sky want U.K. to split off BT’s network unit

East of Ipswich, on a former Royal Air Force base where World War II aces once took off to fight the Luftwaffe, British telecommunications provider BT Group Plc is testing what it calls the near future of broadband.

By the end of the year, thousands of homes will be hooked up to BT’s G.fast networking hardware, which the company says will be enough for customers to stream high-definition TV to multiple sets, download movies onto a laptop, and chat on Skype all at the same time, without any dropouts or buffering. And, not incidentally, it’s a lot cheaper to install than fiber-optic cable. 

In decades past, BT was the monopoly phone company in the U.K., and even as a privatized, publicly traded enterprise, it still runs all the street-level cabinets used by other broadband providers like Vodafone Group Plc and Sky Plc. BT has a last-mile problem: Although it’s strung 1-gigabit-per-second fiber between the street hubs, most homes are connected to the network with its old-school copper lines, so the average speed is more like 30 megabits per second, about the same as in the U.S.

Replacing all of BT’s copper with fiber would cost about 28.8 billion pounds ($36 billion), researcher Analysys Mason estimates. Instead, BT plans to spend about 6 billion pounds through 2020 retrofitting its street boxes with G.fast processors, which it says can wring faster speeds from copper wires by upping the transmission frequency and reducing signal disruption.

“Our research led to the conclusion that most of the industry had missed a few tricks,” says Tim Whitley, who manages BT’s research center at the former RAF base.

Copper-Plus

BT says its G.fast connections should be able to reach 330 Mbps, far from the high end of fiber but as speedy as its top fiber offering. For many customers, that estimate is optimistic. Broadband signals degrade as they travel over copper lines, so homes that are more than 1,000 feet from a G.fast cabinet are likely to be much slower. That’s one reason BT’s five-year rollout is targeting only 10 million homes and businesses. 

BT’s rivals call G.fast a half-measure and say that as the U.K. prepares to leave the European Union, small businesses looking to compete online need high-speed fiber to keep pace with countries that have much faster internet connections, including South Korea, Japan, and even Germany and France. 

“Broadband is a major issue of importance for the U.K.,” says Matthew Braovac, Vodafone’s U.K. head of government affairs. Toby Higho, head of broadband regulatory policy at Sky, says the U.K. will end up having to string fiber anyway, so it may as well do it now.

Pay-TV provider Sky and mobile carrier Vodafone have sharpened their attacks on BT, saying it’s under-investing in the network as its chief executive officer, Gavin Patterson, leads a push to challenge them in their traditional areas of strength. BT acquired wireless network EE this year, and has bolstered its TV offering with more Premier League soccer matches, long a Sky stronghold.

Vodafone, Sky and other BT rivals want the U.K. to break out its broadband unit into a separate company open to outside investment. Media regulator Ofcom has so far stopped short, but Culture Secretary Karen Bradley said in September that all options are on the table.

Frugality is embedded in BT’s culture. While a spokesman describes the Ipswich research center as “BT’s Silicon Valley,” the parking lot is filled with Fords and Kias, not Lexuses and Teslas. Inside, engineers are testing ways to increase the capacity of BT’s existing fiber before stringing more.

“They are trying to squeeze every penny out of the network without putting anything into it,” says Polina Bayvel, a professor of optical communications at University College London who researches improvements in fiber connection speeds.

BT says its approach is vindicated by international comparisons. It developed G.fast with companies including Huawei Technologies Co. and Alcatel-Lucent, now part of Nokia Oyj. Chunghwa Telecom Co. of Taiwan began to install the technology last year.

Limited Rollout

A Chunghwa spokeswoman says its G.fast connections have been able to reach 300 Mbps, but the rollout will be limited because the company prefers to upgrade to fiber wherever possible.

Other companies that have tested G.fast or say they intend to use it include AT&T Inc., Swisscom AG, the Polish unit of French telecom Orange SA, Bezeq The Israeli Telecommunication Corp., and NBN Co. in Australia. 

Despite its drawbacks, G.fast is a solid step forward, says Matthew Howett, an analyst at researcher Ovum. 

“If there were unlimited money available, BT would probably be putting fiber to the remotest farmhouse in Scotland, but money isn’t unlimited,” Howett says. “Why would you disadvantage Britain by not taking advantage of incremental improvements using a technology that exists today?”

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