Source: Comms Business December 2011
The last 18 months has all been about EFM. BT Wholesale (BTW) launched at the beginning of 2010 and almost exactly a year later Talk Talk Business (TTB) announced that they had enabled just under 2000 exchanges for their version of the product. I read last week that Easynet had enabled 1200 exchanges in the UK for EFM and I understand that BE are also looking to get something into the market early next year. At the same time BTW rolled out FTTC, starting with a handful of exchanges in early 2010 but quickly accelerating to over 600 as of the beginning of October 2011. With FTTC BTW run fibre from the exchange to one of the green cabinets at the end of your road so that the amount of copper involved is kept to a minimum. This allows more consistently fast broadband speeds up to 40Mbit/s downstream and 10Mbit/s upstream. TTB are also talking about offering FTTC next year. The trade price for a 10/40 FTTC is around £60 per month whereas EFM prices for a 10/10 start at around £250 per month. Installation prices are usually £75 for FTTC vs around £2000 for EFM although some suppliers will offer free installation for contracts of 36 months or more. Both EFM and FTTC have a minimum contract term of 12 months.
The underlying cost elements are roughly the same in that both delivered to the premises over copper wire. In the case of FTTC a single twisted pair and with EFM usually multiple pairs bonded together. Similarly the cost of the backhaul bandwidth from the exchange is the same. The big difference is how much bandwidth you actually get. With EFM it is all yours – you pay for 10Mbit/s symmetrical bandwidth and that’s what you get – 100% of the time. With FTTC you are sharing the bandwidth with a number of other customers and BTW only offer a ‘best effort’ planned downstream throughput which varies according to the maximum speed of the equipment in the exchange.
Another consideration is lead-time. Where available, FTTC can be delivered in days whereas EFM can take many weeks to be installed. Also FTTC uses the same back-end systems as BTW broadband and so APIs are available for your supplier to automate everything from placing the order to diagnosing problems, raising faults and calling out engineers. Some of the better ISPs will extend these tools out to their partners giving them ultimate control and choice. Sadly none of the EFM suppliers have developed APIs for their products although both TTB and BTW say they are on the way. Consequently EFM is provisioned manually and the process is high touch and high cost with protracted and unpredictable lead times. As more suppliers enter the EFM market prices will inevitably fall and without automation there will come a point when it is just not economical to sell EFM.
Over time the distinctions between EFM and FTTC will blur. Networks will probably launch contended versions of Ethernet and 1:1 versions of FTTC and there will be less of a difference in price. It is all good news for the reseller because as SMEs demand faster and more reliable connections they will be happy to increase recurring ARPU by upgrading them to more expensive connectivity on longer term contracts.