BT set for 2 million Unbundled Lines this week
Unless, they were pulling our legs the latest OpenReach figures revealed that on 1st April, there was a grand total of 1,910k unbundled lines and the weekly adds were 87k gross and 74k net. Note the implied churn within the LLUers - that's an annualised rate of 34.7% (13k*51/1,910). 87k was a record week for additions and by my reckoning even with the Easter break means that sometime later this week we will be welcoming 2m unbundled BT lines. This is a phenomenal achievement given that exactly one year ago we were only at 356k unbundled lines. Sometimes it is important for people to take a step out of trenches and look at the bigger picture and lord forbid even congratulate OpenReach for a job well done.
The big question is how much is this hurting the BT bottom line and this is much more difficult to ascertain. I believe it is the fully unbundled customers who really hurt BT with them losing the highly profitable Wholesale Line Rental and replacing it with the lower margin OpenReach copper rental. BT also loses the inbound voice termination revenue which is significant once the line loss is in the millions.
The 2m figure includes both partial and fully unbundled lines and with only Carphone currently fully unbundling in any serious quantity, I doubt the Bt P&L is suffering much pain especially when you offset the line rental loss with the increased occupancy rentals at the exchanges and the OpenReach activity based fees.
For both, fully and unbundled lines BT theoretically also lose their Retail and Wholesale IPStream margins. However, given that currently no-one is making any real profits in broadband services apart from BT Wholesale and a few SME targeted ISPs, I would argue that BT again is currently feeling little pain. Perhaps, there is some “opportunity” loss of profits which would have occurred if there was no competition and prices were higher, but then there wouldn’t be the demand and associated volumes. The real threat to BT is in the longer term as the market consolidates into an oligopoly with each player having their own backbones and therefore a significant chunk of the traffic and therefore the revenue is kept off the BT network.
Currently, I think the broadband scenario is much the same as the early days of the Free Internet with ISPs such as Freeserve generating huge increases in voice traffic via dial-up access traffic and BT making a fortune from delivery of these calls. The ISPs of course made their money from shareholders selling up and exiting at inflated asset values. This time BT is making a fortune from filling its data pipes, but I feel the time is running out for the ISPs to make an exit at inflated asset values. The Great Pipex Sell-off will be closely followed to see if valuations have peaked and are now on the decline.
In the detail of the LLU KPIs spreadsheet was also an extremely worrying statistic for followers of Carphone LLU saga – a big jump in the DOAs (Dead-on-Arrivals) to 7.6% from 2.6% a couple of weeks ago. That is one in thirteen people are losing both voice and data service when Carphone unbundle them. Dunstone in the recent trading update admitted that DOAs were the most upsetting thing to customers, but OpenReach had improved from the early days – I can only see two weeks in the last nine months were DOAs were greater than 7.5%.
The big question is how much is this hurting the BT bottom line and this is much more difficult to ascertain. I believe it is the fully unbundled customers who really hurt BT with them losing the highly profitable Wholesale Line Rental and replacing it with the lower margin OpenReach copper rental. BT also loses the inbound voice termination revenue which is significant once the line loss is in the millions.
The 2m figure includes both partial and fully unbundled lines and with only Carphone currently fully unbundling in any serious quantity, I doubt the Bt P&L is suffering much pain especially when you offset the line rental loss with the increased occupancy rentals at the exchanges and the OpenReach activity based fees.
For both, fully and unbundled lines BT theoretically also lose their Retail and Wholesale IPStream margins. However, given that currently no-one is making any real profits in broadband services apart from BT Wholesale and a few SME targeted ISPs, I would argue that BT again is currently feeling little pain. Perhaps, there is some “opportunity” loss of profits which would have occurred if there was no competition and prices were higher, but then there wouldn’t be the demand and associated volumes. The real threat to BT is in the longer term as the market consolidates into an oligopoly with each player having their own backbones and therefore a significant chunk of the traffic and therefore the revenue is kept off the BT network.
Currently, I think the broadband scenario is much the same as the early days of the Free Internet with ISPs such as Freeserve generating huge increases in voice traffic via dial-up access traffic and BT making a fortune from delivery of these calls. The ISPs of course made their money from shareholders selling up and exiting at inflated asset values. This time BT is making a fortune from filling its data pipes, but I feel the time is running out for the ISPs to make an exit at inflated asset values. The Great Pipex Sell-off will be closely followed to see if valuations have peaked and are now on the decline.
In the detail of the LLU KPIs spreadsheet was also an extremely worrying statistic for followers of Carphone LLU saga – a big jump in the DOAs (Dead-on-Arrivals) to 7.6% from 2.6% a couple of weeks ago. That is one in thirteen people are losing both voice and data service when Carphone unbundle them. Dunstone in the recent trading update admitted that DOAs were the most upsetting thing to customers, but OpenReach had improved from the early days – I can only see two weeks in the last nine months were DOAs were greater than 7.5%.
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