I reckon the skewed risk has resulted in Openreach seeing 20-25% less investment than it should have.
Those numbers - when you put them in real terms how do they look?
I'll help - the 1.108 billion in CapEx from 2006/7 would be 1.446 billion now.
Does that take account of the fact that Ofcom have a built-in reduction of investment in the older networks, and a built-in escalator (downwards) of regulated income to match?
Or are you calculating primarily from the cost of capital to Openreach vs the rest of BT?
I tend to think that the "growth factor" perhaps applies only to the unregulated side of the investment. So far ... more to read though.
The way Openreach is being run is nuts. They are hiring engineers to maintain an obsolete network rather than trying to replace it. I just don't get the thinking on this. Surely with borrowing being so cheap across the board they should be investing heavily into capital expenditure in order to lower operational expenditure going forward, not hiring engineers to get the KPIs on their copper network up?
I'm obviously not privy to the behind the scenes regulatory discussions but surely if BT were making an effort to take the FoX project beyond the trial stage we'd have heard more about it, if nothing else through BT's PR machine?
If BT had something to gain from fibre, we might see more action. As things stand, they'd have to supply VULA, so limiting income, and offering no particular spur. And there's be no reduction in expenditure, as they have to keep the copper network fully up and running anyway. There is no "savings from maintenance" - the USO and all that malarky.
There is talk of BT wanting to kill of the PSTN as we know it in 2025, but doing so likely needs a lot of USO adjustments - what service(s) will they be required to provide? How, technically? What quality? The impact on copper for the service itself, and for quality assurance/testing? With the answer to some of these, you can start to ask the knock-on questions for LLU supply.
I don't think there's a coincidence in the new USO negotiations being slated to trigger regulations from 2020, and BT's switch-off date of 2025 - a five year notice period to LLU companies.
Once BT get approval to lose copper where they see fit, then you might start to see fibre being rolled out in such places as a direct consequence of the reduced maintenance. Until then, the threat of demands from TalkTalk etc hold it at bay.