Time to think about switching that copper off?

Earlier this week, a short article on Total Telecom was widely distributed in broadband circles. Entitled Portugal Telecom Selling Off Its Copper it outlines how, now that Portugal Telecom has reached a critical mass of fiber to the home customers, it’s looking at getting rid of its copper network altogether.

This is as it should be. No fiber to the home plan by an incumbent is complete without a scenario about copper switch-off. And yet precious few incumbents seem to even be considering the question. Of course, the BTs and DTs wouldn’t, they’re holding to their copper legacy as to a lifesaver.  But what about the Telia Soneras, the Oranges, the Telefonicas, the Verizons ?

Managing two networks in parallel to serve the same customers is nonsensical. Sure, an operator can view fiber as a premium product, only offered to the wealthy few, but there’s no significant profit in that. Fiber to the home is a scale game. Many operators who started this years ago are now in the 40-50% take rates in areas where they have deployed fiber, and the question of what to do with the copper becomes acute.

Switching the copper off isn’t a trivial decision: not only does it still serve many customers today (even if 50% are on fiber) but it is also in many cases resold to competitors through unbundling. These competitors have had to invest in DSLAMs and other pieces of equipment to run their own networks on that unbundled copper. A decision to switch the copper off means that they might be entitled to some compensation, but also that there needs to be an alternative.

Said alternative can be / should be fiber, but the regulatory framework isn’t the same: sometimes fiber isn’t open, sometimes it can’t or won’t be unbundled. Either way, it’s a massive disruption. This explains why the trial Orange ran in France in 2014-2015 to switch the copper off in one city was stopped in its tracks: Orange’s competitors called it off.

All these are hurdles, to be sure. But PT is on the right track: sooner or later, it has to happen because the cost of running an ageing copper network for fewer and fewer customers makes no sense. It’s high time that incumbents (and regulators) who are serious about FTTH start looking into copper switching and build scenarios on how to get there. The efficiency gains (not to mention the value of copper on the raw materials markets) are very important, and once the revenue gains to be derived from migrating the customer base to fiber will be accounted for, the next step will be efficiency.

If Portugal is doing this despite its dire economic situation, surely other countries can achieve it too.