Date posted: 29 March 2022 – Category: Fibre Optics
Having promised that the UK would be enjoying a fully fibre optic network by 2025, the UK government now seems likely to fail. A range of issues including inadequate planning, finance delays, and unrealistic target-setting have all meant that the proposed national upgrade is already falling behind schedule. In the face of this scenario, which leaves over a million UK households without reliable, fast internet access, it seems that the emerging class of so called “alt net” providers will be stepping up to address the shortfall.
Originally seen in the Conservative party’s 2019 manifesto, the promise set forth by the UK government was certainly ambitious in its scope, originally setting out an intention to supply the whole country with gigabit-capable connectivity, within a short four year time frame. And this infrastructure upgrade is certainly long overdue, with current broadband provision denoting stark differences between our urban and rural regions. With the Covid pandemic resulting in a surge in remote working, studying, and other essential online activities, the areas with poor internet access have been strongly disadvantaged.
In 2020, according to Ofcom’s Connected Nations 2020 report, whilst 96% of the UK population enjoyed superfast broadband, only 27% of UK homes had broadband with gigabit-capable connectivity, and a mere 18% had access to full fibre broadband. And it’s important to note that these figures are not evenly distributed across the country: those living in rural areas are significantly less likely to be able to access broadband capable of 10mbps speeds or above, with only 30% of people in remote parts of Wales being able to access even the most basic of broadband connection.
Right now, the government watchdog Ofcom is being tasked with the mammoth task of rolling out the new fibre optic cabling, which will represent an upgrade from the copper wire that was previously the standard. Ofcom’s role is to coordinate the infrastructure upgrade which will be carried out by the two largest internet carrier companies in the UK: BT Openreach and Virgin Media.
So who exactly are the alt net providers who could be taking over where the UK government is failing to deliver? A fast-growing group of broadband carriers, alt net providers are the independent companies that collectively now own the third largest share of all fibre connections in the UK.
The potential power of these providers has been recognised by the Independent Networks Co-operative Association (INCA), who in 2020 released their estimation that alt net companies could reach up to 50% of UK homes by 2025. This represents 15.73m households. The financial markets reflect this growing influence, too, with total alt net investment already valued at £7bn in 2020. The reason for the surge in investment comes from a growing realisation that alt net providers could succeed in connecting the areas that the dominant carriers are reluctant to address. Whilst BT Openreach, for example, has claimed that supplying Wales with full fibre is not cost effective, the agile, eager alt net providers are ready to move in instead.
Whilst the Covid pandemic certainly brought home the problems caused by our inadequate internet network, the UK government had already realised that its initial pledge to upgrade the entirety of the copper cabling infrastructure was untenable, and in 2020 reduced this to 85%.
Alt net providers have been characterised as “vibrant and ambitious” by Annelise Berendt, Principle Associate at Point Topic, a leading resource for broadband market intelligence. “Independent operators have a significant role to play in promoting a healthy, well-functioning broadband sector as the UK looks to deliver on its ultrafast targets,” she went on to say. “This report highlights they are stepping up to this role, playing their part both now and for the future.”
With customer demand clearly present, taking on the challenge of bringing fibre to under-served regions represents a superb opportunity for these companies, whose smaller size allows them to benefit from lower costs and a nimbler approach.
It’s important to note, however, that the explosion in alt net providers is itself causing some concern in areas of the market: whilst investors are eager to plough finance into these new ventures, some of these new firms have secured funding before having the correct planning permissions in place, meaning that their contribution to the infrastructure upgrade is not certain.
Yet ultimately the alt net sector would certainly appear to be integral in achieving the full fibre goals of the UK government, and it would be smart for Ofcom to factor the potential contributions of these providers into its coordination of the roll out as it continues. After all, the cost of the infrastructure upgrade has been estimated at £30 billion, whilst the total sums pledged collectively by the government, BT and Virgin totals just £17bn. The investment record of the alt net sector, together with the companies’ own enthusiasm for expanding their customer base, must hold the key to delivering the promised upgrade.
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