Over the past few years, the broadband landscape in the United Kingdom has undergone a transformation, thanks to the rise of alternative networks, or altnets. These innovators play a pivotal role in expanding connectivity to previously underserved regions and driving the deployment of full-fibre infrastructure. Here, Guy Miller, CEO of full fibre network operator MS3 Networks, explores the implications and prospects that altnets bring to both the channel and consumers.
Full-fibre technology offers numerous benefits to its users. In most cases, the speed remains consistent regardless of the distance to the premises, making the network less vulnerable to disruptions and less susceptible to faltering in adverse weather conditions. Importantly, unlike previous ADSL and FTTC technologies, full fibre will not be impacted by the planned PSTN switch-off scheduled for the end of 2025. As of September 2023, approximately 56.3 per cent of UK premises have access to at least one full-fibre network provider, marking significant progress in its adoption.
The government highlights the significance of full fibre, demonstrated by its Project Gigabit initiative. This initiative aims to achieve nationwide full fibre connectivity by 2030, through a combination of public sector backing and private investment. As the rollout gains momentum, consumers are starting to reap the advantages of full fibre as well. Among the 56.3 per cent with access to this network, recent data from Ofcom suggests that approximately 25 per cent are now utilising services powered by full fibre.
Aside from the financial support provided by the public sector for underserved regions and the investments made by established operators in their full fibre networks, the rise of altnets offers benefits that cover consumers, businesses and channel partners as well.
Closing the connectivity divide
The funding from Project Gigabit complements private network expansion, especially in challenging regions that are logistically, structurally, or commercially unviable for private investments to cover. The most recent update on the project’s progress indicates that it has assigned more than £780 million of procurement to serve up to 545,000 premises.
Running alongside Project Gigabit, Openreach, the UK’s largest incumbent infrastructure provider, has committed to reaching 25 million premises by December 2026. While these figures indicate substantial progress, there remains a disparity between the number of premises where full fibre will be available and the total premises in the UK.
It is crucial to ensure that Project Gigabit funding is exclusively allocated to projects targeting hard-to-reach areas. So, how can we bridge the divide between Project Gigabit and Openreach’s endeavours? This is where altnets come into play. According to INCA’s Annual altnet report 2023, the planned investment in altnets from now until 2030 has surged to £24 billion — surpassing the combined investments of BT Group and Virgin Media O2.
Altnets intend to leverage this substantial investment to establish their own networks across the UK, filling the gap between regions already served by incumbent providers and government-funded initiatives.
Greater opportunities for partners
The emergence of altnets has opened up additional opportunities for channel partners to diversify their service portfolios, particularly in historically hard-to-reach regions. Retail internet service providers (ISPs) can harness the infrastructure developed by altnets to expand their service reach and cater to previously untapped customer segments.
Take the example of Hull, which Ofcom recognises as one of the areas in the UK with the highest wholesale and consumer broadband prices. This situation exists due to a ‘broadband monopoly,’ where a single provider has made it too expensive for the channel to adopt its wholesale offerings.
As altnets gain prominence in Hull, it has become notably more viable for channel partners to enter this market. Altnets have implemented competitive wholesale pricing models to attract channel partners, and this strategy has proven to be highly effective.
The increased participation of partners has generated heightened competition within the market, leading to improved service quality and more favourable pricing for both consumers and businesses. ISPs can pass on the cost savings they enjoy from wholesale arrangements to their customers. Furthermore, ISPs can leverage this opportunity to expand into new regions and diversify their revenue streams by tapping into a broader market base.
Reducing prices for the channel and customers
While it’s widely recognised that competition is essential to a fair market, the broadband sector has historically lacked such competition. Frequently, there are only one or two operators available for both consumers and channel partners to choose from, enabling incumbent providers to maintain higher prices with little motivation to enhance service quality.
The rise of altnets has disrupted this longstanding situation. By introducing competition and lower pricing to both consumer and wholesale markets, they have compelled incumbent providers to reexamine their pricing strategies and service offerings.
Incumbent operators typically benefit from more established brands and local presence. Therefore, to remain competitive, altnets often offer enhanced service packages. In fact, a study revealed that the entry of one broadband competitor into a regional market can reduce the price of gigabit services by as much as 35 per cent.
The emergence of altnets has sparked a revolution in the UK’s broadband landscape, delivering advantages to consumers, businesses, and channel partners alike. By February 2023, altnets had extended their reach to encompass more than 25 per cent of UK premises. Their extensive network coverage now spans cities, towns, and even villages across the country, rivalling that of Openreach.
Altnets are not a minor player in the broadband market, they have become pivotal in ensuring that affordable and accessible broadband packages are accessible to both channel partners and consumers, regardless of their geographical location or the presence of incumbent providers.
To learn more about MS3 Networks visit https://www.ms3networks.co.uk/
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