scte long read
areas. But that sort of required the big ISPs to invest in fibre rollout as well. But Sky and TalkTalk in the UK weren’t willing to do that.” Consolidation Mike Surrey, Chair at Northumberland altnet Alncom rather poetically observed that “Consolidation isn’t happening as funding isn’t happening because subscribers aren’t happening.” There are obvious reasons for this, but a lot of others that aren’t. Paddy Paddison, recently appointed CEO of INCA and co-founder of Cornwall- based altnet Wildanet has decades of experience in this field; he sees parallels with the cable industry of the 80s and 90s, recognising it as a marathon, not a sprint. A senior executive from a UK MSO was also sanguine on the matter, pointing out that that consolidation process took 20 years, whittled down from 30-40 cable providers to only 3. “Unfortunately, the economics just don’t support them all working. Economies of scale tend not to when associated with access networks. Competitive build models generate growth and raise standards, but there will always be casualties.” Consolidation at the rate we are seeing supports the same pattern we saw with cable in the 90s, and one industry insider told me, “We had a strategy meeting last year internally and asked ourselves the question, how many do you think there’ll be left at the end? Some people were up at 25 and some people were down at three.” By 2041, that could be just three ISPs for the whole of the UK: Openreach, Virgin Media and AN Other.
The backstory
The business model
Like many others, Alex Marshall founded Cambridgeshire-based altnet Upp “because it was an interesting project, it was well paid, lasted a good while and we enjoyed the social good that came with connecting people.” Upp’s outlook was relaxed, they weren’t looking for fame and fortune necessarily; “that happened only if you were super lucky, then you’d end up a multimillionaire.” Public Infrastructure Access was granted in 2011, with early efforts from altnets in around 2011-12. Openreach were focused on their own existing networks at that point, leaving the landscape wide open for altnets to emerge all over the country over the coming years. Jason Whalley from the Internet Society explained that “As early as 2012, Ofcom, the UK’s telecommunications regulator, mentions over a dozen ‘altnet’ operators in one of its annual infrastructure reports, describing them as ‘ambitious’. Since then, both their number and ambitions have grown. According to INCA, there are now around 100 such companies that will invest almost £11 billion by the end of 2025 to roll out their networks past 30 million premises. By the end of 2023, altnets collectively passed nearly 13 million premises and had two million customers.” In a territory as small as the UK, such activity is incredible. James Barford agreed, pointed out key differences. “Well, it’s a very localised business, so you get different situations in each market. But in a lot of markets, Spain, Portugal, France for example, the big ISPs all have their own fibre networks, but share a lot where possible, especially in the more rural
It’s risky, starting a business. Like becoming an actor, knowing full well there is a 90% unemployment rate, you do it because it’s something you believe in, and that belief will carry you beyond doubts and alarming statistics. Sometimes it’ll carry you all the way to winning an Oscar, or an INCA award anyway. 20% of new businesses in the UK fail in the first year; 60% fail in the first three. Only 5% of businesses celebrate a decade of trading. That self-belief and determination can cloud your judgment, leading to all sorts of costly denial (I have personal experience of this, having founded a business in 2012 and stepping away in 2018; it reached its 10-year anniversary, but only just). Starting a business is a heroic act and a courageous one, and the cruel rate of failure diminishes the spirit and the graft it takes to establish it in the first place. Was there something intrinsically flawed with the altnet concept? Or have market conditions changed? James Barford smiled and said, “Well, let’s just say we’ve always been reasonably sceptical of it as a model.” He went on, “They’ve done pretty well at rolling out, about 14 million homes passed, which is about 40% of the coverage of the UK. That’s pretty good. But they’re struggling financially for the most part. They lost over a billion pounds in 2023 according to their accounts. Their penetration is kind of struggling to get to 15%. You need to be at 40% to make money out of a full fibre roll out.”
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Volume 47 No.1 MARCH 2025
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