Fierce competition and consolidation causing FTTP altnets to struggle

Just as the country’s leading alternative broadband suppliers (altnets) were being feted at trade body Independent Networks Cooperative Association’s (Inca’s) gala awards, research has warned that the UK’s fibre-to-the-premises (FTTP) altnet providers face mounting challenges in competing with established telecom players, and that as the latter strengthen their positions, market consolidation appears inevitable.

A GlobalData survey noted that with the accelerated fibre roll-out by BT Group’s Openreach and Virgin Media O2’s Nexfibre, altnets face significant challenges due to the lack of an established revenue-generating customer base to transition.

Further intensifying the competitive landscape, the altnets, along with their go-to-market partners, are also competing against well-established service providers such as Exponential-e and Neos Networks.

GlobalData stated bluntly that despite substantial investments in infrastructure, many altnet operators struggle to achieve profitability, with limited market penetration and insufficient customer acquisition. Although the number of FTTP altnets has shrunk from about 150 to 100 or so, very few are looking viable. Having spent so much in infrastructure roll-outs, many have revenues only in the few tens of millions of pounds.

GlobalData’s analysis showed the survival goal for these companies is 30% penetration of their addressable market. This, noted Robert Pritchard, principal analyst for enterprise technology and services at GlobalData, remained a rarity.

“FTTP altnets have focused so much on expanding their networks, many seem to have neglected acquiring customers – business customers in particular,” he said. “This is the fundamental reason behind ongoing market consolidation.

“Being one-trick fixed fibre connectivity purveyors is a fundamental problem,” said Pritchard. “Finally, the penny is dropping that customers do not buy technology, but services. Success depends on teaming up with the most effective resellers and internet service providers. If they are not generating revenue, networks have no purpose.”

The INCA awards looked to recognise those altnets and individuals bringing high-quality broadband services to customers across the UK. Brsk, Ogi, Quickline and Wessex Internet were among the network-builder award winners, while suppliers including Acome Group and PlatformX Communications also took home awards dedicated to the progress and innovation delivered throughout the sector.

Brsk was recognised for leading the way in customer engagement and service, and Inca noted that as the industry pivots from network expansion to increasing customer take-up, the company had excelled in understanding customer needs and creating compelling service offers.

Ogi was cited for bringing high-quality broadband infrastructure to underserved regions, and for exemplifying dedication to tackling these challenges head-on and seizing new opportunities to enhance digital infrastructure.

Commenting on the awards and the winners, Inca CEO Paddy Paddison said: “The altnets have continually shown that they are not only ensuring greater choice for broadband consumers, but that their role towards advancing the UK’s broadband infrastructure and digital ecosystem is critical. Inca’s annual awards give us the opportunity to unite the sector, and celebrate the outstanding achievements and dedication of the organisations and individuals improving fibre and gigabit access.”