The first in a series of three blogs dedicated to the AltNet space.
Helping UK AltNets to help themselves
Tier three AltNets can reduce risk by forging solid partnerships with experienced network infrastructure providers from the off.
The number of alternative network providers offering full fibre broadband in the UK has expanded rapidly over the last five years. And if government targets that 85% of the UK should be able to receive gigabit broadband by 2025 are to be met, AltNets are likely to play a critical role in bringing high speed, fibre optic services to parts of the UK that incumbent telcos like BT and Virgin Media find too difficult (or expensive) to connect.
A report compiled by the Independent Networks Co-operative Association (INCA) and Point Topic suggests that full fibre AltNets expanded their UK coverage by 110% year on year to reach almost 2.6m homes and offices during 2020, with collective ambitions to cover almost 30m by 2026. Emerging players are particularly important here, particularly in rural areas - typically start-ups assessing demand for services/taking orders ahead of building their networks, or expanding their infrastructure following successful small scale rollouts or community projects.
Few of these tier three AltNets have much expertise in network deployment or operation however and the majority are smaller businesses, working to tight profit margins and constraints on capital investment. Help is at hand from government subsidies collectively worth up to £1.5bn which are being put up to ensure that full fibre reaches rural communities. But even so, it looks like the majority of their financial backing comes from private equity.
INCA estimates that the independent network sector (ie AltNets) had already spent or committed to £5.6bn of investment and expenditure in early 2021, with over 2.5m homes and businesses connected to live infrastructure. It also concludes that the vast majority of deployments are being made with little significant public subsidy beyond BDUK connection vouchers which help cover the cost of connecting only the most remote premises.
Survival not guaranteed
Given the delicate nature of their finances it’s almost inevitable that some of the smaller AltNets currently active in the UK market could disappear. In some cases the business model will fail, in others they will lag the pace of rivals and miss their window of opportunity. Other AltNets will get acquired by more aggressive and better funded competitors keen to expand their own footprint as quickly as possible.
People’s Fibre, a new alt net which had passed around 5,300 premises and connected just 150 of them, went into administration last December  for example. Its assets were subsequently acquired for an undisclosed sum by rival Swish Fibre, a company reputedly backed to the tune of £225m by Fern Trading.
Upp (previously FibreMe) is currently laying fibre across swathes of the East Midlands and East of England starting with Norfolk and Lincolnshire. The company’s first customers were connected as recently as September last year  and its had rolled out across eight towns last January. Funding that deployment was £1bn of financing it received from LetterOne, the investment group founded by Russian billionaire Mikhail Fridman. Since Fridman has since been hit by EU sanctions imposed after Russia’s invasion of Ukraine, further investment for Upp is far from assured.
Other AltNets have nowhere near as deep pockets or resources. Wessex Internet serves hard to reach areas of rural Dorset for example while other community funded fibre projects operated by staff and volunteers include Broadband for the Rural North (B4RN) in Cumbria, Michaelston-y-Fedw in Wales and Hereford Community Networks.
Partnerships provide solid foundation
Enlisting the support of experienced network security and infrastructure specialists from the off is essential to the establishment and growth plan of these AltNets. Assistance with everything from basic process and technical support to full network design and deployment tends to be high on their wish lists.
Most are looking for a good initial price per port on the access equipment they buy or lease, and technologies like passive optical networking (PON) which can help them provision flexible, symmetric bandwidth for their customers whilst simultaneously offering an economical, scalable path to expanding their capacity and coverage.
Having skilled network experts always on hand to help with duct and pole configuration, backhaul considerations and support issues tends to be a priority for tier three AltNets too. Building the last mile fibre to the home (FTTH) or fibre to the premise (FTTP) infrastructure is obviously crucial. But a good customer experience relies equally on the alt net having access to sufficient backbone capacity to maintain reliable connections and download speeds.
If market consolidation is to hit UK AltNets, it will be the smaller tier three players which bear the brunt. The best chance of long-term success rests on finding experienced, knowledgeable partners with the infrastructure, assets and expertise to assist on every stage of their journey.