nexfibre says UK fibre market is at a pivotal point

The UK being in a General Election period is at a pivotal point already but nexfibre who have built a wholesale full-fibre network to between 1.1 million and 1.3 million premises has published a report urging that we need to be proactive to ensure the roll-outs continue. In short, if we took further progress for granted, then that in-action will make pauses in roll-outs become roll-outs stopping never to start again.

This includes advocating for three crucial areas:

• A stable regulatory environment which continues to attract the much-needed investment in the UK’s digital infrastructure. The only way the UK can drive momentum beyond the current roll-out is to ensure a sustainable, competitive market long term.
• A regulatory framework which ensures a consistent and equitable playing field for all operators. Regulators and policymakers must restrain anti-competitive behaviour from the incumbent and put in place a regulatory framework which addresses exclusion of competitors.
• A market characterised by sustainable competition rather than fragmented sub-scale operators. The UK needs national-scale wholesale competition to secure future progress and generate the right conditions to accelerate innovation and development in the full-fibre market.

Extract from nexfibre press release

The Ofcom Telecoms Access Review which will settle how it handles regulation during the 2026 to 2031 period is going to be the key way that the broadband market and access to infrastructure is controlled. The prospect of Openreach having a 99% FTTP footprint is something competitors may find hard to compete against unless the pricing terms Openreach faces are favourable for competition.

nexfibre exists as a wholesale player in a market with over 100 different alt-net full-fibre players, and while consolidation is going to shrink this massively in the coming years, we expect to see 5 or 6 regional/nation networks to remain, and perhaps another ten much smaller (30,000 to 50,000 premises) providers such as B4RN and other rural providers who have nailed the footprint, price, community engagement loop.

I am delighted to publish nexfibre’s ‘Platform for Progress’ report, reflecting on our first year operating in the market and taking a critical look at what is needed to further unlock the sector’s potential.

As we have set out today, the market faces a series of challenges. Some of these have been driven by a historic lack of investment and others have been the result of external factors. All of them can be overcome if we create a dynamic market environment conducive to competition and progress.

I look forward to working with industry partners and policymakers as we move towards delivering digital infrastructure that is fit for the future.

Rajiv Datta, Chief Executive Officer of nexfibre

As things stand today none of the Party Manifestos suggest a massive shake-up for the UK broadband industry, so Ofcom is likely to continue operating similarly to the way it has, rather than being directed by a new Government to behave very differently. An example of a radical change would be to get Ofcom to look at and work towards a break-up of Openreach into regional players.

One problem always facing reports of this sort is the length of time to compile the report and sourcing timely comparison data for other markets i.e. a European fibre leaderboard has the UK in 2023 with 42% full-fibre coverage, which does look very bad, but that report in 2023 was compiled from older data. We saw the UK hit 42% FTTP coverage in October 2022 and as of Saturday 22nd June it has risen to 67% (history timeline shows progress from 2010 to now). 

The idea that investment of £1 in broadband will return £9.50 to the UK economy by 2025 is not new with the report using a 2022 CityFibre report that it had identified £38 billion of economic benefits. The benefits were seen as:

DIRECT BENEFITS:

Job creation in construction, engineering, and technology sectors.

PRODUCTIVITY BOOST:

Businesses adopting faster internet see increased efficiency, innovation, and competitiveness.

FLEXIBLE WORKFORCE:

Remote work becomes more viable, expanding talent pools and boosting local economies.

FRICTIONLESS DIGITAL EXPERIENCES:

Customers demand more from their digital services and are frustrated by buffering. Full fibre delivers seamless online services.

BRIDGING THE DIGITAL DIVIDE:

Everyone deserves equal access to the digital world. Full fibre deployment provides the opportunity for everyone to participate and thrive.

FUTURE-PROOFING THE NATION:

We must equip ourselves with the infrastructure to compete in a globally connected world.

nexfibre does face stiff competition, but currently, one problem facing it is that with Virgin Media O2 as its sole wholesale customer, it looks not much different from many other alt-nets that have a wholesale and retail division but have not attracted any wholesale customers. This may become sticky depending on the direction Ofcom takes in the next market review i.e. does it look at wholesale competition or does it decide to evaluate based more on the retail market e.g. BT/EE versus Virgin Media O2/nexfibre as the two largest wholesale networks delivering Gigabit and full-fibre services. With complaints about duplication of network infrastructure from the public, the sheer scale of the existing Virgin Media duct network could see them being forced to offer a PIA product in a similar fashion to Openreach.

In terms of taking progress for granted, we fully expect full-fibre roll-outs to slow down once coverage reaches the 80 to 85% region since the remaining 15 to 20% will be spread out more consisting of deep rural areas or isolated islands of poor connectivity in urban areas, plus old flats and apartments where landlords are making it impossible to deliver full-fibre.

Going out on a limb, I don’t believe AI will be a big driver of demand for ever faster broadband in the home. Access to AI is generally something where you want to ask a question and receive a response with the real data-intensive work carried out in the cloud and the small (in terms of data) results being transmitted to you. The world of Home Assistant, which is an open-source way to monitor and control your home and generally uses a Raspberry PI running in the home to collect sensor data might expand, or perhaps a new AI Assistant appears that takes home sensor data and processes this to change heating/cooling according to desired comfort levels you’ve set. This could also take into account the national demand picture for electricity, but sending that sensor data is not exceptionally taxing in terms of bandwidth, i.e. a stable 30 Mbps download and 10 Mbps upload would be enough, the AI magic again happening in a datacentre somewhere.