September 2023 update on broadband coverage in Ofcom areas 2 & 3

The words Area 2 and Area 3 mean nothing to those outside the broadband regulatory bubble, but are still important as they define how regulation is approached in different parts of the UK. The simplest explanation is that the larger Area 2 footprint represents the postcode sectors in the UK where multiple Gigabit networks are expected and Area 3 is where intervention by the state is more likely to be needed to ensure at one Gigabit network option is available. 

The gap in terms of Gigabit coverage continues to shrink but with Area 2 catching up by around 0.6 points each month, closing the current 34 point gap is a five year battle, if everything goes well. 

The jitters in the broadband market where investors are getting nervous and pushing full fibre builders to improve take-up rates are probably going to slow down roll-outs. The shift from build to connect we suspect is less to do with getting people to sign up to FTTP but more about investors seeing a potentially better ROI elsewhere now that interest rates are higher.

The Government’s ambition for 85% Gigabit coverage across the UK as a whole are not really at risk due to the amount of commercial build in the pipeline, but the landscape beyond 2025 is looking to shift back to an Openreach/Virgin Media (aka nexfibre)/CityFibre competition. One area where we are getting concerned is delays in awarding Project Gigabit contracts, without signed contracts the chances levelling up UK Gigabit coverage diminish and if commercial roll-outs start to scale back it is likely that more public money will be needed to entice FTTP builders to take on the contracts for the harder to reach areas.