What does the future hold for the UK’s booming Altnet market? Chris Croot, KCOM’s Chief Architect, looks ahead.
In the last few years, the number of Altnets declaring their plans to build full fibre infrastructure across the UK has been increasing at a huge rate.
This has been part-driven by a realisation that, once a national full fibre infrastructure has been built, there are unlikely to be any major telecoms infrastructure projects for the next two to three generations minimum.
This has created the current ‘land grab’ with the Altnets stating funded plans to deploy full fibre networks to the UK’s premises more than twice over. When you add the incumbents into the mix, this leads to overbuild with multiple operators. This will then reduce the potential addressable market for each operator’s infrastructure and pushes back the timescales for RoI and profit. It also reduces the value of an Altnets assets when the majority are using PIA products and only own the fibre in someone else’s ducts.
The Altnets can broadly be split into two groups. Those with national plans and those just looking at regional services – these can be further split between those entirely retail focussed, entirely wholesale focussed or those doing a mix of both.
Generally, those with more retail focussed businesses can generate greater ARPU and margin but can suffer lack of percentage uptake unless they have a strong brand presence. Wholesaling network services can lead to greater percentage penetration, but at the expense of margin. Typically, a large number of homes passed is required to pique the interest of the large ISPs to consume their wholesale services. This is due to high integration costs of onboarding a wholesale Infrastructure Provider (INP) into their OSS/BSS.
For those that do wish to wholesale their services but don’t have significant premises passed counts, it would appear logical to seek co-operation with others to help on-board the larger CPs by giving them a way to access higher numbers of homes for a single set of integration within their OSS.
This could be achieved by network interconnects between those collaborating INPs with a single standard API or with one entity acting as an adaptation layer between a single external API and individual INP APIs. This would also mean some alignment on products and availability checkers etc but this sort of cooperation could help generate RoI of their networks.
The UK NICC (Network Interface Consultative Committee - the UK telecoms industry standard forum for matters on interoperability) has an Access Technology Task Group that commenced work on PON OLT-ONT interoperability and the creation of a Wholesale API - but low traction within the NICC members meant little headway was made. It could easily be reactivated if there was sufficient interest within the industry to work on such interoperability standards. There has been the creation of such a platform with the ‘Common Wholesale Platform’ based around the collaboration of six Altnets driven by some of the wholesale requirements of BDUK Project Gigabit.
Even with co-operation, the certainty of significant overbuild in the market will lead to the inevitable consolidation in the market in a similar way to what we saw in the cable market of the 1980s. This will enable some to expand their network through acquisition but inevitably some of the Altnets will fold. Until then the Altnet community must choose its locations carefully and try to minimise overbuild and really test what appetite there is for co-operation.
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