UK fixed broadband overbuild is becoming similar to Spain's as BT's Openreach accelerates FTTP to 946,000 homes in Q1
In its latest fixed broadband availability figures for the UK, analysts Point Topic found that two or more FTTP networks will cover 7 million premises in the UK in Q1 2024. At the same time, 0.80 million he was covered by more than 3 fiber networks. Existing Openreach actually accelerated its full fiber deployment in Q1, reaching 946,000 additional FTTP facilities compared to 917,000 FTTP facilities added in Q4 2023, Point Topic recorded. Given that the Openreach FTTP footprint now totals 12.9 million, the inevitable risks to altnet's business model are clear. Facilities increased by 7.9% from the previous quarter.
A new report from strategic consultancy Eight Advisory highlights the problems with the UK alternative network, which is moving from building networks to filling them with end customers. This is also called diffusion and is expressed as the KPI “usage rate.” Increased penetration over time will greatly contribute to achieving profitability.
Eight Advisory found that Altnet networks have been unable to penetrate this important route to market, with the exception of CityFibre with TalkTalk and Vodafone, and a few Altnets that offer TalkTalk. As a result, FTTP utilization for various altnets in the UK market averages 16% (about half that of BT Openreach), with a range of 5-30% depending on network maturity.
Wholesale model is not healthy
The UK consumer broadband market is highly concentrated between five major ISPs, four of which buy wholesale broadband from Openreach. One of the problems the consultancy identified is that the proliferation of multiple smaller networks is making it costly and complex for large ISPs to work with altnets. The long-awaited convergence and consolidation of network and IT systems could provide a clearer path for large ISPs.
As a result, they believe that the combination of high capital expenditure for network construction, competitive 'overbuilding' in certain geographical areas, and low penetration rates in the UK differs from other European countries. We conclude that there are, but it will be different here in Spain. Eight Advisory said: “This situation is unsustainable and will be resolved through M&A and restructuring.”
Point Topic estimates Altnet's total footprint to be a 11.5 meter facility. This is not far behind BT Openreach, but it has about half the penetration rate. CityFibre covers his 3.2 million households and of the top five ISPs, only serves Vodafone and TalkTalk, which account for up to 25% of the total retail market (including altnets).
One light at the end of the tunnel will be Virgin Media O2 entering the wholesale market. The carrier has announced plans to have an open access network in 2025, but it is not yet an open access network. This is a significant change from Virgin Media's operation of a closed cable network serving only retail stores. With a total of 4 million full-fibre homes growing rapidly to date, Eight Advisory believes this could eventually have a significant impact on the UK wholesale market, particularly if major ISPs join the network. I think it's sexual.
Unstoppable open reach
Meanwhile, Openreach accesses 80% of the consumer broadband market in base size and leads with an average overall network utilization of 32% compared to 25% for its next closest competitor. . Eight Advisory points out that BT said that the penetration rate of his earlier FTTP cohort is now at 50% and the penetration rate is rising, while the new cohort is following a similar trend. Presumably, many other alternative nets will have similar mixed views across their bases.
All upgrades, migrations, speed regrades, and new customers will eventually be required to utilize fiber service. BT said that within three years of going live with the new network, 62% of its lines had migrated to FTTP (a faster adoption rate than expected), or that within just 20 months, 50% of its lines had migrated to FTTP. claims to migrate to FTTP.
Compare this to long-established alternative nets that report average utilization of around 30% across the network, with fluctuations due to changes in deployment speed and some churn. “Hyperoptic and Gigaclear demonstrate that convincing people to move to full fiber service requires long time and consistent marketing efforts,” said Eight Advisory. “As with long-established alternative networks, occupancy in established footprints can be much higher. In one Milton Keynes, we say the penetration rate is over 27%.As with other averages, it may be lower in some areas.”
Thankfully, Eight Advisory will soon be publishing a Part 2 document on what alternatives can do about the creeping doom that some may be feeling.
According to Point Topic, Openreach's full fiber now covers 40.3% of all UK premises, up from 37.4% three months ago. Second, the decline in the number of Openreach ADSL, FTTC, and G.fast-only facilities accelerated, with the number dropping by 944,000 facilities compared to 915,000 facilities in Q4 2023. Again the largest decrease (-799,000 facilities) applies only to FTTC, as this technology is being replaced by his FTTP. Non-fibre platforms still cover 18.7 million premises in the UK, a number that fell by 4.8% in Q1 2024.
The UK market has changed
According to Point Topic, at the end of Q1 2024, FTTP coverage across the UK was 20.7 million premises (64.7% of the UK total). This metric increased by 6.5% compared to Q4 2023.
The highest number of FTTP facilities added in Q1 2024 were in Glasgow (+24.5k), Birmingham (+24k), Buckinghamshire (+20k) and Pembrokeshire (+20k). Among FTTP altnets with at least 100,000 premises, Point Topic had the highest quarterly growth in premises, ahead of FW Networks (+90%), Grain Connect (+59%), and nexfibre (+54%). did. Across the UK, 19% of premises still lack gigabit access, down from 21% three months ago.
