Possible change of government and its role in a changing fixed telecoms sector
On 20 March 2024, ISPA held its 17th annual Parliament & Internet: Priorities in enabling the UK’s digital future conference. As the country prepares for a General Election this year, a change of Government is potentially on the horizon with the conference aiming to identify key ongoing themes in the UK’s digital landscape which will influence the priorities of an incoming Government, and explore how these trends will continue to impact the UK’s future as a leading digital nation.
Sponsored by Openreach, the event opened with the first panel session, Investment and regulation, addressing the topic being widely discussed within the sector, consolidation and change. With more mergers and acquisitions and industry consolidation, and big technology changes (PSTN switch-off, One-Touch Switch) bringing about further change, as attention turns to the next Ofcom market review.
The panel was chaired by the previous Minister of State at the Department for Digital, Culture, Media and Sport, Matt Warman MP, panellists from DSIT, Openreach, nexfibre, and Zen Internet. All participants noted that the considerable legislative and regulatory steps that have been made in the past several years are a positive stride toward reaching the government’s 85% nationwide gigabit-capable coverage by 2025, however, further and speedier government intervention was still needed in the sector.
Criticisms were expressed over the perennial issues of barrier-busting (e.g. wayleaves for MDUs and street works). The general view is that government intervention into these areas is still not robust enough and whichever government comes into place needs to prioritise these barriers as a matter of urgency.
Keeping on trend with the recent hot topic in the sector was the changing landscape for the AltNets as many continue to struggle with making the huge efficiencies required to operate profitably. Many of the mid-tier AltNets are feeling the heat from investors as they seek returns on their unprecedented levels of investment due in recent years to historically low interest rates and an open and competitive marketplace. However, as the investments are starting to dry up operators are having to balance the huge sums of Capex spent on deploying a physical network whilst managing a different type of expenditure on securing consumers through marketing and public engagement. A tricky feat for many of the relatively young ISPs with no brand recognition or strong performance reputations to fall back on.
Many of the panellists agreed with the current predictions for the broadband market in the next few years: the market will become dominated by three main players, BT/Openreach, CityFibre, and VMO2. CEO of Zen Internet, Richard Tang, went so far as to speculate that, “By 2031 there will be two or three major players with a handful of die-hard regional providers hanging on.”
Moreover, the retail and wholesale sectors will likely become two very separate markets and investments will follow accordingly. With this becoming increasingly likely the next government will again need to pivot to ensure that policies are put into place to protect and promote investments in two separate telecoms services.
It was also stressed that wholesale network providers need to work more collaboratively on sharing infrastructure, especially given the recent telegraph poles protests. The latter requires the government and ISPs to better communicate to the public the necessity of poles to gain broadband access.
Poles are less costly and less disruptive than digging up roads and pathways in the long run. Openreach stated it already had a network of 4.1m poles nationwide and in the last year only added 17,000 to connect homes to full fibre. With the 4 million other poles being ubiquitous the public seems to have just gotten used to or learned to live with them without realising that in order to gain access to stable, resilient, future-proofed full fibre broadband sometimes additional poles will be the only option for suppliers.
Universality and the digital divide
The second panel discussion, chaired by Selaine Saxby MP, on Universality covered the issue of connecting the final third of hard or very hard to reach premises along with digital exclusion.
Strides in connecting those final premises by the end of the decade have been made with initiatives such as Project Gigabit and alternative technology trials such as using satellite connectivity and fixed wireless. With more and more services being delivered online from banking to healthcare, being connected to the Internet and having the basic digital skills to navigate the services is essential.
For large groups of the ageing population along with those in the socio-economic class struggling the most with the cost of living crisis the issue is not about how many megabytes they can get, but how they can access basic connectivity whilst being able to confidently utilise digital services that have become more sophisticated over the past several years.
One panel member, Simeon Yates, Professor of Digital Culture Communication and Media at the University of Liverpool has carried out extensive research in this field and had one key suggestion to any future political party coming into power in the future, “The government needs to own this digital exclusion problem because at the moment no one takes responsibility for it.”
The general tone was without the government ensuring that all sectors essential to everyday life are brought into the fold and stepping up to tackle this problem, huge swathes of the population will be digitally left behind.