Research Round-up August 2022
Analysis of Q2 2022 UK ISP subscribers and network operators connections by technology, Project Gigabit Delivery Plan – summer update 2022, plus ISP news and government updates
Point Topic’s key publication of the month: UK Q2 2022 Retail ISP and Network Operators Market Analysis
Fixed line broadband market shows sharp signs of slowdown but broadband connections break the 29 million milestone
By the end of Q2 2022, the UK fixed line broadband market showed signs of a continued slowdown as the level of net adds for both the retail and wholesale sector returned back to pre-Covid pandemic levels. BT and Virgin Media O2’s (VMO2) subscriber numbers continued to wane during the quarter with BT’s Consume segment reporting a loss of 11k subscribers, whilst VMO2 reversed its poor performance in the previous quarter with net gains of 16k up from the net loss of 8k fixed line subscribers in Q1.
BT’s Consumer segment did ride out the turbulent quarter with an impressive revenue boost of revenue by nearly 7% due to its annual tariffs price increase of 9.3% and the deft management of its existing subscriber base. However, BT will struggle for the remainder of the year to carry on this strong financial performance given the general slowdown in broadband uptake and challenging market conditions impacting its business division.
Openreach also had a sluggish quarter but revenue growth remained positive with a 5.2% increase in the quarter up from 2% in the previous, due to inflation and the rise in cost of fibre-enabled products. Remarkably, Openreach reported a loss 44k broadband connections, which is the first quarter in several years for the supplier to experience a drop in its subscriber base. BT Group reported that the 17k bad debt disconnections that were deferred from the previous quarter did go some way in explaining the overall lacklustre performance along with the reduction in voice-only lines. As AltNets start to consolidate and increase their network coverage along with VMO2s JV full fibre rollout, Openreach will likely see this trend continuing over the next year.
Openreach has continued its rollout at pace and its full fibre rollout footprint covered 7.957 million homes and businesses, passing around 2.8 million premises Y-o-Y. Its FTTP connections were also up with just over 2 million connections compared with 1.7 million in Q1 with overall numbers nearly doubling Y-o-Y from 1.086 million (Figure 2).
Virgin on the other hand, did not report such a stable quarter, with a churn rate of 13.7 per cent up from 12.2 per cent. The operator also reported a weaker revenue performance which was down by 0.6 per cent in its fixed line segment. This was due to VMO2’s milder new customer pricing options along with discount incentives given to current subscribers to increase overall retention.
Wholesale connections see a levelling out
At the close of Q2 2022, we estimate wholesale connections to have reached just over 29 million. Growth in the sector has started to slow and as reported above Openreach for the first time reported a loss of connections. Increase in net broadband connections grew by 0.5% Q-o-Q, which despite the increase in FTTP network coverage by major and AltNet suppliers is indicative that the market is reaching saturation point along with AltNet suppliers not gaining as much traction as expected within their footprints.
As expected, DSL lines are on the wane and dipped to 3.15 million during the quarter down from 3.36 million during the previous quarter. FTTC connections decreased to 16.4 million compared to 16.5 million in Q1 2022. FTTP ultrafast (100 Mbps+) lines are steadily progressing however and have risen to around 3.4 million up from just over 3 million in the previous quarter (Figure 3 below).
For more information on key findings along with further information about the Q2 2022 UK ISP Market Analysis Report see our free analysis section. Full reports and supporting statistical analyses are available via our UK Plus subscribers service, sign-in here to access our UK Plus content.
DCMS Project Gigabit Delivery Plan - summer update 2022
On 30 August DCMS published its £5bn Project Gigabit progress summer update, with the previous spring update being released at the end of May 2022. The report included an overview of the programme’s progress in meeting the government’s target of 85% nationwide gigabit-capable network coverage by 2025, updates on the procurement stages of project intervention areas, the current status of Project Gigabit in the devolved nations along with the Gigabit Voucher scheme and Public Sector Hub upgrades.
Key Programme updates from the last quarter
UK gigabit-capable network coverage as of 17 August 2022 reached 70% up from 42.4% Y-o-Y (Figure 4)
First procurement contract signed in North Devon with supplier Wessex Internet, to cover 7k premises; further contracts due to be awarded in Teesdale and Northumberland in coming months
Local and regional procurements launched in Hampshire and Shropshire for 118k premises
Total value of Project Gigabit procurements to date >£690 million; 498k premises passed with gigabit-capable broadband
£82 million investment announced with the Department for Education connect 3k schools to gigabit-capable broadband
To date over 106k vouchers worth more than £214 million have been issued through the Gigabit Broadband Voucher Scheme, with 73k having been implemented
Published new research on the use of Gigabit Broadband Voucher Scheme by SMEs, found over 80% reported an increase in productivity due to connection upgrades along with 70% reporting more efficient and stable business activity during the Covid pandemic
Published BDUK’s 2021 to 2022 Performance Report.
Regional and devolved nations gigabit-capable coverage accelerating
According to the DCMS’ update the East Midlands and North East regions have seen the largest increase in gigabit-capable network deployments since April 2021. The East Midlands went from 18% of premises covered to 72% Y-o-Y, with the North East increasing from 14% to 70%. Northern Ireland remained the best covered of the devolved nations with 71% coverage in April 2021 to 87% coverage at the close of April 2022. Virgin Media O2’s DOCSIS 3.1 gigabit-capable network covers around 480k premises in the province, with future plans to expand its FTTP footprint to tens of thousands more in the near future. Openreach’s FTTP network covers 575k premises, whilst Belfast-based supplier Fibrus is quickening its FTTP rollout pace and has passed around 100k premises.
Wales came in on the bottom of the chart with 53% of national coverage up from 29% in the previous year. Given the remoteness of premises and challenging terrain of the country, coupled with delayed Openreach project deployments, it is likely that Wales’ digital connectivity will be playing catch-up until late 2023 as Project Gigabit funding begins to slowly turn into deployments.
See figure 5 below for the regional and devolved nations gigabit-coverage progress update from April 2021 to April 2022.
Other key telecoms sector news items from the month can be found below.
BT Group News
4 August – Plusnet (BT’s subsidiary budget ISP retailer) announces full fibre services are available to all UK customers. 8 August - BT and Nokia claim European first by combining four channels of spectrum on a 5G standalone network. 10 August - BT and SEACOM team up to deliver enterprise communications services in Africa. 10 August - BT wins 5 year £32 million contract for Sellafield Ltd network services. 12 August - BT Group response to notification by the CWU of industrial action in August. 15 August - Broadband boost for Hastings and Rye with £13m infrastructure investment from Openreach. 22 August - 25,000 Cumbrian homes and businesses can access full fibre broadband. 24 August - Rural affairs secretary gets up to speed on broadband. 26 August - BT TV now available aerial-free. 31 August - Openreach finish Superfast North Yorkshire UK Broadband contract, which has passed 190k premises with a take-up rate of 80%.
Virgin Media O2 (VMO2) News
3 August - Disney+ now available on Virgin TV 360. 3 August - Greater Manchester: 17 community sites granted free fibre broadband for five years as UK’s largest local connectivity programme nears completion. 10 August - O2 launches Switch Up so customers can swap phones whenever they like at no extra charge. 15 August - VMO2 confirms pricing and allocation of £1.474 billion debt financing. 17 August - VMO2 invests hundreds of millions to boost Scottish connectivity as Minister visits broadband dig site. 18 August - VMO2 expands apprenticeship programme as young people reconsider university in cost-of-living crisis. 18 August - VMO2 expands ultrafast gigabit network to 8,500 premises in Burnham-on-Sea. 20 August - VMO2 lays groundwork for faster upload speeds. 24 August - VMO2 donates £2 million to Good Things Foundation to tackle the UK’s digital divide with data, devices, and digital skills.
CityFibre (CF) News
8 August - CF announces £0.5 million FTTP deployment project in Binley Woods, Warwickshire due to complete by the end of 2022.
8 August - CF shortlisted for ISPA best infrastructure award.
9 August - £30 million project build gets underway in Rochdale with completion expected by 2024.
16 August - Sittingbourne (Kent) named as next FTTP network deployment area with construction due to start later in 2022.
17 August - Hastings and St Leonards announced as next FTTP expansion locations with work to begin in Hastings later in 2022, with St Leonards to follow.
18 August - CF to invest £10 million in full fibre deployments in Newark with construction due to commence in November.
21 August - CF announces launch of total rebranding - including logo, website and marketing materials.
31 August - Wellingborough (North Northamptonshire) named as next network expansion location with deployments beginning in October.
Independent Operators (AltNets) News
3 August - Grain spotted building FTTP broadband in Weston-Super-Mare. 3 August - Quickline becomes first UK ISP to commercially deliver 5G SA Cloud-Native Open RAN solution and on 15 August it opens its new HQ offices in East Yorkshire. 4 August - Netomnia announce 210k premises passed and unveils 2022/23 network expansion plans; further locations announced throughout the month include Bristol, Folkestone and Dover, Middleton, Newbury, Oxford, and Wrexham. 5 August - Jurassic Fibre announce FTTP network expansion plans into remote areas of Cornwall, starting with deployment in Bude. 5 August - TalkTalk enters into agreement to buy SSE Phone & Broadband from OVO Energy. 8 August - Brsk announce further expansion plans to 250k premises in West Midlands. 8 August - Telecom Acquisitions Group (Global4) acquiresHive Telecom, which follows a series of prior acquisitions that included Home Telecom, Eclipse Broadband, Fleur Telecom and Weekly Broadband. 11 August - Be Fibre through its build partner Digital Infrastructure announce it has connected the first 2,200 premises of Ingatestone in Essex; on 15 August it announced the next locations for their expansion plans. 11 August - Rural provider Box Broadband has extended their rollout goal to 250k premises and signed Lanes Infrastructure to help build the network. 16 August - Wales-based rural ISP Ogi announce next 38 towns and villages for its FTTP network expansion. 17 August - ITS Technology Group’s Faster Britain full fibre network goes live across Gloucester covering 2,100 businesses. 18 August – Kent-based rural ISP Trooli hits the 275k premises passed milestone with their FTTP network and expand their coverage into Derbyshire. 19 August - ISP Zone Broadband UK joinsMS3’s FTTP broadband network, marking a shift away from Openreach’s wholesale network services. 25 August - Truespeed has partnered with Adtran to enhance its full fibre network with XGS-PON technology. 25 August - Swish Fibre add 4 Yorkshire locations to FTTP build – Boroughbridge, Hillam, Sherburn in Elmet, and South Milford – the rollouts will be covered by their new subsidiary Swish Fibre Yorkshire. 25 August - Shrewsbury-based SWS Broadband’s new FTTP broadband network in Shropshire goes live. 26 August – Gigaclear extends FTTP rollout plan to cover 3k premises in Brackley, West Northamptonshire. 30 August - WightFibre become first UK operator to switch off copper network. 30 August - Giganet announce it has partnered with Neos Networks to provide backhaul and datacentre connectivity to support its new southern counties network and future roll-outs; Giganet plans to pass to 300k premises with its own network across Hampshire, Wiltshire, Dorset and West Sussex. Neos Networks – with its 550 unbundled exchange network – will provide Giganet with the local connectivity required to carry traffic to its data centres and across its national network.
9 August - MPs back Bill designed to tackle controversial UK telecoms poles.
10 August - 900 Devon and Somerset UK premises benefit from 4G mobile boost.
15 August - Government makes it easier to verify eligibility for cheap broadband Social Tariffs.
19 August - Ofcom finds Sky not in compliance with end-of-contract notifications for pay-TV customers.
22 August - Caveats as SpaceX trial cheaper Starlink satellite broadband plan.
22 August - Government invites broadband ISPs to £800 million UK Project Gigabit rollout.
23 August - Government drops security probe of Altice UK’s stake in BT.
24 August - Mobile operators seek more engagement with UK councils.
26 August - Starlink’s LEO Satellites to deliver 4G and 5G mobile from space.
26 August - Government responds to National Infrastructure Commission’s call for clearer gigabit broadband plan.
Devolved Nations News
1 August - Welsh Parliament’s Climate Change, Environment and Infrastructure Committee published latest report on broadband connectivity in Wales and found that, despite improvements over the last few years, many people are still unable to access adequate internet speeds.
19 August - The Scottish Government announced £36 million in extension of the full fibre R100 Programme; the extension of existing contracts with delivery partner Openreach will see another 2,637 rural properties across Scotland.
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