Research Round-up August 2023
- Veronica Speiser
- Sep 15, 2023
- 3 min read
UK ISP and Network Suppliers Market Analysis Q2 23; UK telecoms sector updates; ISP news; government and Ofcom updates
Point Topic’s key publication of the month:
In summary
Total Q2 2023 FTTH/P/B, FTTC, cable, FWA/satellite, and DSL wholesale connections decreased during the quarter and stood at an estimated 29.07m down from 29.20m q-o-q and only up slightly from 29.02m y-o-y; retail consumer and business connections declined to an estimated 28.99m from 29.05m q-o-q up slightly from 28.63m at the close of Q2 2022.
The fixed broadband retail market slowdown resulted in a loss of c.64k net broadband subscribers with y-o-y uptake growth falling to a modest 1.2%.
Openreach’s FTTP connections base has grown by 383k q-o-q and reached 3.50m up from 3.12m.
Virgin Media O2’s (VMO2s) fixed segment showed a reduction in its subscriber base with losses of ~15k in Q2 compared to 29k additions in Q1 bringing its broadband customer base to 5.66m.
CityFibre’s (CF’s) nationwide full fibre network reached 3m premises in August, with more than 2.6m ‘ready for service’ to ISPs; we estimate CF to have around 245k connections at the close of Q2 2023.
AltNet operators FTTx (predominantly FTTH/P/B) ISPs subscriber numbers are slowly on the rise; we estimate the total number to be around 1.53m at the close of Q2 2023.
Retail and business connections continue to decline
The second quarter of 2023 saw a significant reduction in overall fixed broadband subscribers with a loss of ~64k, bringing the total to 28.991m (Figure 1). This downward trend will continue over the next several quarters as consumers continue to struggle with the cost of living crisis and in some cases make the switch to mobile broadband only.
Wholesale connections remain static in challenging conditions
At the close of the quarter, we estimate wholesale connections to have reached 29.078m, down from 29.204m. Similar to the retail sector, growth has been marginal over the past several quarters. As reported above Openreach’s continued loss of connections due to dual technology copper to fibre switchover, wholesale connections will continue to see little to minimal growth for the rest of the year.
Overall net broadband connections reduced by -0.4% q-o-q and grew a meagre 0.1% y-o-y. DSL lines are on the wane and dipped to 2.423m during the quarter down from 2.654m during the previous quarter. FTTC connections decreased to 15.409m compared to 15.690m in Q1 and 16.406m the previous year. FTTP lines are progressing and have risen to around 5.090m up from 4.694m and up from 3.402m at the close of Q2 2022 (Figure 2 below).
Read the complete article in our free analysis here.
BDUK Project Gigabit Update
Building Digital UK - Environmental Resource Guide August 2023
Published on 8 August, the environmental resource guide seeks to support the rollout of digital infrastructure in England, by providing greater awareness of climate adaptation, environmental improvements (biodiversity gains), and low carbon considerations. The guide is based on England jurisdiction, but has direct relevance across devolved administrations too.
Other key telecom sector news items from the month can be found below.
BT Group News
1 August – Openreach published its PIA003/23 briefing for PIA established CPs advising them that we will continue to run a trial on our Physical Infrastructure Access (PIA) product to extend testing (following the Proof of Concept) a process for PIA CPs to replace existing Openreach copper drop wires with fibre drop wires on Openreach poles where it is necessary and would qualify as a Network Adjustment and where the poles are classed by Openreach as either a ‘Policy D-Pole’ or ‘Non Policy D-Poles which are at full loading (as defined in CP08). The trial will continue to run until 30 April 2024 (subject to trial terms).
1 August – Openreach reached nearly 40% of premises across Powys, Wales.
3 August – BT announced it will offer free ultra-fast WiFi and rapid device charging as hi-tech street units come to Newcastle.
3 August – Openreach announced it had commenced it its FTTP build to Folkestone and Hythe in Kent, and passed reached nearly 60% of all homes and businesses in the Banbury (Oxfordshire) exchange area.
8 August – GEN046/23 published WLR UK Stop sell 5 September 2023, to remind CPs that Openreach will implement WLR UK Stop sell and restrict new CPs from establishing to sell WLR from 5 September 2023. This briefing also gives a summary of the rulesets for WLR UK Stop sell and FTTP Priority Exchange Stop sell.
10 August – In a European first, BT and Ericsson have successfully demonstrated the transmission of 5G services in a wideband FDD (frequency division duplex) radio carrier (over 20MHz) within a sub-3 GHz spectrum band.
15 August – BT announced it has secured a seven-year deal with NATS, the UK’s leading provider of air navigation services. NATS handles over 2.5 million flights every year and the new long-term contract will strengthen its technology infrastructure by creating a future-fit strategic network architecture to support air traffic operations in the UK.
16 August – Openreach published NGA2020/23Expanding CP Engineer for overhead installs trial notification in mid to late September 2023. This is the next phase in the Openreach Concept to Market (C2M) product delivery.
17 August – Openreach announced GEN050/23 waiver of charge for FTTC+WLR to SOGEA migrations for 6 months for same CP migrations offer.
30 August – Openreach announced they have covered 940k premises in Scotland and have begun rolling out in Shotts and Annan, Scotland.
Virgin Media O2 (VMO2) News
2 August – Virgin Media O2 Business launched its portable commercial 5G Standalone (SA) Private Network (PN). Since the first trials of the portable solution, Virgin Media O2 Business has developed and deployed two 5G SA PN platforms. Telefónica’s innovation arm, Wayra – home to the first trial of this product – has been using the network since last summer, enabling customers and small businesses to experience 5G SA enabled applications first-hand.
2 August – The High Court dismissed a legal challenge from EE (BT) against VMO2 after the former stated that VMO2 had migrated EE MVNO subscribers to its O2 mobile network before the contractual agreement had been completed.
CityFibre (CF) News
2 August – CF announced that its FTTP build in Easthampstead, Harmans Water, Binfield, Birch Hill, Crown Wood, Great Hollands and Jennetts Park in Bracknell have been completed. CF started building the £20m network in March 2021, and following this latest milestone, CityFibre’s roll out is now moving into the Bullbrook, Warfield and Ascot areas.
17 August – CF added Wath upon Dearne in South Yorkshire to its latest build location and will be investing £31.2m in the project.
29 August – CityFibre’s nationwide full fibre network now passes over 3m premises with more than 2.6m Ready For Service to ISPs, with penetration on target across locations with mature locations now approaching 30%.
Independent Operators (AltNets) News
2 August – Neos Networks announced the launch of national 400Gbps Optical Wavelength services across 26 UK data centres. The service, which adds to Neos’s existing portfolio of optical networking solutions, will provide UK businesses with reliable, resilient and even higher capacity connectivity services.
2 August – RunFibre received £250k in the Rural Gigabit Voucher Scheme for residents in Falfield, South Gloucestershire.
3 August – Administrators provided update on ailing ISP Broadway Partners (Broadway Broadband) which had been building its FTTP networks across rural areas of Scotland and Wales. According to the report, there is currently also “no prospect of any funds being returned to unsecured creditors of either the Company or the LLP“, and, in respect of that £29m mentioned above, they “do not anticipate there will be sufficient asset realisations to repay the Secured Creditor in full from either fixed or floating charge realisations.”
7 August – Netomnia announced further rollout locations throughout the month including 14k premises in Sevenoaks (Kent), 85k premises in Hitchin (Hertfordshire), 51k premises in Musselburgh (East Lothian)
8 August – Neos Networks announced it has been selected by brsk, the broadband ISP and network builder, to provide diverse national backhaul services as the AltNet looks to accelerate network rollout across some of the UK’s most underserved regions.
8 August – Alongside its existing OLT vendor (Nokia), Exascalehave started working with Genexis a residential customer premises equipment manufacturer specialising in xPON and Point-to-Point ONTs and media converters. Exascale announced further expansion locations in Shropshire including Horton in Telford, and are now building into Preston Upon the Weald Moores, Kindersley, Lilleshall and Chetwynd Aston.
10 August – toob, is investing £13m building its own infrastructure in Woking with 32k homes and businesses and £18m building its own infrastructure in Gosport with 45k premises.
11 August – ISP 1310 acquired UK communications provider TxRx Communications to accelerate their own FTTP network and broaden their services.
11 August – Truespeed passed 91k premises across Devon, Wiltshire and Somerset, however they announced on 16 August that its build is expected to slow with around 150 staff redundancies.
14 August – G.Network’s Chairman (Sean Williams) of five years announced he would be stepping down to be replaced by Ian Gray, Non-executive Director at Clancy Group Holdings and SVM UK Emerging Fund. The move comes as the ISP has continued to struggle with further expansion and has been consolidating its operations since early in the year.
21 August – Brsk successfully secured an additional £156m debt investment from funds managed by Ares Management Corporation’s (“Ares”) Infrastructure Debt strategy. This funding has been upsized from an initial £103 million commitment and now totals £259m; Brsk aim to reach the million-homes mark by 2026. Its network reaches into three key urban regions, namely Manchester, the West Midlands and Lancashire, with approximately 250k ready for service (RFS) homes and with 14kcustomer connections.
23 August – GoFibre (Borderlink) adds Scottish rural village of Laurencekirk, Kincardineshire to its build plans and stated that it passed around 50k premises in the Scottish Borders and the North of England at the end of July 2023.
24 August – Netomnia’s CEO Jermey Chelot, announced it’s FTTP network has around 600k premises ready for service with c. 45k subscribers aiming to increase this to 50k by the end of Q3 23. Netomnia are building at a run rate of c. 50k premises per month and aim to reach 1m premises by early 2024.
26 August – Freedom Fibre’s CEO Neil McArthur, provided its wholesale FTTP network update at the end of May 2023, which covers locations in North Manchester, North Cheshire, North of Shropshire towards the Welsh Borders, including areas of Warrington, Greater Manchester and South Wirral, with 100k premises live aiming to expand to 150k by the end of the year.
30 August – Fibrus released its network coverage data to the end of August confirming it has reached 300k homes of which 273k are ready to be connected with around 50k subscribers.
30 August –Lothian Broadband announced that its latest rollout expansion will utilise funding from the UK Government’s (BDUK) Gigabit Broadband Voucher Scheme in order to build their full fibre network across 3,400 homes and businesses in the villages of Cowie, Fallin and Plean in Stirling, Scotland.
Other News
1 August – The Department for Science, Innovation and Technology (DSIT) announced it is working to establish a potential £160m scheme to fund next generation of satellite communications. The development would mark the UK’s most significant ever investment in satellite communications. This package would be complemented by a range of live 5G integration projects such as the 5G testing facility at ESCAT in Harwell, Oxfordshire, aiming to establish networks in underserved and remote areas, bringing high-speed internet and connections to every single part of the UK, while addressing a major priority to improve Future Telecoms, as laid out in the government’s Science and Technology Framework.
7 August – Fitch Ratings has downgraded TalkTalk Telecom Group Plc's (TTG) Long-Term Issuer Default Rating (IDR) to B-' from 'B' and secured debt rating to 'B-'/'RR4' from 'B'/'RR4 and placed the IDR on Rating Watch Negative (RWN). Fitch believes the group's on-net base has continued to decline consistently while inflation-adjusted price increases of CPI plus 3.7% have yet to bring a meaningful benefit for revenue and EBITDA. We understand Fitch-defined EBITDA net leverage increased significantly in FY23. TTG is in a tough trading environment. Vulnerability to high input costs from inflation-linked Openreach wholesale costs and operating cost inflation are exacerbated by a declining consumer base and price competition, limiting its ability to fully pass on inflation and depressing its margins.
14 August – Sky joins Daisy Group in rival bid to take over TalkTalk’s Business Division which is currently valued at £150m.
18 August – Ofcom released its Consultation: Expanding spectrum access for satellite gateways in the 28 GHz band.
21 August – Multiple industry sources have informed ISPReview that the Government’s Building Digital UK agency is fielding interest in a new funding option for rural-focused procurements under their £5bn Project Gigabit programme, which appears set to target smaller community style builds of around 200-500 properties.
31 August – Vodafone has begun their “volume deployment“ of its new 4G and 5G capable Open Radio Access Network (O-RAN) technology and aims to cover around 2,500 across mostly rural parts of Wales and the South-West of England by 2027.
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