FTTP premises up 7% as North and Midlands see high adds in Q4 2023; European Broadband Operators and Tariffs Benchmark Report, Q4 2023; UK TV and Broadband Services Quarterly Research; Competition, ARPU, tariff tiers and more metrics for valuation; Wholesale markets in the UK and why the AltNets shouldn't play; BDUK Project Gigabit updates; UK telecoms sector news; government and Ofcom updates
Key publication of the month:
Point Topic have put together some of our datasets to provide a guide to some of the key metrics that drive acquisition and valuation and here we present some of the outcomes.
We currently (Feb 2024) track 127 active operators in our ‘availability’ database. Including postcode level presence and technologies. We also collate data on tariffs, speeds, and generate forecasts for expected deployment.
Remember that our data will have estimates, not all ISPs publish their subscriber numbers for example and our coverage data can lag the reality on the ground by several weeks. As a result these outcomes should be treated as a guide but we do have some confidence in the outcomes after comparing with real datapoints, like ARPU, published by many companies.
Key takeaways:
You are not alone – almost every (at least 98% of networks in our data) gigabit network is overbuilt by another with an average of 11 competitors overbuilding 37% of a network
The average speed delivered (according to speed tests) over gigabit capable networks is 184Mbps.
Adoption is increasing. More than 20% take-up rate today starts to move ahead of the average network but our data indicates that less than 2% of subscribers are taking a top tier option
Average ARPU is £35 a month for gigabit networks
Across the smaller players there is an average of 200,000 potential subscribers to be gained on top of their existing client base while Virgin still has headroom of almost 7M to be won over, against 4.3M across the Openreach/BT gigabit capable footprint.
Footprints and overbuild
Coverage and competition are two of the more straightforward measurements that drop out of the data. In the UK at the end of 2023 if gigabit networks were laid end to end, with no overbuild, the UK is well over 40M households passed by a gigabit capable fixed network (fttp/b and cable). Enough to cover Germany.
However with overbuild the picture is closer to 24M households passed in the UK. Still significant and enough to blanket South Korea, if they had not done it already.
The average gigabit operator in the UK is overbuilt by a gigabit capable competitor in 37% of the footprint. We estimate that an operator will face an average of 14 competitors over their network. BT for example, at the top of the list, currently faces 91 gigabit operators and ISPs across their FTTP deployment and while there are still a few operators who face only one or two competitors they are across small areas.
Gigabit network adoption
Take-up rates in the face of so much competition are another important data point. What percentage of the possible base actually subscribe to an operator?
In the UK there were just over 11 million households that subscribe to a service from a gigabit capable network. Which means a national take-up rate of around 46% across gigabit networks and is 40% of the total broadband subscriptions. The picture varies widely however with a range of over 60% of potential targets adopting across an ISP’s network down to 10% and below in a few instances.
Adoption profiles and tariff groups
Turning to the speed tests, we have data from the Thinkbroadband speed test network. For this analysis we are taking the average at postcode level for each ISP over the last 6 months. Around 7 million tests covering almost 40% of UK postcodes. This helps us understand, using density plots or histograms, what proportion of users are subscribing to which tariff.
For this example we adopt a general split of low, medium and high tiers according to the general picture in the UK. From the chart above we group by clusters 1 for low, 2+3 for medium and 4 for high.
It is possible to modulate these limits as well as split the groupings out further for individual ISPs by examination of their speed test density plots and tariffs reported. These two examples give an indication of the alignment. For this analysis where there are multiple tariffs from an operator in a cluster we take the average. A more refined approach could look in more detail at histograms for example to allocate a subscriber split to each individual tariff.
Community Fibre is one of the few operator/ISPs to offer a multi-gigabit tier and while it isn’t obvious from the density plot above there is evidence of some adoption at this level. It shows up more clearly in the histograms.
Read the complete article in our free analysis here.
Government intervention programmes see 1 million premises gaining access to gigabit-capable broadband
On 22 February 2024, DSIT reported that 1,006,800 homes and businesses have been connected, or are able to access, a faster and more reliable broadband connection due to UK government-funded programmes since the first upgrade was delivered in August 2012. Most of the 1 million premises are spread across hard-to-reach areas of the UK, including 68,800 in Scotland, 108,800 in Wales and 118,900 in Northern Ireland.[1]
BDUK intervention | Total premises to 1 Jan 24 | 1 Apr 23 - 1 Jan 24 | 1 Apr 22 - 31 Mar 23 (r) | 1 Apr 21 - 31 Mar 22 (r) | By 31 March 2021 (r) |
Superfast programme | 746,500 | 31,600 | 92,000 | 99,700 | 523,200 |
Vouchers schemes | 250,800 | 35,800 | 69,800 | 53,900 | 91,200 |
of which were connected vouchers | 110,400 | 20,900 | 25,500 | 22,900 | 41,100 |
Gigabit Infrastructure Subsidy (GIS) | 4,300 | 4,200 | 100 | <50 | <50 |
Hubs | 5,300 | <50 | <50 | 3,300 | 1,900 |
TOTAL | 1,006,800 | 71,600 | 162,000 | 156,900 | 616,400 |
Tables are rounded to the nearest 100, so figures may not sum due to rounding; (r) indicates where data has been revised; <50 indicates a value greater than 0 but less than 50
Table 1: Premises passed by BDUK intervention to 1 January 2024. Source: BDUK January 2024 Performance Report
BDUK awards 9 Project Gigabit procurement contracts throughout the month
Building Digital UK (BDUK) has carried out significant market engagement in various regions to identify potential areas for government intervention to roll out gigabit-capable broadband.
BDUK has now awarded 25 procurement contracts to 10 local or regional independent (AltNet) operators worth £1.19bn and aiming to cover around 706k premises over the next several years. BDUK announced at the close of 2023 that Northern Ireland, Scotland, and Wales had been added to the subsidy programme, however, timeframes for delivery are yet to be confirmed.
In February 2024 the following contracts were announced:
Phase 2 | |||||||
Lot | Area | Local or Regional Procurement | Supplier | Estimated number of uncommercial premises in the procurement area subject to change | Indicative Contract Value subject to change | Expected Build Start Date | Expected Build Finish |
1 | West Sussex | Regional | 26,000 | £50.3m | Summer 2024 | 2029 | |
8 | West Yorkshire and parts of North Yorkshire | Regional | 28,000 | £60m | Spring 2024 | TBA | |
10 | Nottinghamshire and West of Lincolnshire | Regional | 34,300 | £58.6m | Summer 2024 | TBA | |
11 | Leicestershire and Warwickshire | Regional | 38,000 | £71.5m | Summer 2024 | 2029 | |
12 | Bedfordshire, Northamptonshire and Milton Keynes | Regional | 25,000 | £51.4m | Summer 2024 | 2029 | |
16 | East Sussex | Regional | 26,000 | £50.3m | Summer 2024 | 2029 | |
26 | Buckinghamshire, (part of) Hertfordshire and East Berkshire | Regional | 34,000 | £58.8m | Summer 2024 | 2029 | |
29 | Kent | Regional | 50,000 | £112.3m | Summer 2024 | 2029 | |
Phase 3 | |||||||
18 | East Gloucestershire | Local | 4,900 | £16m | Spring 2024 | TBA |
[1] Department for Science, Innovation and Technology, UK Research and Innovation, Building Digital UK, and The Rt Hon Michelle Donelan MP, One million premises upgraded to gigabit broadband by government, 22 February 2024.
Key February telecoms sector news
BT Group News
Virgin Media O2 (VMO2) News
CityFibre (CF) News
Independent Operators (AltNets) News
Other News
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