Research Round-up January 2023
Ultrafast UK sector updates, UK Retail ISP and Network Operators Market Analysis Q3 22, Global broadband subscribers metrics Q3 22, Project Gigabit update, ISP news, government and Ofcom updates
Point Topic’s key publications of the month:
· UK Q3 2022 Retail ISP and Network Operators Market Analysis
· Global Broadband Subscribers Q3 2022
UK Retail ISP and Network Operators Market Analysis Q3 2022
Bigger players ride out market slowdown but trouble lies ahead
The third quarter of 2022 marked the fixed line broadband sector’s weakest performing quarter in years as consumers and businesses reign in spending costs and grapple with the ongoing cost of living crisis. Over the past three quarters fixed consumer and business broadband subscribers have been steadily decreasing with growth trends in subscriber uptake numbers falling by 38 per cent from Q1 to Q2 and 86 per cent from Q2 to Q3 2022.
A wholesale market shake-up looms as the independent network sector consolidation picks up pace with the winners inevitably eyeing up wholesale agreements for a return on their investments.
Summary of key findings:
Total Q3 2022 FTTH/P/B, FTTC, cable, FWA/satellite and DSL wholesale connections stood at an estimated 29.04 million, up from 29.03 million Q-o-Q and 28.38 million Y-o-Y; with retail consumer and business connections reaching an estimated 29.03 million during Q3 2022, up from 29.01 million Q-o-Q and 28.44 million at the close of Q3 2021.
Retail net broadband additions were in the low tens of thousands (~12k) as the cost of living crisis deepens and some consumers move away from fixed-line broadband services.
BT’s fixed broadband Consumer division saw an estimated 27k net additions in the quarter; for the second consecutive quarter Openreach saw a loss of 40k connections due to market slowdown and industrial action.
Openreach’s FTTP penetration rate continued to slowly rise at 27.4% (Figure 1) and is closing the gap on Virgin Media O2 (VMO2) with the latter’s take-up rate falling to around 35%.
VMO2’s fixed segment showed a slight improvement from Q2 with its broadband net adds reaching 19k up from a 16k bringing its broadband customer base to 5.631 million.
CityFibre reached the 2 million premises passed milestone (1.8 million ‘Ready for Service’), reaching a quarter of its 8 million premises target by 2025.
AltNets FTTx (pre-dominantly FTTP/B) ISPs subscriber numbers continue to remain static and we estimate around 2k broadband net losses during the quarter seeing the total number of subscribers staying around 2.8 million at the close of Q3 2022.
Global fixed broadband subscribers exceeded 1.3bn in Q3 2022
Summary of key findings:
By the end of Q3 2022, the number of global fixed broadband connections grew by 1.87% and stood at 1.34bn. We recorded a decline in fixed broadband subscriptions in eleven countries[1] which mainly include emerging markets, as well as a handful of mature markets of well developed countries.
Other main trends in Q3 2022:
Global fixed broadband subscriber growth was highest in the last four quarters but slower than in Q3 2021 (Table 1).
Out of all regions, Asia Other saw the fastest growth in broadband connections (2.6%), mainly due to low broadband penetration and healthy increases in broadband subscribers in India, Nepal, Malaysia and UAE.
The share of FTTH and FTTB in the total fixed broadband subscriptions continued to increase and stood at 65%. Superfast and ultrafast cable broadband connections followed with a 17% share, while ADSL fell to 9%.
The highest fibre broadband subscriber growth rates in Q3 2022 were in India, Brazil, France and Mexico.
BDUK Project Gigabit Update
On 19 January, Project Gigabit announced that thousands of premises in rural Cornwall will get access to lightning-fast broadband after local supplier Wildanet was awarded £36 million from the government to roll out new connections.
Two contracts, part of the government’s nationwide £5 billion Project Gigabit to supply hard-to-reach areas with better broadband, have been awarded to the Liskeard-based supplier. It will see up to 19,250 homes and businesses in South West and Mid Cornwall connected.
Survey work to connect rural homes and businesses from Newquay to Fowey has already begun. Building work to connect those in need to the fastest broadband on the market is set to begin as early as this summer.
Public Accounts Committee (PAC) Raises Serious Questions About UK Infrastructure Bank’s First Year of Operations
In a report published on 25 January, the Public Accounts Committee raised questions about the independence, strength and value of the first deals made by the new UK Investment Bank (UKIB).
The UK Investment Bank was created in a rush at Ministers’ insistence, which meant it operated with weak financial governance and very close to the Treasury for its first year. The significant risk of begin operating without an effective audit and risk committee and outside the UK’s Corporate Governance code had to be counterbalanced by choosing low risk early deals, approved through Treasury processes.
UKIB has deployed £1 billion of its initial £22 billion capital in 10 deals, but the Committee questions the claim these will fill gaps in private sector investment markets. So far UKIB has provided financing to deliver broadband and build solar farms, which are both relatively common projects. There is also no clear strategic approach to balancing the risk of investment in new markets with the risk to taxpayer money. The reporting arrangements set up by the Treasury do not allow Parliament early sight of emerging problems.[2]
Other key telecoms sector news items from the month can be found below.
BT Group News
4 January – Etc., the incubation team in BT Group’s Digital unit boosting the businesses of the future, today announces that it has entered into a £5m deal with Altitude Angel, a world-leading UTM (Unified Traffic Management) technology provider, as the two businesses scale the UK drone industry and support the development of the UK’s drone superhighway, set to be the largest and longest network of its kind in the world. 4 January – According to Openreach’s annual update, broadband traffic across the UK increased by around 2.5% during 2022 to 64,364 Petabytes (PB) of data. The amount of data being downloaded has increased in recent years, with 62,700 PB being downloaded in 2021, 50,000 PB in 2020, and 22,000 PB in 2019. 4 January – Openreach issues ETH001/23 Ethernet Backhaul Direct (EBD) 1G stop-sell reminder. From 1 April 2023, as set out in the above briefing, no new provision orders will be accepted for the EBD 1G product variants (including resilience options and extended reach options). After 31 March 2023, we will only accept shift (within a building) and cease order types against installed EBD 1G circuits. 11 January – Openreach announced GEN006/23 Notification of product stop sells, tranche 11 in 51 FTTP exchanges. 16 January – Openreach’s £180m broadband network reaches 600,000 premises across Wales. 16 January – Openreach, the UK’s largest wholesale broadband network, announced some updates to its leadership team in order to continue delivering against its strategic goal. 18 January – BT’s consumer division (inc. EE and Plusnet) revealed their approach to this year’s annual price hikes, which looks to increase their broadband, phone and other prices by the contracted CPI of 10.5% plus 3.9% (14.4%), for the “majority” of their customers from 31st March. 19 January – Openreach issued GEN005/23 Notification of tranche 7, 46 FTTP priority exchanges, stop sell implementation 08 February 2023. Realignment of 40 notified exchanges. 23 January – Openreach published a briefing (PIA001/23)for customers advising them that we have provided new features on the PIA Map Tool via both the portal and PIA Application Programming Interface (API).This functionality is available to PIA established CPs from today, Monday 23 January 2023. 23 -25 January – Openreach reported low FTTP take-up rates in Torbay, with only 18% out of the 55k homes taking the service; 13% of the 8k premises in Skipton; and 20% of the 19k premises in Whitley Bay taking an FTTP service. 26 January – BT Group announced plans to recruit more than 400 apprentices and graduates for its September 2023 intake. The company will recruit talent into the company across areas as diverse as engineering, customer service, applied research, and cyber-security. 27 January – Openreach announced it is planning to trial a set of service management measures to encourage customers still using analogue phone lines to contact their provider and upgrade to new, digital alternatives. 30 January – BT Group and Stratospheric Platforms Ltd (SPL) announced they will test delivering mobile coverage using an innovative new antenna technology, designed to be mounted on a High-Altitude Platform Station (HAPS) aircraft. The trials, being conducted at BT’s global R&D headquarters at Adastral Park, aim to provide a solution to one of the final challenges of mobile connectivity – getting coverage to the hardest to reach areas. 31 January – BT Group’s Digital Unit announced it is working with Kyndryl on a cutting-edge programme to move a number of the Group’s mainframe applications which service its legacy copper business and consumer broadband products to the cloud. The 10 year partnership, which draws on Kyndryl’s hyperscaler capabilities and partner ecosystem, will allow BT Group to reduce mainframe operating costs and energy consumption by 70%, leading to savings worth more than £17m a year by 2026. 25 January – Openreach announced NGA2001/23 Shallow Build trial in a footprint area of around 5k business park and industrial estates in 88 exchanges. 26 January – Openreach announced changes to (ETH002/23) OSA and OSEA pricing for 2023/24. Price changes will take effect from 01/05/2023. Openreach also announced the launch of a new wavelength card within the OSA FSP3000 Filter Connect portfolio. From 1 April 2023, the 9TCE-PCN-10GU+10G (9TCE) wavelength card will be incorporated within all OSA FSP3000 Filter Connect base build options and will also be available for additional purchase.
Virgin Media O2 (VMO2) News
3 January – O2 kicks off the New Year with the return of the O2 Gift Card, offering customers up to £400 on a digital prepaid Mastercard; Customers can claim an O2 Gift Card worth up to £400, helping them save on a range of flagship devices and SIM Only plans. 11 January – Virgin Media O2 will be giving millions of its customers more data and extra benefits this year as it begins moving all Virgin Mobile customers over to O2’s range of plans. From February, the company will start sending communications to the first group of Virgin Mobile customers to let them know that their current service will transfer over to a new O2 plan. 16 January – New customers who sign up to M350 before 22 January 2023 will receive a 50% discount on subscription costs on Virgin Media’s M350 broadband only package for the first six months, with the ongoing price of £30 per month for the remainder of their contract. 24 January – VMO2 announced it has upgraded all of its TV customers to HD packages at no extra cost. 26 January – VMO2 confirms around an average annual price increase of around 13.8% on either 1st April or 1st May 2023 dependent upon which package the customer is on.
CityFibre (CF) News
4 January – CF announced it has successfully completed a trial of 2Gbps residential services in York with its launch partner Vodafone. The trial was made possible by CityFibre’s recent upgrade of its York network to XGS-PON access technology, due to be rolled out as standard across its network from April 2023. The 2Gbps service paves the way for the introduction of residential and business services at symmetrical speeds of up to 10Gbps across its entire footprint in the future. 11January – CF named Rochford and Rayleigh as the next UK towns in their rollout; the £25m build programme in Rochford will begin imminently, while Rayleigh’s rollout is scheduled to get underway in spring 2023. 12 January – Construction of the £50m town-wide full fibre network has begun in Maidstone and is being delivered by Lanes-i on behalf of CityFibre with an expected completion date of 2027. 27 January – CF announced it had added over 1m Ready For Service (RFS) homes to its full fibre network in 2022. The achievement marked its most productive year ever and a 40% increase on the previous year’s performance. CityFibre’s network footprint increased 83% in 2022 with rollout underway in 75 metropolitan areas. At year end, the network exceeded 2.5m premises passed, 2.2m of which were RFS, enabling ISPs to serve new customers immediately in those locations.
Independent Operators (AltNets) News
4 January – Broadband ISP Zen Internet sees 21% rise in data traffic during 2022. 6 January – iTalkBroadband launches full fibre broadband services, using Openreach’s wholesale FTTP network. 9 January – FACTCO’s full fibre network is now live in Wheldrake, covering 800 premises. 9 January – Gigaclear announced around 2k premises are to go live in January and February in remote villages in Northamptonshire. 16 January – Gigabit Networks is the latest Internet Service Provider (ISP) to join FullFibre’s partner programme to deliver ultrafast, reliable internet connections via the FullFibre network. After successfully launching its digital services in the cities of Derby, Coventry, Leicester, Nottingham and Wolverhampton, Gigabit have set their sights on the neighbouring towns on FullFibre’s partner network. 17 January – Northern Ireland-based civil engineering firm Viberoptix, has launched a new “Fibre Campus” to train new engineers in the specialist skills required to support such work in Cumbria, England. 18 January – Truespeed announced they have extended their tariff price freeze until 2023 and have introduced their social tariff for financially vulnerable customers offering 30 Mbps full fibre packages for £20/month. 20 January – Fibrus and Quickline both announced that they will be retaining their tariff price freezes over the next year. 23 January – South-Wales based Ogi announced that work has started to connect tens of thousands of people in 23 new communities, as Ogi’s £200m phase one plan extends to commuter communities and business hubs across south Wales. 24 January – Neos Networks completes on its full fibre access promise for Liverpool, Birmingham, Manchester, and London; the entire Metro Network Expansion project makes up over 60km of Neos Networks’ national fibre footprint. 24 January – Gigaclear announced plans to extend its FTTP network to a further 7k premises in Surrey. 24 January – Grain became the latest AltNet to offer social broadband tariffs for those consumers on benefits; its GrainSocial FTTPtariffs offer symmetrical speeds of 15 Mbps for £15/month for its entry level social package or Social Plus which offers symmetrical 30 Mbps for £22.50/month, with both tariffs coming with a one year contract. 26 January – As part of the Connecting Devon and Somerset (CDS) programme, Airband has passed and additional 1,700 homes and businesses with their FTTP rollout; Airband has delivered broadband access to more than 22,400 homes on behalf of CDS. 26 January – Shell Energy Broadband announced 2k jobs may be at risk as it launches a strategic review of its telecoms and domestic energy divisions in the UK, Germany and Netherlands. See 26 January Other News entry regarding Shell Broadband topping Ofcom’s list (again) for consumer broadband complaints. 30 January – County Broadband announced another 5 villages in South Cambridgeshire bringing their rollout plan to a total of 18 villages in the county. 31 January – Lit Fibre add Watford and Basildon to FTTP rollout plans. 31 January – Kent-based mixed technology (FWA and FTTP) provider, VFast Broadband announced its 15,000th customer milestone. 31 January – Gigaclear’s £38m network expansion in Buckinghamshire sees increasing competition from F&W Networks, Openreach, Swish Fibre, and Trooli who are all building at pace in the area.
Other News
6 January – New UK laws boost gigabit broadband into MDUs and new build homes 13 January – ‘One Touch Switching’ being overseen by industry group TOTSCo announced that the new ‘Hub’ system will not be ready for testing until August 2023; the implementation date set by Ofcom is April 2023. 13 January – Street Works UK published report that highlights some of the barriers that civil engineers are facing as they attempt to upgrade the nation’s water, sewage, gas, electricity and broadband ISP infrastructure. 16 January – The Government confirmed that Sky Broadband has officially become the first “national provider” to adopt a new system from the Department for Work and Pensions (DWP), which allows them to verify – with a customers’ permission – that they are in receipt of key state benefits and therefore eligible for the social tariff. 23 January – TalkTalk adopts Strategic Imperatives’ Fibre Café aggregation platform to extend and accelerate further AltNet onboarding plans to offer greater availability in FTTP services. 23 January – Ofcom opened an investigation into BT’s compliance with its obligation to provide customers with clear and simple contract information before they sign up to a new deal. 25 January – EE’s announced that its 5G network covers 60% of the UK with a further 19 locations announced. 26 January – Fern Trading, who backs AltNet providers such as AllPoints Fbre, Giganet, Jurassic Fibre, Swish Fibre, and Vorboss announced they have just supplied investment funding to Vitrifi, a software start-up firm that is due to launch a new technology to help AltNets offer wholesale products in the future. 27 January – The Mayor of London, Sadiq Khan announced that around 50% of the capital city (up from 4% in 2017) can now access a full fibre broadband ISP network, which has been facilitated by competitive rollout by ISPs, private investment into AltNets, along with favourable policies put forward by the Mayor’s office to support the rollout of FTTP networks across the city. 27 January – KCOM announced that it has added the village of Gunness (North Lincolnshire) to its full fibre network plans and work is now underway to deliver FTTP coverage to more than 360 properties. 26 January – Ofcom published its telecoms and pay-TV complaints report for Q3 22 with Shell Energy Broadband topping the list again for broadband complaints received; Virgin TV received the most complaints for its pay-TV service; with Sky attracting the least amount of broadband and pay-TV complaints. 30 January – Vodafone announced it will be switching off their 3G network services in areas of Devon and Hampshire in early February 2023.
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[1]It is possible there will be restatements in the coming quarter/s and single period data should be viewed in that light. [2]Public Accounts Committee, “Rushed” UK Infrastructure Bank operated outside UK Corporate Governance code for first year, 25 January 2023.