Research Round-up January 2023
- Veronica Speiser
- Feb 2, 2023
- 4 min read
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 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
Virgin Media O2 (VMO2) News
CityFibre (CF) News
Independent Operators (AltNets) News
Other News
If you are a subscriber to UK Plus, sign-in here to access our UK Plus content where you can view our updated Q4 2022 profiles of the UK’s leading internet service providers, as well as our annual overview of the country’s broadband market.
Please get in touch if you would like to find out more about UK Plus or these particular publications.
[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.
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