Viewpoint
By Rajiv Datta, CEO of nexfibre
Our industry’s achievements
There is so much to celebrate in our industry. The significant investment made in deploying full fibre networks over the past few years has given the nation’s fibre-to-the-home (FTTH) rollout the shot in the arm it needed, creating a dynamism and competitive frisson that has been absent from the sector for a decade or more. This investment means that today full-fibre broadband is available to more than half of UK homes.
Much of that growth has been facilitated by the physical infrastructure access (PIA) regime created by Ofcom in 2018 and significantly enhanced in the 2021 Wholesale Fixed Term Market Review. PIA is considerably more efficient for alternative network operators (altnets) than building their own infrastructure, allowing for a more rapid and cost-efficient roll-out of fibre networks.
Growing the network is important, as access to full fibre broadband is already a major engine of economic growth for the UK. This will only become truer as technology marches forward. Digital connectivity is increasingly the power that moves nations. In the same way that physical infrastructure drove progress and prosperity for the UK in the past, digital infrastructure will be the enabler of a brighter future.
Emerging fragility in the market
Progress has been tremendous, but it is fragile. The market still lacks genuine national-scale competition to Openreach, which is one of the main reasons why the UK still lags behind many of its international peers in FTTH rollout. This is something nexfibre is seeking to challenge. Failure to do so will be the greatest single threat to future progress.
The current market structure remains unsustainable over the long-term. Today, the full fibre market is characterised by the presence of a large number of sub-scale altnets, whose investment in network rollout is rapidly declining. Customer uptake rates at both the wholesale and retail level have been lower than expected and altnets are facing further financial pressures due to increasingly expensive and scarce access to capital. Most altnets have already begun to slow or, in some cases, cease their rollouts altogether.
The economics of fixed network infrastructure mean there can be only a small number of long-term viable operators. Given this dynamic, consolidation in the pursuit of scale and more efficient operations is both inevitable and necessary.
The UK’s digital landscape is at a pivotal moment
The market is at a crossroads. What comes next matters. Take the wrong turn and the UK could head back to a place where there is a single dominant provider. Choose the right path – by prioritising competition, investment, and innovation – and the stage is set for the development of a dynamic, consumer-centric telecoms market that will power the UK’s digital future for generations to come.
Our first nexfibre report, published this week, looks in detail at how the industry – and the regulator, via the upcoming Telecoms Access Review (TAR) – can protect the progress that has been made to date and unlock the full potential of full fibre broadband to transform our economy and society in the future.
The key, I believe, is to promote sustainable national scale competition to Openreach, which should be the major consideration for the industry and the primary focus of the TAR.
Key areas of focus
Later this summer we will publish a short paper outlining how the TAR should seek to create the right conditions for national scale infrastructure competition.
Broadly, we think those should cover three areas.
The first is the need to create a stable regulatory environment which continues to attract the much-needed investment required to complete the rollout of full fibre and support our digital infrastructure.
The second is the requirement for a regulatory framework that ensures a consistent and equitable playing field for all, which is vital for the future development of a competitive and innovative market.
The third involves advocating for sustainable competition that benefits everyone, not just to complete the current full fibre rollout, but to support the future investment necessary to keep the UK at the forefront of digital innovation and prevent fragmentation by sub-scale operators.
nexfibre is the national-scale challenger the market needs
We have thought about this a great deal at nexfibre. Our mission is to provide lasting national scale competition to Openreach and transform access to fibre broadband in the UK. We are tremendously well-placed to do that given the maturity of our investors, the quality of our future-proofed technology, and our strategic partnership with Virgin Media O2, which grants us solid baseline market penetration to build upon. Combining our fibre footprint with Virgin Media O2’s on a wholesale basis, which will amount to over 21 million homes passed, will drive our ambition to become a true national-scale competition to the market.
We have proven we can walk the walk – investing £1bn in digital infrastructure in 2024 alone and passing over 1 million premises after just 16 months of operation. However, scale network providers like us need an environment that supports, not hinders, nascent competition.
All of us with a stake in the market have a role to play in the consultation and review process. We stand ready to work with policymakers and regulators to create the best environment for the UK’s digital infrastructure economy and look forward to engaging constructively over the coming months to help shape a bright future for our industry.
Is the UK fibre rollout moving fast enough to meet its lofty gigabit goals? Join nexfibre and the rest of the UK’s connectivity ecosystem in discussion at this year’s Connected Britain conference
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