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Are AltNets primed to succeed in a fiercely competitive fibre market?

Since they began to emerge around a decade ago, Alternative Network Providers (AltNets) have made significant progress towards putting the UK on an equal fibre footing with the rest of Europe in terms of its access to fibre connectivity. But in recent months, the viability of the AltNet business model has been met with scrutiny from telecoms incumbents, with the big network players having voiced their concerns that the delivery of extensive fibre or overbuilding could see just a few players cross the finish line in the race to better connect the UK.

Despite incumbent doomsaying, AltNets have adopted a sophisticated business model, choosing the most underserved regions in need of superfast services as key targets for fibre rollouts.

That being said, competition is growing increasingly fierce in the fibre broadband market. One example of this is the introduction of Equinox 2 by Openreach. The provider of the UK’s biggest fibre network announced it would slash pricing for those providers that make use of Openreach’s network for broadband services. Some AltNets have voiced their concerns that this approach by Openreach may choke competition and even threaten the pace of the UK’s full fibre rollout.

AltNets face other issues too. For example, many based their business models on the assumption that if an AltNet was there, an incumbent wouldn’t overbuild them. But this hasn’t necessarily been the case. Instead, we’ve seen some incumbents accelerating their builds. And despite the increased availability of fibre, both groups face the same conundrum: low market penetration.

In this blog, we’ll explore the opportunity that remains for AltNets to grow, and how they can continue to boast ongoing success.

An opportunity for growth
Large numbers of companies competing for a share of the market in any one location is of course, uneconomical. However, the game is far from over for AltNets. A report from Ookla found that AltNets are often harvesting the top speeds in key areas of the UK, which are critical to data hungry customers. In particular, businesses will be looking to pull resources from the cloud or transport high volumes of data, as well as high performance virtual reality and other video applications which require high speeds to avoid buffering.

To build business resilience, AltNets could instead draw their attention to densely populated business postcodes. This underlying connectivity can act as the foundation for creating tech hubs that fall, outside of London, and AltNets can leverage this through educating businesses of the importance of connectivity services to act as a springboard to support their business function. There is also the potential to market the futureproof nature of gigabit capable services beyond the typical ‘superfast’ to create strong footholds in niche markets.

The not-so-level playing field
AltNets have already demonstrated the key role they can play in the government’s levelling up agenda. However, when it comes to government funding, access rights and wayleaves, the playing field is not entirely level.

Bigger suppliers are able to move quickly, without the need to negotiate the permissions smaller players face. The result is additional fees and the slowing down of progress for AltNets, making it more difficult for them to play a critical role in the realisation of Project Gigabit. It seems that as far as ‘levelling up’ is concerned, less red tape and a more level playing field is of upmost importance for challengers within the telecoms’ infrastructure supplier community.

The competition is far from lost
It’s fair to say that for AltNets, the competition is in fact far from over. There is still a viable opportunity for them to succeed. Due to the vast size of incumbents, it wouldn’t be fair to measure the success of AltNets on market share alone. Instead, they should focus on how well they reach customers, and how they serve them, while continuing to establish a competitive advantage through market-leading speeds and high capacity, end-to-end connectivity for businesses and consumers.

Understanding customer needs and continuing to be sophisticated in their approach of identifying businesses and postcodes that put a premium on connectivity will be imperative. But so too will partnering with national connectivity aggregators that can extend the AltNets networks and provide higher capacities into hard-to-reach locations to continue creating long term revenues and achieving business resilience.

Learn more about how we support AltNets in extending their reach across the UK, enabling them to rival the incumbents looking to block their way, in our case study with established AltNet, Giganet.

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