Superfast UK: full fibre ahead

This report provides an update to our September 2016 publication, Superfast UK: the rising popularity of FTTP. It covers the latest announcements and activities of the country’s two largest superfast and increasingly ultrafast players, BT and Virgin Media. It looks at developments and progress made by the alternative infrastructure providers, and offers an update on the Broadband Delivery UK (BDUK) process and activities at local authority and community level, including the Better Broadband Subsidy Voucher Scheme. It also covers regulatory moves affecting the superfast and ultrafast broadband sector. Further details of the projects mentioned here, and many others, can be found in our separate Point Topic Superfast broadband projects directory.

The report focuses on fibre-based network deployments including fibre-to-the-cabinet (FTTC), fibre-to-the-premises (FTTP) and fibre-to-the-building (FTTB) with the exception of student and military accommodation. We also cover superfast cable infrastructure (Docsis 3 and in future Docsis 3.1). We define a superfast line as 30Mbps download or above. Although we do not cover wireless broadband connections specifically, a number of the players mentioned use fixed wireless broadband technology as part of their overall offering, providing services at superfast speeds. Several have a long history in fixed wireless access (FWA) provision and are adding fibre-based solutions to their portfolios.

Introduction

The Government’s embracing of full fibre networks marks a sea change in expectations for broadband in the UK. It was the speech by the then new Minister of State for Digital and Culture, Matt Hancock MP to the World Broadband Forum on 19 October 2016 which set the tone for what has been several months of Government announcements aimed at increasing the provision of fibre all the way to the premises. This is all part of the Government’s Digital Strategy to create an ultrafast Britain in a post-Brexit environment.

In that speech Hancock put fibre and 5G at the forefront of Government ambitions for the UK’s digital infrastructure. His pledge was, “We must start work now on ubiquitous 5G and fibre over the decade ahead”.  But he went further: “The future is fibre. Interim technologies, yes. Part fibre, great. Satellites, sure, where necessary. But around the world the evidence increasingly points to fibre roll out as the underpinning of a digital nation”.

This has excited the country’s alternative network operator community which sees real opportunity in a series of new BDUK procurements and an appetite for full fibre provision by local authorities. For all parties there is a growing sense that scaling up full fibre deployment (and 5G) can only be done through collaboration by Government, local authorities and suppliers. Government rhetoric is also pushing the country’s two largest infrastructure providers Openreach and Virgin Media to up their full fibre credentials.

Point Topic has collated the fibre-based projects of over 30 active alternative network operators as well as many community-led initiatives, either underway or at various stages of development, as published in our separate Superfast broadband projects directory. These are diverse in nature and illustrate the range of players and approaches within the UK’s superfast broadband landscape. Table 1 gives estimated fibre-based and Docsis 3.0 superfast connections at the end of December 2016 for deployments with connections of 10 lines and above. The majority are to residential properties with some to SMEs although we also provide figures for Bridge Fibre and WarwickNet. We provide figures for premises passed, and give Point Topic estimates where actual numbers are not available.

The service provider picture

Internet service providers using the Openreach network had 2,444,000 superfast lines at the end of December 2016 between them. This compares with 1,982,000 superfast lines at the end of June 2016 and 1,803,000 lines at the end of 2015.

The percentage of additions for these non-BT suppliers overall has been rising, from 34 per cent in Q2 2014 to 48 per cent in Q4 2016, albeit with a blip in Q1 2016 which coincided with BT Group including EE numbers for the first time in its results. The last quarter of 2016 saw a slight decline in the proportion of additions for non-BT suppliers but overall additions were up to 238,000. Table 2 shows non-BT superfast connections on Openreach infrastructure.

Openreach sales to non-BT service providers

Table 1: Openreach sales to non-BT service providers

As of March 2017 Openreach listed 23 residential service providers including BT Consumer, Sky and TalkTalk, as offering residential packages on its FTTx network, down by one from September 2016. There were 71 business providers including BT Business, offering FTTx services on the Openreach network in March 2017, the same figure as six months ago. There is some overlap with certain players offering both.

Point Topic estimates that BT Consumer is very close to overtaking Virgin Media in the supply of superfast broadband services. There were 4,733,000 BT Infinity subscriptions at the end of December 2016 and we estimate there were around 4,745,000 superfast Virgin Media customers. BT Consumer will therefore surely become the largest supplier of superfast lines by the end of March 2017.

During the last quarter of 2017 BT Consumer added 260,000 FTTx lines. This means that 51 per cent of BT Consumer’s customers are now on fibre-based broadband packages. Virgin Media does not provide a full breakdown of its superfast line numbers but Point Topic estimates that 96.5 per cent of the cable operator’s total customer base is on 30Mbps or above packages. Between them the UK’s two leading providers had 9,478,000 superfast broadband lines in service.

TalkTalk’s total FTTx base was 853,000 at the end of 2016. Commenting during its results briefing, the company said that simplification of the sales process had brought fibre to the front of the sales journey, and that the use of more data is driving customers to want faster connectivity. It also noted that fibre was becoming a switching market and that the process of re-contracting is driving people to these services.

Point Topic estimates Sky to have had 894,000 FTTx customers at the end of December 2016. In terms of FTTH build, Sky is no longer at the forefront, instead appearing content to use the infrastructure of others. The service provider has stepped back from the York build project with TalkTalk and CityFibre, becoming a wholesale customer rather than joint venture partner. It is unclear what has become of Sky’s FTTH trial deployments at Basingstoke in Hampshire and Swadlincote in Derbyshire with key personnel having left the company leaving no apparent direct replacement.

Get access to the full report and directory

The full version of this report is included in Point Topic’s UK Plus service. More information can also be found in our Superfast UK: full fibre ahead report and our Superfast broadband projects directory also published this month. Please contact Simona Pranulyte on +44 (0)20 3301 3303 or e-mail simona@point-topic.com for more details.