Superfast altnets developing long-term outlook

The UK’s alternative superfast network operator market looks buoyant with new investment flowing in from a variety of sources, and new relationships being built between network operators and service providers. These are the findings from a new report reviewing the past six months in country’s superfast broadband sector.

“There is a real buzz in UK superfast broadband with prospects looking good for several of the country’s alternative network operators,” says Annelise Berendt, Principal Associate at Point Topic, which has been covering superfast broadband since 2009. “Although the period has been marked by final closure of one of the country’s alternative network pioneers, Digital Region, several other altnets are proving themselves in it for the long haul, gaining financial backing to power expansion of their networks and develop scale in their relative niche markets. Some are also growing strategic relationships with other players that effectively bypass reliance on BT.”

Operators attracting new investors in recent months include Ask4, CityFibre, Gigaclear and Hyperoptic. Urban-focused CityFibre plans to roll out ‘Gigabit Cities’ throughout the UK after an oversubscribed £30 million secondary fundraising was approved by its board on 9 June 2014. This latest funding round added to £16.5 million the company raised at its IPO in January 2014. In May 2014 Darwin Private Equity agreed to buy a majority stake in student accommodation specialist Ask4 for £21.5 million. The operator also provides FTTB services to residential apartments in Leeds, Manchester, Sheffield and Shipley. Residential gigabit specialist Hyperoptic’s expansion beyond London into other cities as it secures more funding, is also big news for the altnet community.

Meanwhile rural FTTP operator Gigaclear confirmed the successful completion of a new round of equity financing totalling £7.75 million in July 2014, designed to enable rollout of several additional new networks. Also on the rural front, Call Flow Solutions is making its mark in Kent, widening coverage through both its own investment and via public funding. And community-grown venture, Broadband for the Rural North (B4RN), is gaining real ground with deployment in Lancashire speeding up as subscribers come online, easing cash flow as it works towards its coverage targets. Moving into more remote areas, the Rural Community Broadband Fund (RCBF) in England and Community Broadband Scotland (CBS) appear to be making a difference with deployment now taking place in several communities leveraging their support.

In addition, there continues to be a mushrooming of small altnet deployments around the country including Internet Connections Ltd’s deployment in Staffordshire and TripleConnect’s in Cumbria.

“Some of these operators are proving themselves highly versatile with a number of companies active in a variety of deployments,” says Berendt. “Fibre Options is a prime example with its FTTP deployment in rural Gloucestershire, new-build home development near York, fibre provision in the RCBF-funded wireless project in Tove Valley, and a 16Gbps infrastructure build for the business community in London’s Perseverance Works. ITS Technology Group and Keycom are other examples of players with deployments in a range of locations.”

Relationship building between alternative network providers has also been a key feature of the past six months, with a number of smaller players using CityFibre’s infrastructure – this includes players such as Ask4, Gradwell, Keycom and potentially Gigaclear. ITS Technology Group and Fluidata are partnering to establish a wholesale network in London’s Hammersmith and Fulham. And the deal involving CityFibre, Sky and TalkTalk to build a FTTP network in the City of York announced in April 2014, is part of a growing set of relationships involving infrastructure and service providers that sidestep BT.

“While the initiative does not make either service provider a permanent infrastructure player, it does signal a willingness to look at possibilities beyond the Openreach network,” adds Berendt. “Indeed Sky is building other relationships – it has agreements with both GTC and seethelight, and is also trialing FTTP infrastructure in Hampshire with television solutions provider, Love Digital TV.”

Posted by on Sep 2 2014. Filed under Articles, Broadband, Markets, Research.

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