Report: UK ISP market remains challenging
March 8, 2023
The past two quarters marked a definite slowdown within the fixed line sector as Covid pandemic gains firmly abated along with the cost of living crisis seeing a shift from fixed services to mobile broadband only, reports Point Topic. Despite the sector’s healthier uptake in numbers across the board, with around 85,000 net broadband additions at the close of Q4 2022, compared to the previous quarter’s 13,000, the market remains challenging with little signs of significant turnarounds on the horizon. Point Topic estimates BT’s consumer division to have lost around 79,000 connections as it struggles to attract new subscribers. Its churn rate remained around 1.1 per cent meaning it is likely offering out-of-contract subscribers similarly priced tariffs with an eye on retention. Virgin, Sky, TalkTalk and Vodafone all reported modest gains to close off the year with this trend slowing in the upcoming quarters.FTTP network rollout has steadily continued throughout the quarter with Openreach covering 9.572 million premises and Virgin Media O2’s (VMO2’s) Project Lightning drawing to a close with around 3.2 million premises passed. Wholesale broadband lines increased by around 100k totalling 29.14 million. A wholesale market shake-up looms as the new fibre joint venture, Nexfibre, between Telefónica, Liberty Global and InfraVia Capital is launched with 24k Project Lightning premises being transferred to the network.
Key Points:
- Total Q4 2022 FTTH/P/B, FTTC, cable, FWA/satellite and DSL wholesale connections stood at an estimated 29.14 million, up from 28.51 million y-o-y; with retail consumer and business connections reaching an estimated 29.11 million during Q4 2022, up from 28.77 million at the close of Q4 2021.
- Household Internet penetration reached 89.65 per cent with the majority of fixed broadband connections using predominately FTTC, DOCSIS 3.1 or FTTH/P/B technologies.
- BT’s fixed broadband consumer division saw an estimated 79,000 losses in the quarter; for the third consecutive quarter Openreach reported a loss (-10k) due to the market slowdown.
- Openreach’s FTTP penetration rate continued to slowly rise at 28.5 per cent and is steadily closing the gap on VMO2 with the latter’s take-up rate falling to around 35 per cent.
- Openreach reported that in locations where it built out its FTTP network 24 months ago, almost 50 per cent of the Openreach broadband base are now on FTTP.
- At the close of Q3 we estimate that nearly 55 per cent of lines live on the Openreach FTTx network belong to non-BT service providers.
- VMO2’s fixed segment reported broadband net adds reaching just under 23,000 up from a 19,000 bringing its broadband customer base to 5.653 million.
- Sky UK remains the dominant player in its European operations and its UK operations are bolstered by pay-TV subscribers and closed the quarter with around 6.215 million broadband subscribers.
- CityFibre’s (CF’s) nationwide full fibre network passed over 2.5 million premises at the close of the year, with more than 2.2 million ‘ready for service’ to ISPs.
- Out of the AltNet ISPs metrics we tracked there were an estimated 45,000 broadband net additions compared to 32,000 in the previous quarter.
- Overall AltNet operators FTTx (pre-dominantly FTTH/P/B) ISPs subscriber numbers are slowly on the rise; we estimate the total number to be around 2.81 million at the close of Q4 2022.