Altnet agility driving better outcomes for end users

When MS3 was formed in 2012 its raison d’être was to provide competition to incumbent KCOM within Hull’s connectivity market.

This case study provides a microcosm for the wider dynamics between Openreach and altnets across the UK and gives CEO Guy Miller a unique perspective on the benefits of connectivity competition.

Here, Miller discusses how altnets have leveraged their agility and dynamism to drive benefits for end users. He also discusses how 100+ operators can (or cannot) co-exist whilst gaining fair market share.

Why is competition so critical in the UK broadband market?

Competition creates innovation and wakes up incumbents. If it wasn’t for the handful of trailblazing altnets, the UK would have continued our slide down the global connectivity rankings. Without competition, we would be pushing our ageing copper network to do more and more with g.fast being the best product on offer for the vast majority of the UK. 

Instead, we have seen the UK shoot to the top of Europe for having the fastest FTTP deployment with 4.2m homes added in 2022, a figure likely to be beaten in 2023.  We are seeing providers competing to offer the fastest products with synchronous speeds for the lowest prices and the incumbents are being forced to follow. These are fantastic outcomes for the homes and businesses around the UK who deserve a better connection at a better price.

What are altnets currently doing better than incumbents?

Altnets are more agile and this creates better customer outcomes. At MS3 we wanted a way for end customers to compare ISPs so we conceived, built and launched our own comparison website within weeks, around 25% of our partner orders are now generated that way. There is no incumbent that could have delivered that in 12 months.  Altnets can be flexible with build plans, can try things and fail fast if needed and when someone wants to make a change to the way we work it’s a two week development cycle, not a nine month OSS and BSS drop.

How can altnets increase their market share with many broadband users in fixed long-term contracts with incumbents or competitors?

Broadband contracts aren’t that long (18 to 24 months typically) and the tendency of large players to bring price increases halfway through and at the end of contracts creates a reason to shop around.  If an altnet can start publicising they are coming to an error six months in advance then take six months to build it then in reality two thirds should be ready to switch and the other third in the next 12 months.  With good planning this is not a barrier and no altnet expects full take up overnight – most anticipate 5 years or so to get to their target penetration.

How are you differentiating from the incumbent and other challengers in Hull?

We are wholesale-only, we are commercially flexible, and we are easy to do business with. This isn’t rocket science, don’t have a retail brand competing with your wholesale channel, treat your partners well so they want to do business with you and don’t be greedy about your slice of the pie, share the proceeds with the people doing the hardest job, selling.

Do you think recent Ofcom policy favours the incumbents?

Altnets have had some wins and some losses, we can’t whine every time things don’t go our own way and we can’t expect incumbents not to try and protect their business interests and fight back.  As altnets we either need to take lobbying seriously and invest time and money in making it work or we need to suck up the outcomes.  Build your business to succeed on its own merits, not relying on someone else to fail for you to succeed.

When inevitable consolidation occurs, how many altnet’s will survive and what will set them apart?

It all depends on how far you go down the line, in 20 years there will be 3 or 4 providers in total. Cleary there’s a long way to get down from 100 now to that amount.  It’s also not about survival. you don’t need to be independent to survive, you can become part of a bigger group and be proud of what you achieved in getting there, you might have a different name about the office front door but the brilliant fibre network the altnet built is still going to be the same one providing a massively improved product for the end customers for a century to come.

What other factors of the UK fibre industry would you like to see changed?

We need to speed through the turbulent times that exist now and get out the other side.  Banks and investors have low confidence currently because they can’t tell a good altnet from a poor one and let’s be honest there are definitely a bunch of poor ones. Some might fail, hopefully most get bought out but we need to get rapidly to the time when good altnets, delivering their sales and build KPIs, are able to access funding on reasonable terms and continue to really challenge the incumbents creating a better fibre future for the UK.