Connected North: Key takeaways

The 2024 Connected North conference in Manchester underscored the vital role of collaboration in developing the upgraded connectivity that is propelling the telecoms industry towards the creation of smarter, more connected communities and fostering social and economic opportunities and advancements in the North of the UK. However, these are not without some significant challenges, including competitive tension, regulatory intervention and consolidation in the market.

Our key takeaways from the conference are outlined below:

1. Connection. According to the Independent Networks Cooperative Association's 2024 State of the Altnets Annual Report, alternative full fibre gigabit broadband networks ("Altnets") have increased their UK coverage by 57% in 2023 to top 12.9 million premises (ready for service), with over 2 million customers now using Altnet fibre. There are currently around 25 full fibre providers with more than 100,000 premises passed. Whereas previously the emphasis has been on building network and infrastructure to update broadband connection (at pace) and address the digital exclusion of specific communities and localities, recent trends show a shift in focus from build to adoption through retail and/or wholesale. The market has moved from valuing homes passed to homes connected, with customers valuing suitability rather than speed.
2. Coverage. The remaining connectivity coverage is, however, still dependent on the Government's continued support (such as the Project Gigabit subsidy programme and voucher schemes) and ensuring that those small areas that are (a) more complex or expensive due to geography, lack of investment in physical infrastructure access or lack of maintenance, or (b) areas that could be commercially deployed (but have not been yet), are not missed.
   
3. Collaboration. Relationships with partners, suppliers and local authorities will be key to ensuring "connection with purpose" at grassroots level within the community. Local authorities are the enablers of the purpose and through collaboration, industry provide the connection network and assets. Relationships with local authorities are also key to navigate through planning and deployment. Ultrafast connection is important for society and economy, with enormous opportunities for the UK and future technology advancements.
   
4. Community. The collaborative spirit underpins the fundamental policy to provide digital inclusion and smarter, connected communities across the UK. Accessibility and affordability are also ongoing issues which need to be addressed (with 20% of social housing having no fixed connection in some areas). Providers are therefore strongly encouraged to make tangible differences and social value for the community in which providers operate. This is evidenced in the weighting (10% of the overall score) placed social value clauses in the Project Gigabit procurement process. Learnings from Project Gigabit and commercial deployment show the benefits of providing fibre connectivity are that it enables and generates other investment in rural areas even if the solution deployed is not the final product, but affordability is also a problem which needs to be addressed.
5. Competitive tension. At odds with the collaborative spirit and the focus on adoption, panellists noted that BT is not using Project Gigabit funded fibre to provide fibre broadband to customers where there is no Openreach fibre, instead offering only copper based services to customers in those areas. This despite contractual obligations on recipients of Project Gigabit subsidy to make that network available to other operators on non-discriminatory terms. This means customers are not being provided with enough choice and investors may find it difficult to grasp the long-term return on their investment. It is estimated that although 11.3 – 11.6 million properties now have access to Altnet networks, the current build cycle is not yet mature enough to create enough competition in the market. Barriers to build (eg. wayleaves and planning consents) and pricing strategy (directly and indirectly) have also created tension. How Ofcom will react to further regulate the network-based competition framework to promote customer take-up, remains to be seen.
   
6. Consolidation. The competitive tension and additional challenges in the market (such as inflation and increased cost of energy and materials slowing build ambitions, securing investment complexities and/or evidencing adequate return on investment), suggests consolidation of the market is inevitable. Speculation varied as to the scope of consolidation, but some predictions estimated there would only be 4-6 players by 2030. While consolidation may improve decision-making and prevent overbuild, its attractiveness varies as each Altnet business is unique. Valuation also poses a challenge in the coming years, with not all networks being equally valued and if the Altnet is performing well and has clear strategy, consolidation may not be beneficial for its customers or stakeholders at this time.
   
7. Challenges. As noted above there are many challenges in the current market, including competition, threat of overbuild and consolidation. However, one of the top concerns of Altnets was the delay to one-touch switching ("OTS") implementation caused by technical complexities to coordinate multiple providers and backend systems to ensure seamless transition, regulatory requirements and national players resistance. The 12 September 2024 launch date is fast approaching and participation is a mandatory regulatory requirement. TOTSCo strongly encouraged providers to take action to understand and implement measures to meet the OTS requirements sooner rather than later.
8. Cellular (5G). Despite government focus shifting towards wireless strategies, strategic planning and consumer policies are needed to ensure effective connectivity. One year on from the UK Wireless Infrastructure Strategy, only 10% of UK has standalone 5G coverage, emphasising the need for continued Government support, to help local authorities maximise funding opportunities for 5G infrastructure projects. Extremely rural areas, particularly in Scotland, present unique challenges, but also offer opportunities for innovative technologies like software defined radio platforms.
   
9. Creativity. These challenges give rise to unique opportunities for collaboration and creativity to find specific solutions. Alternative technologies and diversification will be necessary for Altnets to address challenges and sustain their place in the market. There were exciting examples of the way in which the telecoms industry is finding ways to innovate. This includes Altnets improving the customer experience using data and insights and providing customers with smart apps to provide content filtering and parental control, data centre operators using excess heat from data centres in district heating schemes, and transport operators using AI and machine learning to ensure trains are stocked with sufficient sandwiches!
   

In conclusion, these key takeaways highlight the importance of collaboration, innovation, and strategic planning in shaping the future of broadband connectivity and telecommunications to ultimately create smarter, more connected communities. If you have any questions or would like to delve deeper into any of these insights, please don't hesitate to get in touch.