Market Report

Unlocking connectivity infrastructure

Connectivity infrastructure in the UK is undergoing a revolution, opening up new opportunities for channel companies. Comms Business finds out more.

Connectivity in the UK is undergoing a revolution. Fibre-to-the-cabinet, or FTTC services, are being replaced by fibre-to-the-premises, or FTTP. 4G and 5G are slowly replacing 2G and 3G. Big switch off projects are either underway or on the horizon, and we are all stepping into the future of connectivity.

As these project progress, channel businesses have huge opportunities to play a key role in educating businesses and organisations across the UK about the new possibilities that could be unlocked by advanced connectivity technologies.

Gavin Jones, channel partners director, BT Wholesale, discussed how our changing world is placing new demands on connectivity infrastructure. Put simply, legacy infrastructure cannot meet the needs of contemporary challenges.

He explained, “We live in a world where instant access to information is expected, whether that be in an office, at home or on the move. We want to connect and collaborate in real time, share information immediately and conduct business and our social lives more efficiently. Data supports this and it is crucial that the proper infrastructure is implemented to support these ever-increasing demands.

“The upcoming PSTN switch-off has accelerated the need for businesses and individuals to move away from legacy setups and the performance demands around mobile devices require the next generation of connectivity. There are two pieces of today’s connectivity infrastructure puzzle – 5G and full fibre.”

In the long-term, newer connectivity infrastructure will bring benefits to all stakeholders. Oliver Helm, CEO, FullFibre, said, “The benefits of advanced connectivity are far-reaching. It goes without saying that better connectivity will generate an overall boost to productivity, and the economy.

“This latest wave of full fibre technology is also infinitely more upgradable than previous advancements, and the barriers around the path to purchase are largely gone. This, alongside greatly improved reliability of the network, allows for more technology and different ways of working. It also reduces the support costs to ISP partners in real terms.”

Rollout progress

The good news is that the rollout of 5G and full fibre networks is continuing at pace, so these future-ready technologies will be widely accessible before we know it. Jones, from BT Wholesale, discussed the progress made. He said, “Ofcom estimates that 5G now reaches around half of all outdoor premises in the UK. The move to 5G is a massive opportunity for partners and customers. With higher speeds and lower latency, 5G offers access to a wide range of applications and potential new services to improve collaboration and access to information.

“One of the biggest challenges that partners face is to fully deliver on the promise of 5G. This will require coordinated efforts with vendors to improve network capacity, latency, and quality. By partnering with operators who have knowledge and industry experience, the channel can ensure that there is capable infrastructure to make 5G a reality.”

Jones added, “Also crucial to future connectivity is full fibre. Openreach has a target to connect 25 million homes and businesses to FTTP by December 2026. In November 2022, FTTP build surpassed 9.6 million premises, so the UK’s move to full fibre is progressing at pace. This is particularly important for channel partners because there is more demand than ever for high-bandwidth services, driven by digital transformation and data hungry applications.”

CityFibre has also been speedily laying miles of fibre across the UK, with the company mindful of minimising overbuild. Andrew Wilson, sales director, wholesale channel, CityFibre, explained, “At CityFibre, we have now passed 2.5M premises with 2.2M RFS across 80 locations currently in build, and we are well on our way towards our own 2025 targets of 30 per cent UK coverage which equates to 8M premises, 800k businesses, 400k public sector sites and 250k mobile/5G sites.

“But it’s not just about each altnet and infrastructure builder developing their own networks in isolation to cover their own parts of the UK. It’s about working together to ensure we maximise coverage for our investments, minimise overbuild and develop a technologically agnostic network for the future that everyone can benefit from.

“We are wholesale only and provide open access to our networks and encourage the industry to collaborate, to ensure maximum full fibre coverage throughout the UK while providing access and choice to our partners.”

Yet some areas are subject to the coverage gaps that go hand-in-hand with newer generations of connectivity networks. Tremayne Hatton, director of voice services at Wavenet, said, “In large urban areas there are now many options available in relation to full fibre or 5G connectivity across all of the major UK carriers, however in more rural areas there is a noticeable delay in full fibre rollout as well as 5G installation amongst most UK carriers.

Hatton added that these delays are largely due to “civil regulations, local bylaws and getting approval from councils for the installation of 5G masts or the sign off for roads to be dug up for new fibre to be installed.”

Bernie McPhillips, sales director, Pangea, agreed that there is a gap between rural and urban locations, but said efforts to bridging that divide are underway. He explained, “So far the focus has been on cities and towns that had large shares of the population. But over the next two years the accelerating rollout is shifting focus to rural areas, presenting a lot of exciting opportunities to providers and users.

“Customers of all sizes are now looking to brilliantly-placed channel partners for guidance to help navigate through the technological changes whilst getting the most out of their investments.”

The gap between availability and live connections is another challenge for the industry to tackle. Helm, from FullFibre, said, “Rollout and build of fibre is no longer the big challenge in the UK market space. As an industry, we have mobilised a credible build engine and capability that will see 80 per cent coverage in the next two to three years.

“This is something many believed would not happen just a few short years ago. With this fibre proliferation happening at pace, 5G becomes much easier and quicker to deploy and we will see this move out from current dense urban deployment to most parts of the UK.

“I believe this pace will continue for a while, but stall as the easier-to-deliver, more urban areas are closed out. The final 20 per cent of the network build will be considerably slower in the harder-to-serve rural areas. I would predict that this part of the network won’t be close to completion until 2030 with the final two to three per cent requiring different options.”

As such, Helm explained, building awareness of the benefits of fibre and 5G will be vital. He said, “The focus now has firmly moved to helping consumers and businesses access the services now available to them. Encouraging adoption of these new networks is the responsibility and opportunity of our industry, to ensure we leverage this investment and support continued rollout.”

Finding the gold

So, where are the biggest opportunities for channel partners? Wilson, from CityFibre, pointed to business FTTP services as an “undoubtable” opening. He said, “While providing Ethernet remains a critical source of successful growth for the channel, partners now also have the valuable opportunity to serve the connectivity needs of smaller businesses or those seeking reliable, gigabit-capable connectivity at even more affordable cost.

“Although there have been many interim solutions over the years, nothing meets this need as well as business FTTP, which enables customers to fully embrace the huge business benefits of full fibre. Fully aware of the approaching copper switch-off, channel partners are best placed to address the uncertainties that businesses are facing, by offering easily affordable connectivity solutions that will serve them through decades of growth.

“Add to this the current economic climate in which almost every business is looking at how and where it can reduce costs, improve efficiencies and capitalise on new opportunities, as well as the ongoing strategies of supporting remote workers and multiple offices. It’s easy to see the value that business FTTP presents to channel partners for their own growth.”

Some stakeholders believe partners should also look beyond businesses. James Warner, CSO, FullFibre, said, “The biggest single opportunity for channel partners is in the unique product offering available via altnets.

“Partners who are adapting to take service from altnets are able to engage with existing and prospect customers on new capability that has either not been available, or has previously been too expensive for the end user. Most of this capability is not obtainable from the likes of the larger players and presents an opportunity to stimulate new interest and generate margin improvements.

“I would encourage ISP partners to explore the significant opportunity that now exists in the residential market, as well as the business one. There has never been a better time since the introduction of consumer broadband, to acquire and build a challenger service provider to consumers.

“Altnets are generating significant consumer demand and interest that cannot always be served through the large national players, leaving an opportunity for smaller players to provide great customer experience with an improved product at a competitive price point, and still make margin from it.

“Not only will many partners be able to serve customers sooner than some incumbents on their ultrafast networks, but this will also stimulate competition and drive competitive margins.”

McPhillips, from Pangea, discussed the opportunities available within the mobile space. He said, “The opportunities in 5G go beyond its faster speeds. It’s ultra-reliable and has incredibly low latency, resulting in almost real-time data transfer. In turn, it opens doors for the previously unthinkable, like remote surgery.

“5G’s one million connections per square kilometre can help make smart cities a reality. If you want assets like trains, cars, and street furniture to be connected all over the country, you’ll need high connection density to connect a massive volume of services.

“It’s clear 5G is unlike its predecessors so it’s crucial for the channel to start thinking of mobile data as a connectivity product and not just a mobile product. It’s a genuinely credible alternative to fixed line connectivity. Broadband outages cost the UK economy £5 billion last year. By deploying intelligent mobile data services like 4G and 5G instead, businesses can be up and running more often, ultimately helping the economy.”

There is also the possibility for channel companies to wrap all solutions a business will require into a single solution. Jon Selway, vice president of channel sales, EMEA, Aryaka, explained, “Finding alternative solutions to customers’ connectivity challenges has been, and will always be, a significant opportunity for the channel. And as full fibre bandwidth is so scalable, resellers must differentiate themselves in other ways than simply supplying fast connectivity.

“Channel organisations can truly disrupt the [connectivity market] by taking a full account of every aspect of the challenge. Security, remote working, monitoring and maintenance, as well as resiliency [could be] managed within a single solution. Right now, given the focus on reducing business spend in the face of a year-long recession, cloud services and NaaS can especially help remove CapEx costs and enable end-customers to be more agile in their infrastructure.”

Mike van Bunnens, managing director, Comms365, added, “The transition to all-IP and full fibre isn’t just about connectivity infrastructure and voice. The market is ripe for innovative 4G and 5G propositions to support everything from IoT to CCTV and connectivity failovers.

“Adding 5G alongside fixed line services into a multi-connection solution can significantly enhance the service quality, whilst reducing downtime and improving the end-user experience. For areas lacking 5G, there are hundreds of use cases where innovative solutions can solve any ongoing infrastructure bottlenecks.”

Tackling challenges

In terms of the biggest challenges for channel partners providing connectivity infrastructure, many stakeholders emphasised the need for education and clarity over the newer networks.

CityFibre’s Wilson said, “Whilst demand for FTTP is growing, there remains confusion among small businesses and consumers over the differences between part fibre and full fibre, and this inevitably affects take up.

“Research we carried out among consumers showed that 64 per cent don’t understand the difference between full fibre and existing copper connectivity and, in our experience, this is also reflected among small business owners. The challenge for channel partners then is in communicating the real-life benefits that full fibre delivers.

“Word of mouth is a hugely powerful tool – once a customer tries full fibre they don’t look back and soon spread the word to colleagues and neighbours. We have experienced this in some of our more mature build cities such as Milton Keynes, where we are now the largest full fibre provider with 27 per cent penetration.

“For us, success is based on working closely with our channel partners to deliver clear and targeted communications to businesses, explaining the benefits of full fibre and driving that demand for better, faster and more reliable connectivity.”

BT Wholesale’s Jones added, “With the PSTN switch-off looming, the biggest challenge for the channel is educating customers about the need to transform from the old to the new and the benefits this will bring. It’s imperative that businesses start their planning to migrate to FTTP now, but many are still delaying.

“Channel partners should work with vendors to understand what it means, audit their estates and plan the transformation they need for their businesses. Ultimately, improved connectivity is powering the future of work.”

Oliver Helm, CEO, FullFibre, also discussed the need for education. He said, “An enormous challenge for channel partners is in cutting through the noise in the marketplace and getting a clear and concise message out to consumers about why the transition to full fibre is needed.

“Over the years, our industry as a whole has done a bad job of educating the consumer about what good broadband is. This in itself has created an opportunity for channel partners to fill the void, and yet, there is still a lot of confusion on the subject of broadband, and what good actually looks like.”

Helm said delivering a “clear and concise message” will be key to continuing to further the development of infrastructure.
There are also operational challenges.

Brendan Hourihane, senior director, enterprise and real estate, Freshwave, pointed out the reality that bringing mobile coverage indoors can be complex. He explained, “Connectivity infrastructure is a specialised sector with a complex ecosystem. When it comes to indoor networks, not only do you need people with radio frequency experience, but you also need to work with companies that have good relationships with the MNOs and agreements in place with them.

“The MNOs are, quite rightly, very protective of their networks and only work with trusted partners who they’re confident have the knowledge, experience and processes to bring a network live on their behalf. So for channel partners with customers who need a network, it’s imperative to partner with a neutral host that has the right technical knowledge plus the relationships with all four of the UK’s MNOs.”

Hatton, from Wavenet, added, “Some of the main challenges being faced are the lead time for services to go live caused by the lack of available network types in specific locations, in addition to some of the aging infrastructure still in use. These issues can be overcome through businesses actively upgrading and modernising their infrastructure, however there still seems to be blackspots of availability for all service types across regions.”

Wilson, from CityFibre, explained how the company is tackling wayleave challenges. He said, “Wayleaves are also a great source of frustration for channel partners, often causing delays and the need for legal representatives. After listening to feedback from our partners, we introduced a revolutionary new process called Permission to Work.

“It gains approval at the point of order for all CityFibre Ethernet services, instead of putting it into the traditional wayleave process. Since its launch, we’ve cut the average delivery time for Ethernet orders in half – allowing our partners to get from order to cash much quicker.”

Team work

The Channel will need to work closely with partners to deliver the benefits of improved connectivity to premises across the UK.

Wilson, from CityFibre, said, “Channel partners need to work closely with their wholesale suppliers to ensure they have access to the full range of full fibre connectivity options available to best suit their customers’ needs, whether they’re based on Business FTTP, Ethernet, 5G or other technologies.”

Local support, Wilson explained, will be critical. He said, “In our experience, local economies benefit the most when all aspects of the community come together and embrace the adoption of full fibre and the advancements it delivers – for schools, councils, hospitals, businesses, and consumers.

“That’s why we work closely with our partners to help them communicate and market the benefits of full fibre to whole communities, not just into individual bids and pitches. We work alongside local councils and authorities to help them integrate the best solutions for their areas and connect whole cities.”

FullFibre’s Warner said altnets are essential to provide a competitive market where channel businesses can thrive. He added, “It is vital that the Channel take the opportunity now to ensure that the current competitive infrastructure layer is maintained.

“We don’t [want to] move back to a single provider, with a monopoly of underinvested infrastructure. This would set UK-wide progress back and severely hamper future development.”

Vertical expertise would be another advantage. Sarah Mills, chief revenue officer at Neos Networks, said, “Businesses operating within the Channel need to connect partners who have the right technical capabilities and understand the business challenges across a variety of vertical industries.

“These connectivity players can help deliver key benefits and overcome the connectivity challenges many business customers face today. This technical know-how and market understanding from partners will be critical for the Channel in helping the end customers understand how important robust, reliable connectivity is in supporting their business goals and future resiliency.”

The message from all stakeholders is that channel partners must act immediately. The transition to newer networks is happening now, and the channel can guide businesses across the UK through their options.

McPhillips, from Pangea, said, “When it comes to emerging technology opportunities, you can either develop the capability yourself, acquire it, or partner up. Developing the capability would take a long time; time you don’t have since compelling events such as the PSTN switch-off are already underway.

“The opportunity is here and now. By the time you develop the capability, it’ll be gone. But acquisition is expensive, and there aren’t many providers that can help you with integration. It all boils down to the partner’s ability.”

This market report appeared in our March 2023 print issue. You can read the magazine in full here.