Connectivity – What does Digital Britain mean for the Channel?

Barely in the job a week, new PM Boris Johnson made some encouraging statements around his intentions for the fibre market. Having previously called the fibre roll-out timetable laughable in the Telegraph, he went on to say that we should be aiming for full-fibre (FTTP) in the next five years. Let’s see eh?

Whenever I hear the words ‘Digital Britain’ it conjures up other well-meaning slogans such as the 1990s ‘Cool Britannia’ or Apple’s ‘Think Different’.

Paul North, Head of Sales at Entanet would seem to agree with me when he says, “The danger with the term ‘Digital Britain’ – as is often the case with a catchy soundbite – is that it will be used by many organisations – commercial and non-commercial – to draw attention to whatever they are promoting. That can end up diluting what the term really means and confusing people.”

So what does Digital Britain mean?

The UK Government has stated a commitment to create an all-digital future and set targets in their 2018 Future Telecoms Infrastructure Review (FTIR). Added to the goal of full fibre access for all, there are new innovations in technologies such as 5G, AI and machine learning that are expected to significantly enhance and change the way we live and work.

The yearly industry review by UK regulator Ofcom published this summer as CMR 2019 throws up a number of observations on the how users are driving the need for faster and faster connectivity for their devices.

Ofcom CMR 2019

• Internet take-up and smartphone ownership are both unchanged in 2019. Household internet take-up remains at 87%, and 79% of UK adults personally use a smartphone.
• Consumers are upgrading to faster broadband. The number of fibre-to-the-cabinet connections overtook standard broadband copper connections for the first time this year, and the number of superfast broadband lines increased by 17% as people upgraded from standard broadband services.
• And people are using more data. The volume of data used on fixed and mobile connections both grew by around a quarter, with 240GB being used on average each month per fixed broadband connection and 2.9GB in an average month being used on each mobile data connection.
• Much of the growth in data use is driven by online video. Fifty-eight per cent of people watched on-demand video services, up from 53%. This is driven by increased use of subscription video-on demand services such as Netflix and Amazon Prime Video.

As Ofcom’s CMR 2019 confirms, for a number of years now the use of connectivity and apps at home has to a large extent seen business use cases follow so we asked a number of questions to channel suppliers of digital services enablers – the connectivity part.

How will the UK manage the post-WLR world of all-IP networks?

Digital Britain means a full fibre Britain according to Richard Thompson: Director of Partners at TalkTalk Business

“The opportunity that full fibre brings to the channel is huge and there are a lot of expectations around the rollout. Higher bandwidth and faster speeds will improve customer experience, which in turn will reduce customer churn and deliver a lower cost to serve.

However, the challenges for the channel can’t be overlooked. Working with a variety of Fibre to the Premise (FTTP) access providers will create complexity and there will be a patchwork quilt of coverage offered by multiple providers without standardisation. Each provider has their own set of technical standards, operational models, pricing, product variants, SLAs and customer journeys.

In addition, there is a race to get there first. First mover advantage is going to be vital. Once a customer is on FTTP they’re unlikely to move. Therefore, the provider that can bring a full fibre product to market will reap the rewards. However, that doesn’t mean that the first offering will be the best. Providers need the scale and experience to deliver a great customer experience, as well as relationships with altnets to reach the whole country. The nature of our channel environment is going to change. We can’t see the UK as one overall geographical location anymore, we need to understand where our Partners are strong and where we can help them grease the wheels of digital Britain.”

Nick Powell, Sales Director at Sky Business Communications believes we have to manage the post-WLR world through the ‘best available’ approach, with full fibre at the top end, through 5G, FTTP and so on.

“As an industry we should be looking at educating the market to the benefits IP Networks will bring them; for example, access to VoIP and what additional functionalities this brings to make their world easier to connect and communicate.

We should learn from other markets that are already migrating (Germany, France, Switzerland and New Zealand) and understand how we can best avoid ‘forcing’ consumers to migrate – it leads to problems, poor market perception and high levels of complaints which are not conducive to our industry.”

Dan Cunliffe, Managing Director at Pangea, says that with digital applications like WhatsApp and Skype taking the landscape by storm, we’ve already made serious headway into a post-WLR world.

“We’ll continue to gradually adapt as a nation, as businesses make suite shifts and infrastructure changes. And, really and truly, that’s a big positive—it spurs healthy competition, which in turn breeds disruption and innovation; leading to better services all-round.”

Andrew Dickinson, Managing Director at Jola commented, “The UK is very well positioned in the move to IP. Most connectivity is FTTC or Ethernet and the emergence of 5G and FTTP will simply improve speeds and reliability and encourage adoption.”

Paul North – Head of Sales at Entanet says that the success of the UK’s evolution from out-dated, copper-based services to a full fibre future that’s fit for a ‘Digital Britain’ will be in ensuring the transition is something the whole industry owns.

“It’s not just about Openreach shutting down its legacy platforms to save costs, it’s an opportunity to open the market up and give UK businesses a much better range of connectivity options than they had before.

Britain – and British businesses – will manage very well in the all-IP world, providing that they do have access to the full fibre services that they will need in order to compete – at home, in Europe and in international markets. This will become even more important once Britain has left the EU.”

Neil Wilson Head of Products & Marketing at Virtual 1 thinks that whilst that there are lots of uncertainties in the market, there are some essential principals that the channel can depend on and plan for – three of which are;

• Copper will go, Openreach are doggedly sticking to their withdrawal date, and whilst that could slide, the end position is inevitable
• We believe that in 2021 Openreach will have aligned their 100Mb and 1Gb bearer pricing, resulting in the market moving to consume only 1Gb and 10Gb bearer services. There will therefore be a place for a business grade FTTP proposition
• 5G will be in the connectivity mix, but I don’t see it replacing primary fibre connectivity in major offices where bandwidth demands continue to grow apace. I do however see it having a key role in smaller offices, backup services, as well as creating new revenue opportunities by connecting previously isolated systems

Iain Sinnott at VanillaIP says there will be difficulties ahead for video services.

“Assuming either the terrestrial, microwave or mobile players deliver a stable data connection to all parts of the country and that businesses have at least a GSM capable phone to act as an end point, I would suggest the transition of the voice and text services will be easy. The video related services will be the hardest to deliver to the worst connected parts of the country, along with desktop share and collaboration. Resellers are going to need to know their products and have flexible solutions which aren’t just based around a phone on a desk.”

Much of the growth in data use is driven by online video.

How can we both promote and de-hype the expectations around full fibre and 5G capabilities and timescales?

Daren Baythorpe, CEO at ITS says the UK is in a phase of fibre transition, and this is factored by schemes and initiatives to facilitate rollout, end-user demand, and of course Openreach’s decision to plan for the copper switch off.

“With the benefits of full fibre and 5G connectivity well understood and firmly cemented in the long-term strategies of the government, the value of the smaller altnet builders role in this should not be underestimated. There are dozens of innovative businesses delivering full fibre solutions across the UK. Innovation such as re-use of existing duct is complementing the major network build programmes and helping to drive faster penetration of FTTP.

However, while great strides have been made, there is still a way to go. This is illustrated in Ofcom’s Connected Nations report that revealed overall full fibre (broadband) penetration in the UK stands at around 7%. Therefore, the biggest challenges remain the timescales involved, and the skills needed to deliver on this vision. We need to nurture new talent and keep our existing talent too. These are unprecedented times in the UK; the likes we will not see again.”

“The 5G hype is huge; and in many ways, rightly so,” says Dan Cunliffe at Pangea.

“Even in its infancy, test rollouts and 5G experiments have blown minds and challenged what we thought was possible through connectivity tech.

However, it’s also true that there’s a lot of misinformation out there, and it’s in both providers and customers’ best interests to separate truth from exaggeration.

Part of the onus is on government-approved sources, such as the IEEE, to provide accurate, informative resources that educate the sector.

And the other part is on us—the Channel—to properly specify the capabilities, applications, and outcomes people can expect from the rollout of these technologies.”

Andrew Dickinson at Jola, says the issue with 5G is how quickly the MNOs will make it available to the channel.

“The enlightened will understand that volume and land-grab early-doors is more important than those extra few points of margin by going retail only. Especially as we are better served to address the fixed location market, where 5G will get the fastest traction in competition with FTTP.”

Digital Britain could prove the catalyst to build new propositions and business relationships but will the infrastructure provider be sufficiently well rewarded (subsidised?) to become super motivated?

Steve Mackervoy, Channel Sales Manager at Nextgenaccess says the government voucher schemes are certainly helping make the business case stand up for infrastructure providers.

“But having significant corporate investment funding in place is essential. While Digital Britain is no free ride for wholesale full fibre infrastructure providers such as Nextgenaccess, the rewards on offer are significant. However, you have to be prepared to take the long-term view.

It’s always been the same in connectivity over the years when it comes to risk versus reward. The infrastructure provider takes a long-term view and must expect to take lower margins, providing operators and channel partners the opportunity of layering services over the top such as VoIP and hosting. This presents ongoing more margin-friendly business opportunities for them but in return they are taking all the risk on the customer. That’s the quid pro quo and keeps all sides engaged and motivated.”

“It’s a tricky one,” according to Pangea’s Dan Cunliffe.

“As a rule, they should only be subsidised once they deliver on their KPIs—and perhaps funded even further if they top those KPIs.

If by nothing else other than sheer longevity, there’s enough opportunity within these technologies for business plans and deep investment to be rewarded.”

Daren Baythorpe at ITS echoes what a lot of people are realising when he says the drive for full fibre and 5G has certainly created some new and interesting dynamics.

“I think there is already huge motivation to deliver on the government’s vision. The various initiatives and schemes it has launched are a springboard to stimulate markets – the Local Full Fibre Networks (LFFN) scheme is a great example of this.

Perhaps further help/support/subsidy could be centred around schemes to make it more straightforward to deliver on its full fibre vision. Phasing grant funded programmes would also help to stagger programmes reducing the pressure put on highly skilled resource which is in short supply vs. demand. The government should look at innovative financial models that will allow them to invest in alternative commercial schemes such as asset sharing e.g. re-using existing ducts (tramways, CCTV, etc) where the capex build costs are significantly reduced, speed to market is increased, and environmental impact reduced.”

Ed Says…

I think our editor summed up the connectivity market well in his weekly comment recently when he said ‘money is pouring into the UK infrastructure space at the moment’. Just recently we saw traditional provider KCOM sell for £627 million after a bidding war pushed the price up by over £120 million. Country Broadband has just received £46 million in private investment to build-out fibre in Norfolk, Call Flow Solutions has raised £30 million from European investors for a fibre network in Kent.

For the Channel this could be regarded as a fantastic opportunity to deliver customers some truly ground-breaking connectivity.

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David Dungay

Editor - Comms Business Magazine