ISP Differentiation

The recently published Ofcom UK Communications Market Review for 2017 takes a close look at access activity and provides many pointers for how, in an age where data consumption that feeds the UK digital economy continues to soar, ISPs can differentiate their offerings.

It’s been a given for many years now. The more we rely on the internet for business applications the greater is the demand for faster, reliable and cost-effective access.

The Ofcom Communications Market Review report published this August is a yearly look at what is happening in our communications markets. Data shows how the increasing take-up of faster fixed and mobile data services is extending people’s choice over how, where and when they communicate with others, watch or listen to content services, seek information, shop, and participate in the digital world.

Forty-four per cent of all fixed broadband connections were able to receive actual download speeds of 30Mbit/s or more in June 2016, up from 38% a year previously.

Smartphones are the way many of us keep connected. They are now firmly established as the most widely owned internet-enabled device, with more than seven in ten consumers owning one, up by 5 percentage points from the previous year, and four in ten internet users consider smartphones to be their most important device for accessing the internet.

They are used both inside and outside the home: data collected through Ofcom’s mobile research app shows that around two-thirds of data connections are via Wi-Fi rather than a mobile network.

Access networks are also facing demand for bandwidth hungry applications as Ofcom research shows that on demand and streamed content delivered over the internet is an important part of the way in which people watch television. The public service broadcasters online services (BBC iPlayer, All4, ITV Hub, My5) are used by 67% of adults, with subscription libraries such as Netflix and Amazon Prime used by 45% of adults.

Disagreements Over UK Speeds claimed in August 2017 that speed test data shows UK’s average broadband speed is 16.51Mbps and said the UK sits in 31st place – ahead of 158 countries but behind the majority of its European neighbours.

This average speed of 16.51Mbps is however less than half that reported by Ofcom in its UK Home Broadband Performance earlier this year. The regulator, which used data provided by SamKnows, said the UK’s average download speed in 2016 was 36.2Mbps.

The speed does however tend to be more in line with Akamai, who in its annual State of the Internet report, said the UK’s average speed was 16.9Mbps, putting it in 15th place in the world.

What is clear however is that the UK, with the seventh largest economy on the planet, is apparently being left behind in average download speeds.
This comes at a time when Openreach announced an extension of 26 new areas capable of receiving 330MBPS G.Fast service, a move that Distributor DMSL predicts will double the number of partner opportunities.

The plans will make speeds of up to 330Mbps to more than one million premises in 26 more areas across the UK by the end of the 2017. The initial pilot had covered 20 areas and has, according to reports, already been made available to over 500,000 premises and the extended scheme will double the number.

It will also double the potential, says DMSL Managing Director, John Carter. “The response to the initial roll-out has been immense. With this announcement Openreach is effectively doubling the size of the project and we’d expect interest from SMBs to at least double as well. It’s a colossal opportunity for resellers.”

Openreach plans to make ultrafast broadband services available to 12 million UK homes and businesses by 2020. It intends to do this using a mix of 1Gbps FTTP and 330Mbps hybrid-fibre, with the latter expected to provide a large majority of services.

As a Premier Partner of BT, DMSL has been encouraging resellers to take full advantage of the additional investments being made by Openreach. It will be focusing on the benefits and growth potential that BT’ communications and voice services offer at the Channel Live event at the NEC this September.

DMSL is also running call-outs to generate new business leads for BT partners in the 26 pilot areas. The distributor says it will provide marketing and sales support where required, and will support resellers at local business events.

Meanwhile, in August, the Government named trial areas for ‘full-fibre’ (FTTP) broadband technology that provides data at speeds approaching one gigabit per second.

Businesses, schools and hospitals will be the first to try out the network technology with the pilots running in Aberdeenshire, West Sussex, Coventry and Warwickshire, Bristol, West Yorkshire and Greater Manchester.

The technology involved is being referred to as full-fibre because it takes high-speed cables directly to premises as opposed to roadside cabinets (FTTC) which rely on older, slower copper for the final link to homes and other buildings.

Currently full-fibre networks are only available to about 2% of premises in the UK.

“How we live and work today is directly affected by how good our broadband connection is,” said Andrew Jones, Exchequer Secretary to the Treasury, in a statement. “Faster, more reliable connections would create jobs, help new industries to emerge and let people work more flexibly.”
Possible uses of full-fibre broadband would include hospitals sharing high-definition images to aid diagnosis, or schools using video more effectively during lessons.

However, gigabit-capable cables would be shared with many different premises, suggesting that actual data download speeds would be much lower than the theoretical maximum.

Commenting on the ‘full-fibre’ announcement, William Newton, President and EMEA MD at WiredScore, said, “With the UK’s Internet economy making up the greatest percentage of GDP than any other European nation, great broadband is no longer a luxury for businesses. Underpinning business operations and customer-facing services, companies need access to high-speed, resilient broadband services.

These new fibre spines are a great step towards future proofing business in Britain, as demonstrating that the UK has the necessary digital infrastructure will not only be crucial to supporting existing business operations, but also ensuring that the country continues to be seen as an attractive place for tech investment and to do business. This is a real concern for the business community, with nearly two in five northern tech professionals indicating that improved internet connectivity would make Manchester a more attractive city to UK based tech companies.

This is a much-needed step to ensure that the UK’s digital infrastructure can continue to meet the needs of modern businesses. Establishing a fast and effective roll out of full-fibre broadband will be essential if the UK is to remain a global digital leader.”

Speaking to mainstream ISPs we sought answers to a few current issues in the market – such as; Should resellers have two specialist access suppliers that know their trade inside out? Mark Curtis-Wood, Head of Network Services at Nimans, says this is an interesting area as there are many traditional ISP’s that over time inevitably have diversified into lots of different areas, some of which they have got right and some they haven’t.

“I know of one major player where traditional broadband now only accounts for 45% of revenue. The remainder is still connectivity based such as co-location, data centre connectivity, Ethernet and MPLS. These are much further up the food chain compared to five years ago when traditional services accounted for 80% of their business. The convergence of voice and data should give resellers more confidence as supplier expertise grows whether voice or broadband-based.

There’s normally three factors around connectivity; these are price, speed of installation/set-up and the technology play in terms of what is going to be overlayed across the infrastructure. A combination of these individual or collective components determine where people place their business. It is hard to find one solution that fits all. Certain providers are commoditised and keen on price but not always good on service delivery. Whereas others will offer potentially higher speeds at a higher price. Nimans has always remained suppler agnostic and therefore provides choice which means resellers don’t have to put all their eggs in one basket.”

Jodie Kay, Product Manager, Partner Voice Services at Zen, comments, “Resellers generally prefer to partner with a provider that can supply a broad enough portfolio of products to meet the majority of their customer’s needs, especially when it comes to connectivity and voice as the two go hand in hand. Justifying managing two service provider relationships and the ongoing investment that comes with it can be difficult. The time investment also tends to increase when it comes to delivering next generation voice solutions as there’s a lot more to consider compared to traditional voice.

However, with the communications requirements of SMB’s changing rapidly it can be a wise approach to have a number of service provider options in the Resellers kit bag in order to succeed over the long term, which can make investing in multiple relationships worthwhile. When choosing those providers quality is key, and is, in most instances, more important than simple cost.”

David Barber, Head of Channel Propositions at Zen says that having a secondary access provider can make sense if your primary provider cannot offer you the breadth of access technologies you need to support your customers’ requirements wherever their sites are located.

“More service providers are now offering access services from multiple backhaul networks in order to extend reach, therefore the real advantage of the belt and braces approach is if your primary provider is suffering service problems such as uptime, throughput at busy periods or packet performance (latency etc.). However, if they are, then it’s probably time to move to a provider that’s invested in their network infrastructure to support the future of their Resellers customers.”

Is the price of bandwidth the over-riding consideration for resellers’ customers?

Curtis-Wood at Nimans says price is still a major consideration but quality of service is for many a more important factor.

“Any savvy reseller knows the impact of poor connectivity and I think their customers do too. Reliability is critical especially concerning voice applications, video conferencing and mission critical applications that need 100% uptime. Price just can’t be the over-riding factor. I think delivering a value proposition is more important than ever in an era when it’s never been more cost effective to get higher bandwidth. Price is therefore not as big a consideration as it used to be.”

David Barber, Zen Internet

David Barber, Zen Internet

David Barber at Zen
“Most conversations revolve around quantity of bandwidth for a given price but the reality is that resellers and end users need reliable and predictable high capacity throughput to support their customers in taking advantage of cloud computing and converged voice and data services. It is easy to advertise headline speeds at low prices, but delivering high speed reliable access cannot be done on a shoestring budget.”

This is a fast moving and dynamic market so should you really opt for three year contracts for your customers?

Curtis-Wood at Nimans believes that as you get further up the bandwidth chain three and five-year contracts still tend to be standard.

“Historically a lot of that has been driven by upfront excess construction charges and high installation costs. But these are reducing as more fibre gets rolled out into the market so things are changing. Where there is a shift to shorter contracts surrounds more readily deployable solutions. One of the biggest threats to ISP’s comes from the mobile players now because they do offer the ability to deploy fast and short-term solutions. 4G data Sim cards with a fixed IP address on a 30-day contract are easily available and we can run a terabyte if required. 30 day, 90 day and 12 month fast deployable pre-Ethernet solutions are definitely gaining traction.”

According to David Barber at Zen three-year contracts can offer cost certainty for businesses over the term meaning there are no surprises along the way.

“This customer commitment also helps the provider put together some really compelling offers. Unless end customers have a business plan containing significant organisational change over the short term that requires short contract services, it makes sense to look at three-year deals, as what we generally see is that the technology available tends to develop quicker than the pace of the organisation’s change.”

UK Digital Economy

To illustrate the importance of access connectivity, House of Commons Business, Innovation and Skills Committee’s Digital Economy Report of 2016-17 revealed that the United Kingdom is one of the leading digital nations in the world, and its economy has the highest percentage of GDP involved in the digital economy of all European nations. UK digital industries grew two and a half times as fast as the whole economy between 2003 and 2013 and comprised 7.5%, or £113 billion of the UK’s gross value added (GVA) as of 2013.

The estimated turnover of digital tech industries in 2014 was £161 billion, and there are 1.56 million jobs in the digital tech economy, of which 41% are in traditionally non-digital industries. Furthermore, the average advertised salary in digital jobs is just under £50,000, 36% higher than the national average.

Ed says…

Technologies are not linear but instead run in parallel. Lest we forget, whilst the full fat fibre heralded by the government, being made available in just six areas of the UK, will deliver a speed of one gig, by the time FTTP becomes more widely available the UK will be in the midst of a 5G roll out that will provide ten times that speed. Inevitably there will be crossover and competition for business – most likely based on cost and geographical availability, that will further risk carrier investments in both fibre and spectrum. Remember you heard it here first, the first faint echoes of a race to the bottom starting pistol.

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David Dungay

Editor - Comms Business Magazine