The Head of Public Policy and Regulatory Affairs at broadband ISP Gigaclear, James Fredrickson, has today highlighted to ISPreview.co.uk some of the challenges they face in rolling out their gigabit-capable Fibre-to-the-Premises (FTTP) network to rural areas, and why they’re well placed to benefit from future consolidation.
For those who don’t know. Gigaclear has been operating in the UK for the best part of ten years and their focus has always been fixed on extending full fibre broadband infrastructure into some of England’s remotest rural communities, which most other commercial providers tend to overlook due to the high (disproportionate) cost of deployment.
Despite the challenges involved, the operator’s FTTP network has now covered around 240,000 premises across 22 counties in England (450 rural communities) and they’re currently aiming to reach 500,000 UK properties by 2023. The operator also ended last year with 439 employees, which is up from 337 in 2019 (summary of annual accounts).
At the same time Gigaclear now finds itself in a very different market from the one they launched into a decade ago. Today there are close to a hundred alternative network (AltNet) ISPs building full fibre networks (Summary of UK FTTP Build Progress) and that’s before we even count the huge expansion plans from Openreach (BT), as well as Virgin Media.
“Whilst this potential investment brings the promise of better connectivity to remote communities, the economics of building in these areas is not supportive of multiple overlapping gigabit capable infrastructure operators. This is unlikely to be sustainable in the medium to long term and will likely result in a period of industry consolidation,” said James Fredricksonto ISPreview.co.uk.
James has been with the company for over 4 years, and before that he worked at Vodafone UK in its Corporate and External Affairs function. Suffice to say that he knows a thing or two about this market. “If consolidation does then occur, we think Gigaclear is well placed to benefit from that process,” said James, optimistically.
Naturally, we wanted to know a lot more about the provider’s view of the current market and their plans for the future, and James has been kind enough to oblige.
The Gigaclear Interview
1. Gigaclear have been deploying FTTP networks into challenging rural areas for some years now and you’re currently aiming to cover 500,000 premises by the end of 2023. So, to get us started, are you able to give us a little update on the network’s current premises passed, committed investment and take-up progress?
James’ Answer:
As of right now we’re at around 240,000 premises passed, across southern rural England. In some of the most mature parts of the network, our take up reaches around 50% and as things stand at the moment, we have raised over £750 million in committed capital.
2. As one of the most well-established alternative network (altnet) providers, you’ve surely seen a lot of change in the market since 2010. One of the biggest over the past few years has been the surge in new entrants, most of which have been fuelled by an influx of commercial funding from investors and more favourable market conditions / regulation etc. (something Gigaclear itself has also benefited from via Infracapital).
One of the catches with this is that you now have many more potential competitors to deal with than just the traditional players, and some of those are already in close proximity. What are your thoughts on this, and how are Gigaclear adapting to meet the challenge from a greater number of infrastructure and ISP competitors?
James’ Answer:
The altnet community has certainly expanded over the last few years. Whilst a large part of that proliferation has focused on build in urban areas, we have seen new operators declaring build plans in the rural areas in and around our current footprint.
This marks a substantial shift in our industry’s landscape; you don’t have to look too far back into the past to see the fixed network landscape dominated by an incumbent and a single large challenger; neither of which were investing in FTTP or prioritising rollout in rural areas. In large part thanks to the emergence of new operators in this space, the big operators have had to react to that challenge and increase the scale of their investment.
Whilst this potential investment brings the promise of better connectivity to remote communities, the economics of building in these areas is not supportive of multiple overlapping gigabit capable infrastructure operators. We aren’t then surprised to see new entrants making big declarations about their intentions to build in these types of location. This is unlikely to be sustainable in the medium to long term and will likely result in a period of industry consolidation.
For our part in responding to these changes, we have to continually improve on what we do. On the build side of the business, that’s meant continuing to accelerate our build rate, scaling our design processes and regionalising the operation of the business to be closer to the communities we are serving. We’re also increasing the number of wholesale partners we work with, as well as the size and effectiveness of our own retail function.
3. Gigaclear is an operator that specialises in connecting remote rural areas, which are incredibly expensive to tackle with FTTP technology. Can you tell us, which was your most expensive deployment (by per premises cost) and have you found any new ways to help bring the costs down over the past 3 years?
James’ Answer:
The ones that immediately jump to mind are laying fibre across the Clifton Suspension Bridge in Bristol and drilling under the River Severn. Whilst the costs associated with that work were significant, we had to accept them as it was the only viable way to bring gigabit capable connectivity to those areas.
In terms of bringing the costs down, PIA has made life easier in some places. But in some of the areas we are building in, it’s either not available as the Openreach infrastructure is buried directly into the ground or is in need of significant repair to be viable. This can mean that the benefit is only marginal and it’s not the magic bullet some hoped it might be for rollout, especially in rural areas.
The more material change in how we have driven down cost is the granularity of our planning and improving the scale of our civils contracting resources. When rolling out network in urban and suburban areas, there are usually multiple alternative network routes of roughly equal cost. Whereas in rural areas you can often be dependent on a single viable route. That means a single non-responsive landowner can hold up an entire community build. Whilst this is an enduring risk in rural rollout, we have improved our ability to quickly develop new build routes should we fail to secure land access on a critical path.
4. The award of Scotland’s R100 contract to BT for LOT 1 ended up being delayed for one full year by a legal challenge from Gigaclear (here) – what exactly happened there? Reports from the court room stated that Scottish Ministers had made a “manifest error” in the procurement process (apparently this related to the technical issue of bid scoring). But very little detail has emerged to clarify what specifically went wrong in the process.
James’ Answer:
I appreciate that it’s an intriguing topic, but unfortunately, I can’t discuss it. The only thing I can say is that we were very conscious that a legal challenge risked delaying the programme and we did our very best to limit that delay.
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