Connected Britain - 3 years on - 3 key observations

Back in 2017, when Sonalake first attended Connected Britain, Matt Hancock stressed that the UK Government strategy was firmly behind a Digital Agenda and had recently switched to an unequivocal full fibre agenda. Some of the key messages from the conference included, Lord Mendelsohn also stressing the need to invest in the UK’s key digital infrastructure to be competitive in a post-Brexit era.

However there was a sense that we were playing out the old adage of “when all is said and done, there’s a lot more said than done.'' However, in hindsight I stand corrected, Connected Britain 2019 showed that a lot has actually been done.

So for 2019, my 3 key observations are:

Observation #1: The challenge is fast moving from deployment to service uptake

According to Greg Mesch (CityFibre) he can’t keep up with the number of players rolling out Fibre, there seems to be new fibre start-ups every week.

Daniel Butler (Hyperoptic) says 90% of the addressable fibre market still has yet to be served, so there is plenty of runway left. Talk Talk’s Tristia Harrison says the market has pivoted and In two years copper has gone from being the core technology to a legacy technology. Furthermore, that 70% of all products now sold have a Fibre component.

Interestingly, we’ve now seen the first of the second round start-ups, most notably Zzoomm headed up by the original founder Matthew Hare of Gigaclear.

So it appears the medium term winners will be those who can successfully achieve a land grab and avoid being over-built. This does however point to a consolidation of the market at some specific levels, particularly up the technology stack. It’s clear that to have any mass market scale, it will have to be easy to buy similar services wherever needed, it looks like INCA will have a key role to play here lest the market be again served by a small number of large players.

Observation #2: Capacity pressure across the value chain

There only seems to be one area where capacity exceeds plans and strangely that’s in finance. According to our Corporate Finance friends, they’ve funds lining up to invest in Fibre.

We heard from Clive Selly (CEO of Openreach) that the company had hired 6,000 engineers between this year and last.

Not to be outdone, Simon Holden (COO of CityFibre) said that they create jobs for 200-250 jobs in every City (so based up the 70 Cities they have planned to cover this rounds off at 15,000 jobs).

Tristia Harrison (CEO of Talk Talk ) said that the data demand driven by customers is up by 40% year on year, with OTT Content as the main driver in the consumer sector and with data growth also explosive in the B2B market, driven by Cloud migration.

Dave Dyson (CEO of Three UK) said that 5G opens up a huge amount of capacity via the available spectrum and Three can upgrade the sites handling 80% of traffic by 2022, but this will need fibre in the backhaul and therefore, Three want access to Dark Fibre.

Scott Petty (CTO of Vodafone) foresees huge uptake in the Enterprise market for 5G in private networks in Factories.

Derek McManus (COO of O2) said 5G is more than new mobile technology, as it can transform many other industries. In the B2B sector, e.g. The NHS will benefit by freeing up 1m GP hours from patients not having to visit surgeries. Moreover, for 5G to be a success, we must work together using partnerships to shape the use cases.

The presentation from Eric Joyce (Adtran) outlined how, with the growth in data volumes and the number of customers outlined, the need for 10Gig was fast coming up on the horizon.

So as the fibre supply comes to the market in scale, what is next?

Observation #3: Maturity is the next challenge

As any technology matures, the needs and expectations of customers evolve also. This maturity will impact the industry at all levels. Whether the customer is an end user streaming videos, a small business in the Peak District transforming to having a digital presence to allow them play on the world stage, or simply a Mobile Operator looking to connect their 5G customers, it will be the flexible and the aigle that will be the real winners.

Cormac Whelan (Nokia) put it to his panel that Telecoms players are becoming more like software companies in their needing to be Agile. Gareth Williams (Gigaclear) said that this approach was being embraced by Gigaclear while Phil Sheppard (Three) said that Three weren’t planning on being a software company but did need to partner with software companies in an agile manner.

Daniel Butler (Hyperoptic): clearly there is an opportunity to disrupt via outstanding customer service and better reliability - he said that it was critical not to rely on legacy IT Systems for (dis-functional) Customer care.

Stephen van Rooyen (Sky) described Sky’s role as about bringing retailing and customers to networks and he felt that Customer focus is where they can innovate. Interesting to watch will be Sky’s talks with Altnets following up on an RFP issued in March.

So as we look forward to the next 12 months, I think we can expect a clearer picture of who will be the providers across the various landscapes. It’s a fair prediction to think that consolidation of local players might not be too far away, creating some further large and medium sized players.

I think we can expect the money flow to also begin to tighten up favouring those who hit targets and can show future scale. However, I also see that the enablement of an agile business model through a software service layer will create the real “new breed” winners of this era. Time will tell who will be the Skype and WhatsApp of the fibre age.